How To Fund A Trust

Hi there, my name is Bridget Mackay. I’m an attorney in Petaluma, California, and I practice in the area of wills, trusts, estate planning, probate, trust administration. Today, on my blog, I’d like to talk to you about funding your trust. It is the most critical part of any estate plan that you make. You think you have all your affairs in order when you’ve created a trust and put all the support documents in place, and that’s wrong. That isn’t the end of the story. Your trust or your plan must be funded, is the term we use, and what that means is, it’s a process of transferring title of assets that you own personally or that you own with your spouse into your trust, and an unfunded trust is the equivalent of a treasure chest without any gold in it, so it’s really important.

A good estate planning attorney, if you’ve gone to them to get your trust done, will instruct you how to get your assets into your trust and will maybe do it for you and include it in their fee. And also your estate planning attorney can prepare all the deeds and any paperwork for other assets to move stocks, bonds, investment portfolios into your trust. If you fail to complete this critical piece in putting your estate plan together, it could send your estate all the way back to probate or worse. So the words written on your trust that you have would be useless. It could undo everything that you so carefully planned and cause a lot of stress to your survivors. But let me tell you something else.

There are some assets that don’t go into your trust, and those are, number one, retirement accounts, so any 401K, IRA, annuity-type account that’s, taxed… You get a tax advantage from, those all have beneficiary designations, and you may name your trust as a beneficiary, although I’d consult with a knowledgeable estate planning attorney before you do that. Life insurance is number two. Number three is custodial accounts, those accounts that might be have set up for minors. Finally, vehicles normally don’t go into the trust, because they’re assets that go in and out of our lives, purchase, sale, and also they’re assets, they’re pretty easily transferred at death through any department of motor vehicles. And then finally, checking accounts. Really talk with the attorney you set up your trust with to find out if your checking account should go into the trust, because sometimes those accounts being outside of the trust will be okay.

So ultimately the bottom line is, discuss this with a qualified Estate Planning attorney, and they’ll point you in the right direction and make sure your estate plan is funded.


Santa Rosa, CA

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