What does it mean to fund a living trust?

On Behalf of | May 5, 2021 | Firm News |

A living trust provides more control over your assets and the process for dispersing them after you are gone. It also helps avoid probate, because the trust will own your assets going forward.

According to Kiplinger, many estate planners forget to fund their trusts. Without this very important step, the court will decide how to disperse assets to heirs. Here are a few essential steps to ensure your trust is legally binding.

Look over financial statements

If you would like the proceeds for a bank or investment account included in the trust, you must change the owner of the accounts to the name of the trust. Call the financial institution responsible for maintaining the account and ask how you can get the name changed officially. Remember, financial accounts are only included in living trusts when they are properly titled.

Review real estate deeds

Deeds must also state the name of the trust and not your name after trust creation. Problems often arise when property refinancing occurs, as it is often necessary to remove the name of the trust during this process. If this is the case, contact the lender and have the name officially changed.

Assess beneficiary designations on life insurance

Life insurance policies have beneficiary designations, which allow you to put the name of a primary and secondary heir. After creating a trust, change the primary designation to the name of the trust and not an heir, or the proceeds will pass through the trust directly to the heir. Beneficiary designations trump other estate planning documents, regardless of your wishes.

Review all aspects of your estate plan, including trusts and wills, every three years or so. Make updates as your life changes, such as when you get married or divorced, or welcome a new child into your life.