The Importance of Trust Funding

In recent posts, I have explored the advantages of a revocable living trust centered estate plan: namely, avoiding probate, providing for incapacity and the ability to dictate the manner in which your heirs receive their inheritance. For these advantages to be realized in your estate planning, your revocable living trust must be fully funded. What does it mean to fully fund your trust, and how is trust funding accomplished? That is the subject of today’s post.

Trust funding is the process of transferring title of your property and assets to your revocable living trust. Take your house for instance. If you own a home, it’s likely that upon closing the seller gave you a deed conveying the house from his/her name to your name (or jointly to you and your spouse). In order to fund your revocable living trust with your house, you would grant a deed to the trustee(s) of your revocable living trust. Another example is your bank accounts. Funding your revocable living trust with your bank accounts involves changing ownership of the accounts into the name of the trustee(s) of your revocable living trust by signing new signature cards. A similar process is undertaken for stocks, bonds and brokerage accounts (note, however, that individual retirement accounts cannot be owned by a revocable living trust; rather, the revocable living trust is named as beneficiary of the account). Funding your revocable living trust with your personal property such as furniture, jewelry and other valuables is accomplished by drafting an assignment of property to be included in your revocable living trust.

As you can see, trust funding requires additional work. Yet, the benefits of fully funding your revocable living trust are worth the extra effort that trust funding requires. And some estate planning attorneys will fund your revocable living trust for you. At my firm, I handle trust funding for all of my clients to ensure their estate plan is effective and fulfills their goals and wishes.