A trust is a key tool in estate planning that has many uses. In order to establish a viable trust, however, it must be funded. Funding a trust involves the transfer of a client's assets into the trust itself but difficulties can arise with this process.

Problems with Funding a Trust

Many estate planning attorneys rely on the clients themselves to fund their own trusts. After all, transferring the title, ownership, and control of assets into a client's trust takes significant time and effort for the attorney. The problem is that the client will often not follow through and the trust never gets funded.

The Mechanics of Funding a Trust

Once the decision has been made regarding which assets will be held in the trust, the process of transferring those assets is fairly straightforward. In simple estates, a grantor may be interested in personally funding a trust. In more complicated situations, a grantor may be interested in an attorney funding a trust. In most instances, the grantor and attorney will each bear some responsibility for transferring assets to the trust.

Asset transfers that are generally handled by a grantor personally funding a trust include:

  • Bank accounts
  • Investment accounts
  • Insurance policies and proceeds

Asset transfers that are generally handled by an attorney funding a trust include:

  • Retitling real estate
  • Interest in a business
  • Intellectual property rights
  • Assignment of valuable non-titled assets, including jewelry and art

The process of retitling assets for trust funding is relatively uncomplicated. In many instances, all that is required is a simple assignment that can be prepared by the estate's attorney. The estate's attorney will also prepare a Certificate of Trust that sets forth the basic terms of the trust and names the trustees of the trust. The Certificate of Trust may be required by some institutions to complete the retitling and transfer of certain assets.

After the determination has been made to establish a trust fund, it is important to determine which assets should be placed in the trust as well as when the trust should be funded. The process of funding a trust involves transferring title, ownership and control of certain designated assets from the individual to the trust.

Letters for Funding a Trust in Beyond Counsel

Beyond Counsel makes it easier for the attorney to fund a client's trust. Our document preparation system allows you to create customized letters that simplify this process. These letters include those that allow you to:

  • Change bank accounts, mutual funds/stocks, bonds and dividend reinvestment accounts
  • Transfer individual stock certificates
  • Transfer individual bonds
  • Change the beneficiary of tax qualified retirement plans (non-IRA) or Individual Retirement Accounts (IRA)
  • Transfer treasury bills or notes
  • Change the ownership or beneficiary of life insurance policies
  • Change the beneficiary designation of an annuity
  • Assign a promissory note
  • Assign an interest in a limited partnership

To learn about other ways that Beyond Counsel can make your practice more efficient and provide you with customized estate plans for your clients, contact us by phone at (877) 284-7897 to schedule a demonstration.

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