How can I make sure my trust is properly funded?

On Behalf of | Jan 17, 2021 | Uncategorized

Trusts are a great tool to have in your estate planning arsenal. They give you greater control over how your assets are distributed, lower tax burdens, and even help you avoid probate. However, creating a trust is not enough to ensure your assets are protected.

According to Kiplinger, trusts must also be properly funded. Here are a few ways you can rest assured that your trust will protect your assets after you are gone.

Review life insurance policies

With life insurance, beneficiaries are made with the insurance company itself. Most allow you to name a primary and contingent beneficiary on policy documents. If you want proceeds from life insurance to flow directly into your trust, it must be named as your primary beneficiary. Regardless of your wishes, information listed on life insurance policies supersedes other estate planning documents.

Examine property deeds

Property like homes and vehicles have deeds of ownership. In most cases, the owner of the property is listed on deeds. If you want property to be included in your trust, property deeds must show ownership by the trust. Reviewing deeds ensures this process has taken place. This is especially important after refinancing a home, as you may need to re-establish ownership by the trust on new documents.

Evaluate financial statements

Proceeds from checking and savings accounts can also flow into a trust after you are gone. In this case, bank statements should list ownership by the trust, so you can confirm the proper steps have been made. If you have a retirement plan, such as an IRA, naming individual beneficiaries might be a better option than naming the trust. That way you will not run into issues regarding taxes or distributions.

A solid estate plan not only protects you, it also safeguards your family. By ensuring your documents are valid and completed according to your wishes, you may prevent contentious arguments and disagreements about your true wishes.