Beyond Bending Tell You How
Creating a revocable living trust is a popular estate planning tool. It allows you to transfer your assets to a trust during your lifetime, which can help your loved ones avoid probate after you pass away. However, in order to reap the benefits of a revocable living trust, you need to fund it properly. That means transferring ownership of your assets to the trust. Here’s what you need to know about funding a revocable living trust.
Understanding Revocable Living Trusts
A revocable living trust is a legal document that allows you to transfer ownership of your assets to a trust during your lifetime. You can serve as the trustee of the trust and manage the assets while you’re alive. You can also name a successor trustee to manage the assets if you become incapacitated or pass away. When you pass away, the assets in the trust are distributed to your beneficiaries according to your wishes.
Why Fund Your Revocable Living Trust?
The main reason to fund your revocable living trust is to avoid probate. Probate is the court process that takes place after someone passes away. The court determines the validity of the will and oversees the distribution of assets. Probate can be time-consuming and expensive, and it’s public record. By transferring ownership of your assets to your revocable living trust, you can avoid probate altogether.
Assets That Can Be Funded to Your Revocable Living Trust
You can fund a wide variety of assets to your revocable living trust, including:
Real Estate
You can transfer ownership of your home, vacation property, rental property, and other real estate to your revocable living trust. This can help your loved ones avoid probate and ensure that the property is distributed according to your wishes.
Bank Accounts
You can also transfer ownership of your bank accounts, including checking, savings, and money market accounts, to your revocable living trust. This can help your loved ones avoid probate and gain access to the funds more quickly after you pass away.
Investment Accounts
You can transfer ownership of your investment accounts, including stocks, bonds, and mutual funds, to your revocable living trust. This can help your loved ones avoid probate and ensure that the investments are managed according to your wishes.
Personal Property
You can transfer ownership of your personal property, including jewelry, artwork, and collectibles, to your revocable living trust. This can help your loved ones avoid probate and ensure that the property is distributed according to your wishes.
Business Interests
If you own a business, you can transfer ownership of your business interests to your revocable living trust. This can help your loved ones avoid probate and ensure that the business is managed according to your wishes.
Life Insurance
You can also name your revocable living trust as the beneficiary of your life insurance policy. This can help your loved ones avoid probate and ensure that the proceeds are distributed according to your wishes.
Retirement Accounts
You can name your revocable living trust as the beneficiary of your retirement accounts, including IRAs and 401(k)s. This can help your loved ones avoid probate and ensure that the funds are distributed according to your wishes.
Debts and Liabilities
You can also transfer ownership of your debts and liabilities to your revocable living trust. This can help ensure that your creditors are paid and your loved ones don’t have to deal with any outstanding debts or liabilities.
How to Fund Your Revocable Living Trust
Funding your revocable living trust is a relatively simple process. Here’s what you need to do:
1. Create Your Trust
The first step is to create your revocable living trust. You can work with an estate planning attorney to draft the trust document.
2. Transfer Ownership of Your Assets
Once you have your trust in place, you need to transfer ownership of your assets to the trust. This involves changing the title of the assets to the name of the trust. For example, if you want to transfer ownership of your home to your revocable living trust, you need to change the deed to reflect that the trust is now the owner of the property.
3. Update Beneficiary Designations
If you have any assets with beneficiary designations, such as life insurance policies or retirement accounts, you need to update the beneficiary designations to reflect that your revocable living trust is now the beneficiary.
Conclusion
Funding your revocable living trust is an important step in the estate planning process. By transferring ownership of your assets to your trust, you can help your loved ones avoid probate and ensure that your assets are distributed according to your wishes. If you’re not sure how to fund your revocable living trust, or if you need help creating a trust, talk to an estate planning attorney.
People Also Ask
1. What is a revocable living trust?
A revocable living trust is a legal document that allows you to transfer ownership of your assets to a trust during your lifetime. You can serve as the trustee of the trust and manage the assets while you’re alive. When you pass away, the assets in the trust are distributed to your beneficiaries according to your wishes.
2. What are the benefits of a revocable living trust?
The main benefit of a revocable living trust is that it can help your loved ones avoid probate after you pass away. Probate can be time-consuming and expensive, and it’s public record. By transferring ownership of your assets to your revocable living trust, you can avoid probate altogether.
3. How do you fund a revocable living trust?
To fund a revocable living trust, you need to transfer ownership of your assets to the trust. This involves changing the title of the assets to the name of the trust. For example, if you want to transfer ownership of your home to your revocable living trust, you need to change the deed to reflect that the trust is now the owner of the property.
