Let's Talk About Funding a Trust

Creating a trust can often be somewhat confusing. The process is usually new to the client and it requires a shift in one’s thinking regarding ownership of assets. As a result, many people think once they sign on their trust document that everything is settled. However, this is really just the start. In order for your trust to be of any use, it must be funded.

Funding a trust is the process by which you transfer your assets to the trustee’s ownership. Following are a few different types of assets and the typical process by which you can fund them into your trust. 

Bank Accounts

Funding a trust with a bank account is a relatively simple process. It typically involves going into the bank with your Certificate of Trust (a separate, short document including important information regarding the trust) and changing the name on the account to the name of the trust or opening a brand new account.

Real Property

Real property (including surface and minerals) can be funded into a trust by conveying the property via quit claim deed. The deed lists you as an individual and current owner of the property as the Grantor and you as the trustee of the trust as the Grantee. 

Life Insurance and other Funds with Beneficiaries

Life insurance, IRAs, and other types of assets that allow you to list a beneficiary can be transferred by listing the trust as the beneficiary. This way, when you pass away, the available funds will be given to the trust.

New Assets

New assets acquired after the creation of the trust can simply be acquired in the trust’s name, preventing you from having to take further steps to transfer it after acquisition. For example, if you purchase a new home, the trust would be the purchaser and would be listed as the Grantee on the deed.

Overall, the typical goal of a trust is to ensure a smooth transfer of assets following one’s passing. Setting up a trust without funding makes the trust essentially useless. By ensuring you are fully and correctly funding a trust, after your death, your trustee will be able to have immediate access to all of your assets in order to manage it according to the trust’s terms. It is always wise to consult an attorney to assist you in funding a trust, to make sure it is done correctly and no assets are missed.