The person who creates a trust is called a trustor or a settlor. Once the ink is dry on a trust document, the trustor may think their work is over. Not true. The trust is just like an empty vessel that needs to be filled up. If you’ve created a trust, here’s what you need to know about funding it.
What Does “Funding Your Trust” Mean?
To complete the process of creating a trust, you’ll need to transfer assets to the trust. That’s called funding the trust.
How Do I Transfer Assets To My Trust?
There are several ways to do this:
- Real Property. If transferring real property to a trust, you’ll need to prepare, sign, and record a new deed showing the transfer of title.
- Personal Property. The trust document will contain an assignment of personal property.
- Cars, RVs, and Mobile Homes. You’ll need to transfer the title to the trust.
- Business Interests. The action you take depends on the type of business interest. Stocks or shares in a corporation will be reissued in the name of the trust. Other business entities, like LLCs, may require formal authorization from the board of directors and shareholders.
- Financial Accounts. To transfer certain financial accounts, contact the financial institutions involved and change ownership to the trust.
- Bank Accounts. If you are transferring one of your bank accounts to be used by the trust, talk to the bank to find out what forms and documents are needed.
- Retirement Plans and Insurance Policies. These can be a little tricky. Consult with your attorney before transferring these to a trust.
What If I Don’t Fund The Trust?
There was a reason you set up your trust. Maybe it was for asset protection, to provide for a family member with special needs, or to reduce potential taxes. Your trust won’t accomplish what you intended until it is funded.
For example, your assets will not be protected if you never move them to the trust. Beneficiaries named in your trust cannot receive benefits from a trust that is empty.
Funding your trust is critical to its success.
Call Us to Learn More About Trusts
Keystone Law Firm attorneys are experienced and have the know-how to analyze your current situation and help you make thoughtful decisions about your estate. Call us at (480) 418-8448 to set up an appointment. We offer services for clients throughout Arizona, including Chandler, Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.
