Your trust is not effective until you do this

Whenever a new or prospective client tells us that they have a trust, our next question is, “have you funded it?” Because until you do this, you don’t really have a trust. You just have some signed documents and your trust planning is incomplete.

Watch our video below to learn the step you need to take to make your trust effective

In the eyes of the law, a trust doesn’t exist until it’s funded

How do you fund the trusts? By titling your assets to the name of the trust. For example, if the investment account belongs to the trust, it needs to be titled in the name of the trust. Similarly, if you own real estate such as homes, the title of the homes, need to be changed to the name of the trust and you need to do this on the deed of the real estate properties.

Beneficiaries of retirement accounts and life insurance

If you have retirement accounts such as 401 k or IRAs, it’s best to keep the individual as the beneficiary because if you name the trust as a beneficiary, the distributions will be taxed at the trust level, which is higher than that for an individual. Finally, for any insurance policies you might have, you could name the trust as a beneficiary.

Next step for you

Ask your attorney for direction on how the assets need to be titled and work with your financial advisor to get this important trust planning, step done. If you would like to talk to us about your financial plan, including your trust planning, please book a call below: