Hi, everybody. I’m Miranda Dressler, attorney with MacKay Dressler Law Firm in Petaluma, California. What is funding your trust? We here at the office kind of say that word a lot. It’s a word that’s used in the context of estate planning, specifically living trust funding. What does it really mean and how important is it?
What we mean by funding your trust is when you create a living trust, the way that the trust works is you actually then have to transfer the title of your assets into the name of the trust, such that those assets are now owned by the trust. That’s really what makes the trust then, and the instructions that are contained within it, have authority over those assets so it’s a really vital piece to having a living trust and having it work effectively. So the process of funding your trust or transferring title to assets is you know going to vary depending on what exactly that asset is. So, for real estate, it’s going to require a deed be prepared and then recorded with the county. For financial accounts, you have to provide some paperwork from your trust to the financial institution to have the account retitled, things like that. You should always be having a conversation and your estate planning attorney and their team should be able to help you and guide you with regard to the funding of your trust and, really exactly what needs to happen to get each of your assets into the trust where it needs to be.
Funding your trust is so important, like I said, because that is how the trust ultimately works, right? So, you can think of the trust like a box or like a chest, right? That you create and then you have to fill it up. You have to put your assets in it because ultimately you could create a living trust that is super thorough, contains all the instructions that you want in there and if it doesn’t have any assets in it, right? So, if that box is empty, the trust is kind of going to be defunct. And one of the main reasons that people create trust in the first place is to avoid probate, right? To avoid that court process that becomes required when someone dies. Well, if your trust isn’t properly funded, even though you have the trust, often probate is going to be required anyway. So, we always underline for clients what funding is and how important it really is when you have a living trust. So, thanks for listening. If you have any other questions, contact an experienced estate planning attorney in your area or check out our other content by subscribing to our channel. Bye.
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