Funding Your Trust

Once you have taken the critical step of creating and executing estate planning documents, you still have work to do. You must ensure that your assets have a beneficiary named or have been transferred to your Revocable Trust, if you have one. Doing this work is the only way to ensure your assets pass to your loved ones outside of probate. Neglecting this important step will result in your assets going through probate, which will be expensive and time-consuming for your loved ones.

Funding a Revocable Trust

If you have a Revocable Trust, you can ensure that your assets pass outside of probate either by naming your Trust as a beneficiary on your assets or transferring your assets to your Revocable Trust. Your estate planning attorney can assist you with deciding which approach makes most sense for you.

If you name your Trust as a beneficiary on your assets, for most assets, you will simply name the trust as the recipient of those assets upon your passing, as opposed to naming your loved ones as individual beneficiaries.

Setting Up Beneficiaries

If you do not have a Revocable Trust, and instead, your Last Will and Testament is your primary estate planning document, you will want to ensure you have named a beneficiary for every asset you own, identifying the person who is legally entitled to receive those assets upon your death. Naming a beneficiary on these assets ensures that the assets will pass to your named loved ones outside of probate.

Handling Specific Types of Assets

Bank Accounts and Non-retirement Investment Accounts

To name beneficiaries on bank accounts and non-retirement investment accounts, you will need to contact the financial institutions that hold those assets. Those financial institutions will register your accounts with a “pay on death” (POD) designation, which specifies how those assets will be distributed upon your passing. Most financial institutions will allow you to name trusts or individuals as beneficiaries on these accounts.

Retirement Accounts

Qualified retirement accounts (such as IRAs and 401(k) plans) typically should name your spouse as your first beneficiary (if you are married). This allows your spouse to roll the funds over into his/her own IRA, preserving the possibility of further income tax deferral. After naming your spouse, you should name contingent beneficiaries, most often directing those retirement accounts to your Revocable Trust, if you have one, or to your specific beneficiaries, depending on your specific family situation.

Vehicles

Your local Department of Motor Vehicles (or the department that issues vehicle titles in your state) typically allows you to place a “transfer on death” (TOD) designation on your title. Again, doing so will allow you to specify which person or Trust will receive your vehicle after you have passed.

Real Estate

In most states, real estate is handled with a beneficiary or transfer on death deed, which is where you name the recipient of your real estate upon your death. If your attorney prepared such a deed for you, ensure that it has been filed with the Recorder of Deeds in the county where the real estate is situated. Your attorney may have filed the deed for you, or you may need to file it.

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State laws vary and, as such, it is always advisable to speak with your estate planning attorney and financial professional about how your assets should be handled.