A living trust streamlines asset management and distribution, but it is useless without funding. A well-funded trust allows assets to bypass probate, providing a seamless transition for beneficiaries.
Failing to properly transfer assets into your trust can render it ineffective. Below are four essential tips to help you fund your living trust properly.
Transfer real estate into the trust
Real estate can hold substantial value, making it wise to transfer ownership to the trust. This process involves recording a new deed that names the trust as the property owner. Transferring real estate into a trust also provides privacy by keeping details out of public records.
Retitle financial accounts
Financial accounts can be retitled in the name of the trust. Contact your financial institution to update ownership records to help ensure the trust holds legal title to these assets. This step can prevent delays in the distribution of assets to beneficiaries.
Transfer business interests
If you own a business, consider transferring ownership shares or membership interests into the trust. This process varies depending on the business structure, making legal guidance essential. Funding a trust with business assets can maintain continuity and prevent probate complications.
Update beneficiary designations
Certain assets, such as life insurance policies and retirement accounts, cannot be directly owned by a trust. Instead, update beneficiary designations to name the trust as the primary or contingent beneficiary. This allows proceeds to flow into the trust upon your passing
A living trust can add considerable power to your estate plan when funded and managed properly. Guidance from a legal professional can help your trust functions smoothly, protecting your assets and beneficiaries from unnecessary legal hurdles.