You finally have your brand-new Living Trust.
Now you can sit back and relax, right?
Not so fast!
You may be forgetting the most important part of the Estate Planning process: actually funding your Living Trust.
Without properly funding your Living Trust, you may have actually spent several hundred dollars to purchase a fancy book-end or mantle-piece!
That’s because an unfunded Living Trust is useless to transfer assets to your intended beneficiaries.
Without funding your Living Trust, you will NOT avoid probate, you will not ensure the privacy of your estate, and you will miss out on all of the estate tax benefits of having a living trust.
If your trust is not properly funded, your estate administrator will be forced to either probate your assets (if you have a will), or worse yet, go through an intestacy proceeding (if you have a trust but not a will).
In addition, you will have lost all of the other benefits of a Living Trust: reduction of estate taxes, privacy for your estate, and lower costs of administration.
So how does one fund a Living Trust?
The funding process is simple, but it does take time and effort.
Simply put, you are changing the title on all of your major assets (i.e., your personal residence, IRA or other retirement account, bank or other investment accounts, any valuable personal property (such as coin or art collections, etc.) into the name of the Living Trust.
Due to the inherent tax and legal ramifications involved in funding, we recommend that you not fund your Trust without first consulting a qualified attorney.
When your Living Trust is properly funded, it will be able to successfully pass on each asset to the next generation.
Proper funding is the key to unlocking all of the benefits that the Living Trust has to offer.