To those of you that already have a Revocable Living Trust as part of your estate plan, congratulations! However, did you fund that trust. Over the past several months I have worked with a number of families to amend their existing trust only to find that they were never funded in the first place.
What Does Funding A Trust Mean?
The term "funding a trust" is often confusing. That's our fault, attorneys I mean. We like to continue to use phrases that are outdated, and that aren't just plain english. When attorneys say "funding a trust," what they really mean is to transfer title of your assets from your name into the name of your trust. Understanding the concept is the simple part, the actual transferring part can be a little tricky.
Never Transfer Retirement Accounts From Your Name To Your Trust!
Retirement accounts, IRAs, 401Ks, Roth IRAs, etc., are special beasts in the financial world. They offer many benefits in exchange for some very particular restrictions. One of those restrictions is that the accounts must stay in your name to continue the benefits they offer. Working with your Retirement Accounts and your Trust is done through beneficiary designations. You should seek the advice of a professional when completing your beneficiary designations.
Cash Accounts - Title Them To Your Trust
All of your savings, checking and similar account should show your Trust as the owner with your trustees as authorized persons on the accounts.
My advice when transferring your cash account to your trust it to call your bank and set an appointment. Make sure that you tell them exactly what you are wanting to do. This will increase the likelihood that you will meet with a banker that understands the process.
You shouldn't have to open new accounts and should be able to keep the same account numbers. This is important. If the bank tries to get you to open a new account hold your ground and see if they will change their minds. The bank may hold their ground...at that point it is up to you whether you want to continue doing business with them.
Real property is transfered by deed. You shouldn't attempt to do this yourself. Contact a professional knowledgable in Trusts and Real Property Titling.
These are only a few of the assets that you will need to deal with after creating your Trust. If you have a trust and are unsure if it is properly funded you should contact an attorney to help you. If you have questions for me, schedule a free 30-minute Strategy Session and I will do my best to help you.