Funding a trust refers to the process of transferring assets to a living trust after the entity has been created. Once a living trust has been established, the trustor may choose when to add assets to the trust, with some adding more over time. A trustor may want to retain complete control over their property before taking advantage of living trusts as an estate tool. However, many individuals prefer to go ahead and transfer ownership and control of assets to the trust and trustee in case something were to happen to them before the assets become part of the trust. Large assets like real estate and securities with ownership documents can be more easily transferred to the trust, but other items like bank accounts and physical assets like antiques must go through other steps to transfer ownership. Usually, physical assets like jewelry must be transferred through an assignment of property form. When planning how to fund a trust, issues often arise as to who will be transferring the different assets because lawyers and financial advisors may each only plan to handle certain transfers, leaving some assets under the ownership of the trustor. Because assets never transferred to the trust will be distributed through probate, it is imperative that individuals make sure all the assets they want to be in a living trust are properly transferred.
[Last updated in February of 2022 by the Wex Definitions Team]
- Keywords