When it comes to estate planning, incorporating a revocable living trust can offer more control and peace of mind compared to a traditional will. A key component of utilizing a trust effectively is understanding the process of funding it. At Law Offices of Terrence Fantauzzi, we often encounter queries about what it means to fund a trust and why it’s crucial. This blog aims to clarify these aspects and highlight the importance of properly funding your trust.
The Advantages of a Revocable Living Trust
A revocable living trust offers several benefits, most notably avoiding the lengthy and often complex probate process. Trusts can be particularly beneficial in scenarios such as providing for a spouse without disinheriting children, especially in second or subsequent marriages. They also offer the advantage of potentially saving on estate taxes and protecting inheritances from creditors, divorces, and financially irresponsible beneficiaries.
What Does It Mean to Fund a Trust?
Funding a trust essentially means transferring your assets into the trust. This process involves changing the titles of your assets from your individual name (or joint names, if married) to the name of your trust. This crucial step ensures that your assets are correctly aligned with the trust’s structure and objectives.
Maintaining Control Over Your Trust Assets
A common concern is the control of assets within a trust. As the creator of the trust, you have the flexibility to name yourself as the trustee, thereby retaining control over the assets while you are alive. This setup allows you to:
- Act as the trustee of your trust.
- Buy and sell assets as you currently do.
- Make changes to the trust as it is revocable.
- Remove assets from the trust if you decide to do so.
The Importance of Properly Funding Your Trust
The protection and benefits offered by a trust apply only to the assets that have been properly placed into it. If a trust is established but assets remain in your individual name, they will not be governed by the trust and will be subject to probate in the event of your passing. It’s crucial to ensure that all intended assets are transferred into the trust’s name for it to effectively serve its purpose.
Addressing Untransferred Assets: The Role of a Pour-Over Will
In cases where an asset is inadvertently left out of the trust, a “pour-over will” comes into play. Created by your attorney, this acts as a safety net. Upon your passing, the pour-over will captures any assets not included in the trust and transfers them accordingly. While these assets may still undergo probate, they will ultimately be distributed according to the terms of your trust.
Funding a trust is a critical step in ensuring that your estate planning objectives are met. By transferring assets into the trust and understanding the controls you have, you can secure the future of your estate as per your wishes. For further guidance on setting up and funding a trust, feel free to contact Law Offices of Terrence Fantauzzi at (909) 552-1238. Our expertise in estate planning can help you navigate these important decisions with confidence.