We have often discussed setting up trusts as a part of an effective estate plan on this blog. There are many reasons that people choose to set up a trust, and there are a number of different trusts that may be available. And it is true that the process can be very overwhelming and confusing. However, that should not dissuade a person from exploring their trust options.
Working with an estate planning attorney can help people not only set up an effective trust, but it can also help to make sure that the trust administration process goes as smoothly as possible. One way that people can make sure their trust works well is to examine if and how a trust is funded.
Funding a trust means that the assets involved are appropriately titled. It can be important that a person’s assets are titled to the proper beneficiary, which in many cases would be the trust. Every asset, whether it is a life insurance policy, real estate, or cash, should be addressed.
It can also be crucial for people to make sure that any changes they make to a trust are made appropriately. When updating a trust, some people may feel inclined to rename it to reflect when it was updated. However, renaming a trust can end up setting up a new trust that is not funded in the same way that the original trust was funded because of how assets in the trust are titled. This is why it may be more appropriate to amend an existing trust to reflect changes rather than setting up a new trust.
This can all be very complex. However, taking the time to make sure a trust is set up and funded properly can make it much easier to administer the trust when the time comes. In order to make sure this is done, people can work with an attorney to explore their options and develop a strong and effective estate plan.
Source: The Times Herald, “Matthew Wallace: The title of assets key to trust administration,” Dec. 14, 2013