Wills are legally bound directives that state who will receive your property upon your death…
Why Is Funding Your Trust So Important?
Funding your Trust is critical to having a successful outcome to your estate plan.
Goals of a Trust
When an individual implements their estate plan, they usually have one or more goals they are looking to accomplish. For example, a common goal for establishing a Revocable Trust is to avoiding probate. This can be for a variety of reasons, including owning property in multiple states or concerns that someone may challenge (contest) your estate plan. Some reasons for establishing an Irrevocable Trust may include Medicaid asset protection, estate tax planning, and avoiding probate.
Avoiding probate may be accomplished by holding assets in a Trust, having a beneficiary designation on the asset, or holding title to the asset jointly. Absent joint ownership or a beneficiary designation, it is important to highlight that an unfunded or partially funded revocable living trust does not avoid probate. It is also important to emphasize that an unfunded irrevocable trust living trust will result in certain assets not being protected for Medicaid eligibility purposes or may even result in not accomplishing your estate tax planning results.
In addition to the reasons set forth above, making sure your Trust is funded, allows for your testamentary desires to be realized upon your passing. The body of your Trust stipulates how you want your assets to pass upon your death. Your Trust will, oftentimes, stipulate the flow of assets for multiple generations. If your Trust is not properly funded, then your testamentary desires may not be adhered to upon your passing.
In general, you can accomplish the funding of your Trust by making an ownership change to the title of most of the assets from your name individually to your Trust or for certain assets you may designate the Trust as the beneficiary of the asset(s).
If your Trust is not properly funded, it will have a significant impact on the effectiveness of your plan. We recommend that you review your estate plan with your attorney periodically to make sure you have completed the necessary steps to accomplish your estate planning goals before it is too late.
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