Funding; the Final Frontier

You’ve met with an attorney, you’ve signed a trust, and you’ve brought copies of it home with you in a nice-looking binder . . . Now what? Are you done? 

Well, not quite.

The very last step of completing an estate plan is to fund your trust. Funding is the process of putting all of your property into the trust. If you think of your trust as a lock-box, protecting its contents from the probate process and keeping them private; then funding is how you fill that box. Without funding, your trust is just an empty box, and doesn’t provide much protection at all.

So what are the things you’ll want to put into that trust lock-box? The easy answer is EVERYTHING, with some exceptions. We typically create a deed to help our client putting their home into the trust. For most people, their home is their greatest asset, and the one that is most important to put into that protective box. In California, unless the title of the real property is in the name of the trust, it is likely that the property will be subject to probate.

The next step is to go to your bank and investment advisor and put your bank accounts and stocks or investments, and any other immediate assets into the name of your trust. To do this you will need your Certification of Trust, which is a short document that protects your privacy and proves the existence of your trust.

The third step is to look at all of your tax-deferred assets such as retirement accounts, 401(k) accounts, or life insurance policies. These tax-deferred assets cannot be owned by the trust, but to ensure that the proceeds of these assets are distributed according to your wishes you will need to make your trust the primary beneficiary of the accounts or policies. By doing this you are arranging to funnel the proceeds of these assets into the protective lock-box when the time comes.

Your last step is to execute a comprehensive transfer document, a simple document stating your desire to put all small or tangible property such as furniture, artwork, antiques, etc., into that lock-box, and be considered trust property, rather than subject to probate.

Of course every estate will have its idiosyncrasies, and you’ll want to contact your attorney for a comprehensive list of assets to fund, or if you run into any roadblocks. Once you’ve tucked all your property nicely away in that protective box you can finally breathe that final sigh of relief.