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What is Funding a Trust?

Having a Trust-based estate plan is a fantastic beginning for a whole host of reasons, but most of the benefits are only available to you if the assets you own are actually owned by your Trust or Trusts.

The way you go about "funding" a Trust is to change the ownership documents and/or the beneficiary designation of your assets. So, to put your house in a Trust, you need to record a deed from your name into your Trust's name. To put an account in your Trust's name you ask your financial institution to open an account in the Trust's name and fill out the corresponding paperwork.

Some assets cannot be owned by a Trust while you are alive. Examples include 401(k)'s, 403(b)'s, IRAs, 457 plans, TSAs, and all other assets which are commonly known as Qualified Plans. One of the attributes of qualified plans is that they are only available to those who have jobs, and, since your Trust never worked, it cannot own a qualified plan while you are alive. Trusts can be beneficiaries of qualified plans at your death, so it makes sense to list your Trust as one of the potential beneficiaries of your plan.

Keeping your Trust-based estate plan fully funded is one of the most critical DIY (do it yourself) things you can ever do, but there are some tricks of the trade to be aware of here. Has it been some time since you reviewed the funding of your plan? Are you sure that everything is owned the way that it should be? Do you need any help making sure that your assets are properly held? If so, please contact us to set up a Funding Meeting.