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Funding Your Trust: Don't Let Your Estate Plan Go Up In Smoke

May 26, 2023

Planning for the future can be daunting, but ensuring your revocable living trust is fully funded is a critical step towards securing your legacy and protecting your assets. As you prepare for your estate plan, it's important to understand the significance of funding your revocable living trust. A fully funded trust can help you avoid probate and ensure that your assets are distributed according to your wishes. On the other hand, an unfunded or partially funded trust may not have the intended outcome. In this blog, we'll discuss the importance of funding your revocable living trust, the process of funding, and the role of various professionals in the process.

What is funding? Funding refers to the change of ownership of certain assets to be titled into the name of the revocable living trust. This includes changing the beneficiary of certain assets according to your estate plan. To transfer assets into your trust, you must execute new documents of title deeds to real property, signature cards for your bank accounts, and change of beneficiary forms for pension plans, individual retirement plans, and life insurance. It's important to place a document under your trust assets section of your revocable living trust portfolio to prove that your trust is the owner or beneficiary of each asset.

Ownership changes can be made on cash accounts, investment accounts, real property, stocks, bonds, and personal effects. You will need to change the title of most of your assets from your name as an individual to your name as the trustee of your trust. Beneficiary changes will be made to retirement plans, life insurance policies, and annuities. The beneficiary may not necessarily be your revocable living trust. Other assets that require funding include mortgages, notes, other receivables, potentially partnership interests, corporate business or professional interests, sole proprietorship, business interests, oil, gas, mineral, anticipated judgments, gifts, or lawsuits.

So, who does this? The first person to tackle this task is you. Your estate planning or business attorney will help you with all the transfer paperwork. Your financial advisor plays a key role in the process, as well as your accountant, broker, and life insurance agent. Working with a team of professionals can help ensure that your trust is properly funded, and your estate plan is structured in a tax-efficient manner.

Finally, it's important to have a certification of trust, which is a document used to evidence that your trust is in creation. This document provides evidence of the trust's existence and the trustee's authority to act on behalf of the trust. It can be used to verify the trust's existence without having to provide a copy of the entire trust agreement.

In conclusion, funding your revocable living trust is a critical aspect of estate planning. It ensures that your assets are protected and distributed according to your wishes. Working with a team of professionals, including your attorney, financial advisor, accountant, broker, and life insurance agent, can help ensure that your trust is properly funded, and your estate plan is structured in a tax-efficient manner. Don't forget to obtain a certification of trust to prove the existence of your trust. Start the funding process today and take control of your estate plan.

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