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The Importance of Funding Your Trust: A Key Step Often Overlooked

Loune-Djenia Askew, Esq.

Jun 26, 2024

Here’s what you need to know about why funding your trust is essential and how to do it correctly.

Creating a trust is a component of estate planning, offering control, privacy, and ease in the management of your assets. However, one step that is often overlooked is funding the trust. Without properly transferring assets into your trust, it cannot fulfill its purpose in your estate plan. Here’s what you need to know about why funding your trust is essential and how to do it correctly.

What Does It Mean to Fund a Trust?

Funding a trust means transferring ownership of your assets from your personal name to the trust itself. This involves changing titles and beneficiary designations to the name of the trust. Common assets that you might transfer into a trust include real estate, bank accounts, investments, and personal property. If your trust is not properly funded, it will not be able to manage or distribute your assets as you have directed in the trust documents. Unfunded or underfunded trusts may lead to unnecessary probate proceedings, which the trust is specifically designed to avoid.

Avoiding Probate and Legal Complications

One of the primary benefits of a trust is avoiding probate. By fully funding your trust, your assets can be managed and passed on seamlessly and privately, according to the terms you've set.

Providing for Immediate Access and Management of Assets

A properly funded trust allows for immediate access and management of the assets by the trustee in the event of your incapacity or death. This can be crucial for seamless financial management and support of your beneficiaries without delay.

How to Fund Your Trust

Real Estate: Deeds for real estate properties need to be re-titled in the name of the trust. This process can vary by location, so it's essential to work with a legal professional who understands local real estate laws.

Financial Accounts: For bank and investment accounts, you will need to change the ownership to the trust. This typically involves providing the trust agreement to your financial institution and completing the necessary paperwork.

Personal Property: Items like jewelry, art, and other personal items can be transferred into your trust by creating a detailed list of these assets, sometimes called an assignment of personal property.

Once your trust is funded, review it periodically, after major life events such as marriage, divorce, the birth of a child, or the acquisition of new assets. It’s wise to consult with an estate planning attorney to guide you through the process. 

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699.

Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.

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