FUNDING YOUR TRUST

PaperworkOnce you have created your trust, the next step is to transfer your assets into the trust.  This is done by changing titles and beneficiary designations so that your trust is either the owner or the recipient of your major assets. This is called “funding” your trust.

Funding your trust is a critical step in utilizing the benefits of having a trust.  Creating a trust without proper funding negates the purpose for having a trust in the first place and results in a waste of your money and time in creating it.  The reason for this is that the trust can only control what it owns.  A trust does not own property just because you created it.  Changing ownership requires you or your attorney to take affirmative steps to do so.  This does not mean that you lose control over your assets.  They are still treated just as they were before they went into the trust, but ownership is important for the future operation of the trust.

One of the main reasons many people create a trust is to avoid probate.  Probate is the court process of giving someone the authority to control your assets and transfer them to your beneficiaries.  It often goes on for a year or more and can cost several thousand dollars.  Properly utilizing your trust will avoid probate.  However, if the trust is not properly funded, then the assets outside of the trust will still have to go through probate.

Generally, your attorney transfer your real estate into the trust for you, and then give you the option of having the attorney transfer your other assets, or having you transfer the assets themselves.  There are pros and cons to each option.

Having the attorney complete the funding for you gives some assurance that the process is being done correctly, although it generally results in slightly higher fees.  Most importantly, having the attorney complete the funding ensures that it is actually completed.

The problem with clients taking the responsibility upon themselves is that the majority of them fail to complete it, or if they do, part of it is done incorrectly.  They do save some money in the process, but if the trust is not properly funded, it will cost much more to whoever has to administer the trust and to administer the probate estate.

Whatever decision you make on how your trust is funded, the most important thing is making sure that it actually gets funded.  If you are comfortable with the process and have the time, then feel free to take it on yourself.  However, if you have any reservations or if you know life will get too busy, then you should consider having a professional handle it.  It will pay for itself, and more, in the long run.

About Mark Jacobson

Attorney Mark Jacobson works in our tax department as well as our estate planning department. Mr. Jacobson has a talent for explaining estate planning concepts to clients in terms that they can understand. Whether you are in the initial stages of creates a Revocable Living Trust, Last Will and Testament, Living Will, Health Care or Durable Powers of Attorney, Mr. Jacobson can help. If you have an existing Trust or Will that needs to be updated in Scottsdale, Arizona or Fountain Hills, Arizona contact Attorney Mark Jacobson. Mr. Jacobson also meets with clients who are covered through the Hyatt Legal Plan in Scottsdale, Arizona for estate planning services. Contact Mr. Jacobson for all your estate planning needs. Google+ Profile
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