FUNDING A LIVING TRUST
A trust can be an important and valuable estate planning tool. It allows people to bypass probate and gives their beneficiaries access to important assets more quickly. In some cases, it can help people limit their tax liability and help keep assets in a family. Depending on the type of trust, they can fulfill many estate planning goals.
However, one important trust administration issue, the funding of the trust, can be easily over looked. Without any assets, the trust will not be able to fulfill any of the goals it was created to accomplish. In other words, without assets, it may not be able to provide any benefit to the beneficiaries.
There are two ways to fund a trust, during a person's lifetime and after death. At death, a pour-over will can be used to fund a trust. In this situation, any property that is not assigned in a will "pours over" into the trust and becomes property of the trust. This property can include any number of assets. However, if people do this, the will must still be probated. The probate process can be costly and time consuming, depending on the situation.
In order to avoid probate altogether, a person can fund the trust during the person's lifetime. To do this, people need to determine the type of property they want to give to the trust. Depending on the type of property, the requirements for giving it to the trust will change. For example, if it is property that has a title, like a car, people can change the title to list the trust as the owner instead of themselves. In other cases, people may have to transfer their rights to some asset, like ownership interest in a business, to the trust.
An attorney can help people determine the best way to fund a trust. This can help to ensure that the trust benefits the person's family after the person has passed.
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Established in 1991, Rignanese & Associates is available to work with clients on their legal needs.
On behalf of J. Kelly Kennedy, Attorney/CPA, PLLC, which has been acquired by Rignanese & Associates, PLLC.
Source: Findlaw.com, "How do I put money and other assets in a living trust?," accessed Dec. 8, 2014