Trust Week, Day Three: Funding

If trust were a living creature, it would be on the endangered species list.

- Unknown

In order for a trust to be effective, that trust must be funded. In this context, “funding” means that the grantor must transfer some amount of property into the trust. Any property that is not owned by a trust will not be controlled by the trust’s terms. So, what do you need to do to fund your trust?

Sometimes, funding a trust means transferring land to the trustee. To accomplish this, the grantor will need to execute a deed transferring the land. In some states, this deed will say “to (Name of Trustee) as Trustee of the (Name of Trust) Trust.” Some states will allow language like, “to the (Name of Trust) Trust.”

Other times, funding a trust will involve changing title on your CD’s or investment accounts. This will involve contacting your investment company or bank and informing them of your intentions regarding the accounts you hold there. Many investment companies will have departments devoted entirely to making sure trusts contain the necessary language and making sure the necessary title changes get made. Often, the grantor will need to sign an authorization for the trustee as well as a change of title.

Finally, funding a trust might be as simple as listing an asset on the schedule of assets at the end of the trust. Assets that this approach would work for would include assets that don’t require a title to own like antique furniture or a coin collection. Other assets that might fit this category could include foreign currencies or precious metals.

If you are considering creating a trust, make sure to ask your attorney about how your trust will get funded. Failure to fund a trust is the single most common mistake a grantor can make and the error that is the most fatal to a newly created trust.

------------------

Lawyer Joke of the Day:

Five signs you need a new lawyer:

5. He tells you his last good case was of Budweiser.