One of the most common and dangerous mistakes that people make with estate planning is not funding their trust. Funding is the key step that brings your plan to life. Without it, your trust is essentially an empty container that can’t safeguard your assets.
If you think about your trust like a backpack that holds all of your assets, funding is the process of putting each asset into the trust. When your assets are not in the backpack (trust) it cannot serve its purpose.
If you don’t want to waste money on an estate plan that doesn’t work, take a few minutes to read this blog, and make sure that you are educated on the funding process before getting a trust.
What Does It Mean to “Fund” My Trust?
Funding your trust means transferring ownership of your assets into your trust, or setting things up so those assets automatically move into your trust when you pass away.
When properly funded, your trust, not you personally, is listed as the owner or beneficiary. This allows your assets to be managed and distributed according to the terms of your trust, not through probate court.
Common examples of funding include:
- Retitling financial accounts (like bank or investment accounts) in the name of your trust
- Deeding real estate to your trust
- Naming your trust as a beneficiary on life insurance policies or retirement accounts
If your trust isn’t funded, those assets may still have to go through probate, defeating one of the main reasons you created the trust in the first place.
“From beginning to end working with Linville Estate Law was the right choice. Between initial contact, management of the estate process, and funding our trust, it was the right decision to work with Trent, Dan, Autumn, and Katie. It was worth the time and money to have their team handle everything. Would definitely recommend.” -Brian
What Do I Need to Fund My Trust?
The specific steps for trust funding depend on the type of assets you own. Your estate plan should include funding instructions outlining the process for each category of assets.
For financial accounts, you’ll usually need:
- The type of account and account number
- The name of the financial institution
- Your Certificate of Trust, which verifies your trust’s details
Most banks and financial institutions will guide you through the process, some require you to visit in person, while others allow updates online or by mail.
For more complex assets, such as real estate, business interests, or investment properties, the process often involves preparing and recording specific legal documents. Working with your estate planning attorney ensures every asset is properly transferred and that your trust remains legally sound.
How Do I Add New Assets to My Trust?
Your financial life doesn’t stop after your trust is created. When you purchase new property, open new accounts, or acquire other assets, those need to be added to your trust as well.
This may include:
- Titling new bank or investment accounts in the trust’s name
- Deeding new real estate to the trust
- Naming your trust as the beneficiary or contingent beneficiary on retirement plans or insurance policies
Failing to include new assets means they might not be covered by your trust, and could still be subject to probate. If you’re ever unsure how to handle a new asset, reach out to your estate planning attorney for guidance.
A trust that isn’t funded can’t do what it was designed to do. By carefully transferring your assets and keeping your trust up to date, you ensure your loved ones are protected, your wishes are followed, and your estate avoids unnecessary court involvement.
If the process of funding feels overwhelming or is too time consuming to commit to in this season of your life, that doesn’t mean you shouldn’t set up an estate plan! At Linville Estate Law, we are one of the only law firms in Tennessee to offer to fully fund your trust for you. If you are ready to take the necessary step of estate planning, click here to schedule your free discovery call today.
“We are currently meeting with their financial team to ensure our assets are properly accounted for in the trusts. Their team does all the paperwork …realizing all the documents they provided and the work the financial team needs to transfer items in the trusts, it’s worth the price.“ -Trish
