When designing a customized estate plan or adding to your existing plan your attorney may suggest establishing a trust. There are a variety of trust options that will vary based on your situation. Despite the type of trust that you select it will require funding in some aspects.
Funding a Trust
Funding a trust means you transfer ownership of the named assets to the trust. For example, if you are transferring real estate to the trust, you would need to prepare and execute a new deed that transfers the property to the trust.
A Typical Trust Funding Process in Minnesota
- Create a trust: A trust document that outlines the terms and conditions of the trust is designed and drafted by your attorney. This document will specify the trustee, beneficiaries, and assets that will be transferred to the trust.
- Transfer assets to the trust: Once the trust is drafted and signed, you will need to transfer ownership of your assets (named in the trust) into the trust. This typically involves changing the titling of your assets to reflect the trust as the new owner.
- Update beneficiary designations: If you have assets with beneficiary designations, such as retirement accounts or life insurance policies, you may need to update the beneficiary designations to name the trust as the beneficiary. This ensures that these assets are also included in the trust estate and distributed according to its terms.
- Notify financial institutions: You will also need to notify your financial institutions, such as banks and investment firms that you have established a trust and have transferred assets into it. This process usually requires additional paperwork to be completed.
- Create or update estate planning documents: Funding a trust may also require reviewing and updating other existing estate planning documents, such as your will, power of attorney, and health care directives, to ensure they are consistent with the terms of the trust and your overall estate plan.
As you can see from this outline, there are a number of steps that need to be taken with each named asset to ensure the trust is properly funded and that your assets are protected according to your wishes.