Creating a revocable living trust is a smart step in protecting your assets and ensuring your wishes are carried out, but creating the trust alone isn’t enough. One of the most critical steps in the estate planning process is funding your trust. But what exactly does that mean?
What Is Trust Funding?
Funding your trust means transferring ownership of your assets into the trust or designating the trust as a beneficiary. Simply put, it’s the process of making sure your trust actually controls your assets so it can work as intended by avoiding probate, ensuring privacy, and distributing your assets smoothly to your chosen beneficiaries.
Which Assets Should Be Funded into a Trust?
1. Real Estate
All real estate you own, whether in Florida or in another U.S. state, should be retitled into the name of your trust. This does not include foreign real estate, which typically requires separate planning
2. Financial Accounts
This includes:
- Checking and savings accounts
- Investment and brokerage accounts
- Life insurance policies
- Retirement accounts (in some cases)
Depending on your goals, these accounts should either be retitled in the name of your trust or have the trust listed as a beneficiary. It’s important to work with your estate planning attorney to determine what’s appropriate for your specific situation, especially for retirement accounts and life insurance policies where beneficiary designations have tax implications.
3. Business Interests
Own a corporation, LLC, or partnership? You may need to assign your ownership interest to the trust. This ensures that your business assets are properly managed or passed on according to your plan.
4. Uncommon or Miscellaneous Assets
Other less common assets, such as notes receivable (e.g., if someone owes you money from a property sale), should also be addressed. These may need to be formally transferred into your trust through assignments or other legal instruments.
What Trust Funding Is Not
Funding your trust does not mean placing a symbolic amount like $1 or $10 into it. Instead, it’s a legal process of retitling assets or updating beneficiary designations so that the trust can manage and distribute those assets effectively, either during your lifetime or upon your death.
Why Funding Your Trust Matters
Failing to fund your trust can lead to serious consequences:
- Assets not in your trust may have to go through probate.
- Your estate may face delays, additional costs, and a lack of privacy.
- Assets may end up in the hands of unintended beneficiaries.
Properly funding your trust ensures your estate plan works as you intended and provides peace of mind that your loved ones are protected.
Need Help Creating Your Trust in Florida?
At SJF Law Group, we guide families through the estate planning process every step of the way. Our trusted and compassionate attorneys are here to ensure your plan is complete and your legacy is secure.
Call us at 954-580-3690 or contact us online to schedule your complimentary estate planning consultation.