A living trust is one of the most useful estate planning tools. Its flexibility ensures that you are in control until the very end, and even then, the terms of the trust will prevail after you are gone.
However, you need to get everything right when funding a living trust to avoid any legal loopholes that could affect your beneficiaries. When funded properly, a living trust gives your appointed trustee the legal authority to administer all assets under the trust.
How to go about funding your living trust
Funding a living trust or transferring assets and property to it is one of the most crucial steps in establishing it. However, it is not as simple as it sounds. How the transfer works usually depends on the nature of the property or asset under consideration.
For titled properties, such as a vehicle or a boat, you have to change the title from your name to the trust’s name. Similarly, bank accounts, securities and business interests should be listed under the trust’s name.
Non-titled assets like appliances, jewelry or art collections can be transferred to the trust using a dated and signed legal document known as an assignment of property. This document moves the control of such assets to the trust.
A trust must be properly funded for it to be effective
Legally, a trustee cannot control assets that have not been correctly transferred to the trust even if it was your initial intention. Eventually, such assets may have to go through probate, which is something you may not have wanted.
Therefore, it is crucial to avoid any technical mishaps that could leave out assets or property from the trust. It could throw your estate plans into disarray, and your loved ones may have to pay the price.