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Trust Funding: Setting Your Trustee Up for Success

The Baner Law Firm

For many people, a revocable living trust is a valuable tool to ensure that their finances are well managed during periods of incapacity and that their loved ones are financially secure upon their passing. However, signing the trust agreement doesn’t end the estate planning process: To work properly, the trust needs to be funded.

What Is Trust Funding?

Trust funding is the process of transferring the ownership of accounts and property to the trust during your lifetime, or designating the trust as a beneficiary of an account or piece of property so that the trust will receive ownership upon your passing.

Trust Funding as a First Step for Trust Administration

Not only does a completely funded trust avoid the dreaded probate process, it can also make the trust administration process much easier.

  • Accessing your accounts and property will be less complicated. If you have properly funded your trust, your successor trustee should have little or no trouble stepping in to manage the accounts and property if you are unable to do so. This can be incredibly important if you are incapacitated and action must be taken right away. Your successor trustee may need to provide third parties with documentation proving their authority to act on behalf of the trust, but we can easily prepare this documentation for you without court involvement.
  • Creating the inventory for your trustee. One of the first things your successor trustee must provide your named beneficiaries at your passing is a comprehensive inventory of all the trust’s accounts and property. If the information gathered during the funding process is kept up to date, you will leave behind a helpful preliminary list for your trustee to use. This can save the successor trustee a lot of time in the beginning stages of administration.
  • Confidence that your plan will be carried out. If an account or piece of property is not owned by the trust, the instructions in the trust agreement will not matter. If the item is not controlled by a beneficiary designation or joint ownership, it will go through the probate process. At best, the property will be funded into the trust through a pour-over will. At worst, the court, relying on state statute setting forth a default method for dividing your money and property among specified heirs, will distribute the account or property to a family member you would have otherwise wanted to disinherit. If a beneficiary has been named on an account or piece of property, it does not matter what your trust agreement says, it will go to whomever is listed on the beneficiary designation. The same is true with joint tenancy. Joint tenancy means that the other owner will automatically receive 100% of the interest in the account or property upon your death.

Working Together Now for Future Success

You obviously care deeply for your loved ones: Otherwise, you would not have taken the time to create an estate plan. The last step you need to take is to fund the trust. Please give us a call (650) 383-7663 if you have any questions about the process. We are available, via telephone call or video conference if you prefer, to assist you in any way you may need. If you would like, we are also available to do the trust funding for you. Let’s work together to make sure that your hard work will set up you and your loved ones for a successful future.

Baner Law

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