Previously we looked at three common ways people can use to fund a trust. This week we wanted to continue the discussion by looking at three additional trust funding methods. As with any discussion of trusts or estate planning topics, it’s important to talk to your attorney about specific questions you might have when it comes to funding a trust. The trust funding process has to be done correctly, and unless you proceed with the guidance of your estate planning attorney, you run the risk of causing significant problems should you fail to make mistakes during the funding process.
How to Fund a Trust: Real Estate
Transferring real estate to a trust can be one of the most important steps you take throughout the trust creation and funding process. Transferring real estate will require you to take different steps depending on where the real estate is located. For example, some states require the use of a quitclaim or correction deed, while in others you might have to use an assignment. The document(s) you use to transfer real estate will need to properly identify the asset, name the trust to which you wish to transfer the property, and contain other specific provisions. Your attorney will draft the appropriate documents for you and walk you through the real estate funding process. There are also other details, such as changing your homeowner’s liability insurance documents, tax assessment notifications, and other real estate related steps that your attorney will explain.
How to Fund a Trust: Bank Accounts
Most bank accounts can easily be transferred to a trust by the completion of a simple form or two. Each financial institution will have slightly different procedures that you must go through, but it is usually no more complicated than signing a form or two. This process might also include naming the trust as the new transfer-on-death beneficiary of the account. The same is true for certificates of deposit or accounts you have with a credit union.
How to Fund a Trust: Credit Cards
A credit card is not an asset, so you don’t need to worry about transferring ownership of your card to your trust’s name.
How to Fund a Trust: Vehicles
Transferring a vehicle to a trust is not always the best idea. Cars have a substantial liability risk associated with them, and if you transfer the car to the trust, it’s possible that a person could sue the trust to recover damages for any accidents caused while driving the car.
Talk to your attorney about when you might want to transfer title of vehicle(s) to your trust.