Just a few generations ago, the average person did not typically include a trust agreement in his or her estate plan. During those intervening years, however, trusts have evolved to the point where there is now a trust that will compliment just about every estate plan whether yours is complex and full of valuable assets or simple and includes only modest assets. One question people often asked, though, is “ How do I fund my trust? ”
Funding your trust agreement can be accomplished in several ways and with numerous different types of assets. How and when you fund your trust will depend on several factors, including:
Whether your trust is a testamentary or inter vivos (living) trust.
The underlying purpose of the trust
Who the beneficiaries are of the trust.
What your estate planning goals are for inclusion of the trust.
A testamentary trust is one that does not take effect until your death while a living trust takes effect during your lifetime. As such, a testamentary trust is often funded by a “pour over Will”. As the name implies, a “pour over” Will is one that simply directs all estate assets to “pour over” into a trust. This arrangement is common when minor children are the intended beneficiaries because a minor cannot inherit directly. The trust, however, is not needed unless you suddenly die so there is no reason to fund the trust prior to your death.
A living trust can be funded using almost any type of assets, including cash, stocks and bonds, real property, collectibles, jewelry and precious metals, or proceeds from a retirement policy. Assets already owned by you are simply transferred directly into the trust. In some cases, ownership documents, such as a title, must be signed over to the trust. If the proceeds of a retirement policy are used the trust is simply designated the beneficiary and the disbursement then go directly into the trust account.
In short, almost any assets can be used to fund a trust. Exactly how that asset is transferred into the trust will vary somewhat; however, in the end they all become trust property.
If you have additional questions or concerns about trusts or estate planning in general, contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.