Creating a trust is a powerful step toward securing your family’s future and ensuring your assets are managed according to your wishes. However, a common oversight can undermine the entire structure: failing to properly fund the trust. An unfunded or improperly funded trust is essentially an empty container that provides none of the benefits you intended. As estate planning attorneys, we see this issue frequently and want to help you avoid it.
Here are three critical mistakes to steer clear of when funding your trust.
1. Procrastinating the Funding Process
One of the most significant errors is creating a trust and then never transferring assets into it. Life gets busy, and it’s easy to set the paperwork aside for “later.” Unfortunately, any assets not formally titled in the name of the trust will likely have to go through probate. This can lead to unnecessary delays, costs, and public proceedings, the very things you sought to avoid. The best practice is to begin the funding process immediately after the trust is signed.
2. Incorrectly Titling Assets
Simply intending for an asset to be in the trust isn’t enough. You must legally transfer ownership. For real estate, this means preparing and recording a new deed. For bank accounts, it requires working with the financial institution to change the account title to the name of the trust. For investment accounts, transfer-on-death (TOD) or payable-on-death (POD) forms may need to be updated. Each asset type has its own specific retitling requirements, and a misstep can result in that asset being left out of your trust.
3. Forgetting About Future Assets
Funding a trust isn’t a one-time event. Over your lifetime, you will acquire new assets, such as a new home, vehicle, or investment portfolio. It is vital to remember to title these new assets in the name of your trust as you acquire them. Forgetting this step can lead to a partially funded trust, diminishing its effectiveness and creating complications for your beneficiaries down the road.
Secure Your Legacy Today
Properly funding your trust is just as important as creating it. We can guide you through the process, ensuring your assets are correctly titled and your estate plan functions as designed. To discuss your estate planning needs, contact us to schedule a consultation. You can reach our Lake Placid office at 863-600-8510 or get in touch through our online contact form.