Many people are choosing to use revocable living trusts in their estate planning these days. A revocable living trust is an effective document for avoiding probate, protecting privacy, and assigning a manager of your assets. Sounds like a great estate planning tool right? Only if you use it properly and fund the trust.
What does it mean to “fund” my trust?
Funding a trust is simply transferring ownership of your assets from you to your trust. Once ownership is transferred, the assets officially belong to the trust. You will also want to name the trust for most if not all of your beneficiary designations.
Do I lose control of my assets once they belong to the trust?
If you have named yourself as trustee of your trust, you will remain in complete control of your assets. You can continue to add or remove assets from the trust if you decide to do so.
What Happens if I Don’t Fund My Trust?
If you don’t fund your trust, it will not work as you had intended it to. Chances are, you created a trust so that your family could avoid probate court at your death. In order for this plan to work, you must transfer the titles of your assets to the trust.
If your assets aren’t in the trust, your family will end up in court and you will have wasted your time developing the trust.