Funding Your Trust-Based Estate Plan

We continue to meet with clients whose trust-based plan was created by other attorneys who have not been instructed in properly funding their trust. Remember, trusts are simply agreements between the Grantor of the Trust and the Trustee of the Trust to accomplish certain things for the Beneficiaries of the Trust. The most common type of trust used in estate planning is a revocable living trust. A revocable living trust holds and administers your assets during your lifetime, during any period of incapacity, and after your death according to your wishes described in your trust.

Your revocable living trust cannot accomplish any of its purposes until assets are transferred into the trust. At Ison Law, we advocate that and assist you in transferring your assets into the name of the trustee of your trust (usually you are your own trustee during your lifetime) when the trust is established. As you attain more assets those too should be included among the trust assets. That process is called Funding the Trust. Certain assets must not be transferred to the Trust – assets that would trigger an income tax by making the transfer. Assets like IRA, 401k, 403b, and other qualified plans for instance should not be transferred into the ownership by your trust.

By completing the Funding process and maintaining the Funding, at the time of your death you will own no probate assets. The reverse is likewise true. If you do not properly Fund your trust, then your survivors will need to complete the probate process just to transfer assets into the Trust. That extra step can be expensive and time-consuming yet it is entirely unnecessary if your Trust is properly Funded and you maintain that Funding.

Those of you who work with our office know that we emphasize the importance of Funding and provide Funding letters and documents as part of the estate planning process. We enjoy working with you to make certain you understand the Funding process and your future assets are properly Funded.