Once your estate planning documents are completed, there is still work to do. The word of art “Funding” describes the process of completing forms to change the title of asset ownership from your personal name to the name of your trust. This is not usually a taxable transfer as at this stage the tax identification used for your trust is still your own tax identification number.
Here is an example of funding:
Your household operating checking account is held at XYZ Bank. The Title of the account reads:
Jane and Jerry Jones
You take your original Trust Document with you to the bank, along with your spouse (especially if you are co-trustees), and you ask to have your account put into the name of your trust. The bank will likely have you fill out their “Certificate of Trust” form, and ask to see the trust document. The new account title will look something like:
Jones Family Trust, dated 10/10/2021
Jane Jones, Trustee
Jerry Jones, Trustee
Although there is no actual change in how you will use the account, the change in title means that when the time comes to “account” for trust assets, this particular asset will be included. This is true of your home, and any titled property you own.
Any assets which are not funded into your trust may end up having to go through the court process known as “Probate”, so please get guidance from your attorney regarding ALL of your assets. This work will make sure that your trust operates properly when the time comes.
Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.
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