Estate Planning, Probate, Guardianship & Elder Law

Your Family. Our Purpose.

Mary Beth Kelly

Trust Funding: A Critical Step In Planning

Funding a trust is critical to achieving the objectives of the trust. The funding does not have to occur simultaneously to execution of the trust, and many people are reluctant to transferring their property to the trust. If the funding is done properly, the process is painless and without significant impact on your daily activities.

When the funding of the trust must occur depends on the specific objectives for creating the trust in the first place.

One objective to funding a trust is to distribute your assets to beneficiaries you choose. If the only objective is to have your property distributed to your intended beneficiaries through the trust, there is no need to fund the trust during your lifetime. A properly executed pour-over will be sufficient to transfer the property to your trust upon death. However, your properly would pass through probate first, but your objective would be accomplished because the property would be distributed to your intended beneficiaries through the trust. Many estates are settled in this manner, with the trust used as a will substitute because of its relative privacy and the ease in which the trust instrument can be amended.

Another objective of funding the trust is to avoid probate. If this is one of your objectives, then a trust is an effective way to accomplish this. But keep in mind, you only avoid probate on property that is held by the trust at the time of death. If you own property in your own name when you die, a pour-over will would transfer that property to the trust, but the property would have to go through probate first, and you must have a pour-over will. So it is important that you get the property into the trust while you are alive, to avoid probate.

One last objective to funding the trust is to ensure the management of your property in case of your incapacity. However, as stated in the objective regarding avoiding probate, a trust can only operate with respect to property that it holds at, or during, the time of incapacity. If you would become incapacitated and unable to handle your personal or financial affairs, and some or all of your property remains in your own name, it may then be necessary to have a guardianship or conservatorship established through the probate courts. This can be costly, and the length of the process would be totally dependent on the court system. If the trust is intended to manage property in the event of your incapacity, then you should take whatever steps are necessary to ensure that your property gets into the trust before your incapacity.

Call The Law Office of Mary Beth Kelly, LLC, in Lake Mary at 407-536-6901 or send an email to discuss how you can secure your trust funding today.