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Palm Springs Law Blog

Wednesday, July 14, 2021

Ways to Fund a Trust

Creating a trust is a great way to find peace of mind for both you and your loved ones, ensuring that they are taken care of. However, in order for the trust that you’ve established to be able to help in the way you’ve intended, it’s really important that it’s funded.

When a trust isn’t funded it often requires probate court if you become incapacitated or pass away.

What does Funding a Trust Mean?

You may be wondering what it even means to fund your trust. Funding a trust means that your trust is the owner of your property instead of you personally. The way in which this is done is dependent upon the type of property. Funding is so important because it makes sure that everyone can avoid issues in the event that you are unable to provide guidance. Your trust can be funded with a variety of your assets, such as bank accounts, investments, and real estate. However, merely listing your assets in your trust doesn’t automatically give ownership to your trust. Here are the most common types of assets to fund your trust.

1. Bank Accounts

It may sound strange, but you can actually give ownership of your bank accounts to your trust. This requires that you provide your certificate of trust, your driver’s license or other personal ID, and your social security number. While you can complete the process online, it’s often helpful to do so in person. That way any questions you have can be answered and you can be sure to receive written confirmation of the changes you make.

2. Investment Accounts

Another way to fund your trust is with your investment accounts. This is not to be confused with your retirement account(s). Investment accounts include stocks, bonds, and equities. When it comes to a brokerage account, to hand the ownership of these accounts over to your trust, you can contact your financial advisor who can instruct you to fill out the proper paperwork and will make sure everything aligns. You’ll know that you’ve done this correctly when your statements that arrive have the name of your trust rather than your own.

3. Real Estate

Another way to fund your trust is with real estate. You can make your trust the owner of your real estate by creating a deed that can transfer ownership from you to your trust’s trustee. You must sign off on the deed and have it notarized. It should also be recorded by the county recorder’s office.

4. Life Insurance & Annuities

Concerning your life insurance and annuities, you do not change the name. These will remain in your personal name. However, you will want to make your trust the beneficiary of them. To do so you must contact the insurance company to obtain a beneficiary change form.

As for your annuities, your spouse can still be the primary beneficiary and you can use the trust as either a backup or a contingent beneficiary. Occasionally, your specific circumstances would make it best for the trust itself to be the primary beneficiary.

5. Retirement Accounts

When it comes to your retirement account(s), it’s important to keep in mind how they may impact your taxes. Since spouses have benefits that non-spouses do not, it may be best for your spouse to be your primary beneficiary, while your trust or your children can serve as your backup. The most important thing is to ensure that everything in your plan is cohesive and coordinated.

6. Business Entities

It’s also a good idea to make sure that your business entities (or your percentage of them) are owned by your trust. For instance, if you own part of a corporation, your share should be owned by the trust; for an LLC, your membership units; and for a partnership, your interest should be assigned to the trust.

It’s important to remember that there are instances in which it’s not possible for the trust to own certain business assets. For instance, some professional corporations’ shares can only be owned by a licensed professional.

Since transferring and protecting your property is so important, but also often so complex, it’s best to consult with a knowledgeable and experienced estate planning attorney.

Heritage Legal, PC Helps Those in California to Establish a Comprehensive Estate Plan

At Heritage Legal, PC, we understand the importance of protecting your interests and the interests of those whom you care about most. We can help you to create a comprehensive estate plan that fills all of your needs and plans ahead for your loved ones. To learn more or to schedule a free consultation, contact us today!


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