The Importance of Trust Funding and Asset Integration

             Living Trusts are a popular estate planning tool that can be used to provide for the care of the Trustmaker in the event of disability and direct the disposition of assets when the Trustmaker dies. Historically, Living Trusts were popular for the purpose of minimizing estate taxes and avoiding probate.  In addition, a Living Trust was typically revocable and the Trustmaker could change or amend the trust as circumstances changed in the life and legacy of the Trustmaker or in the law. Ultimately, a Living Trust was designed to provide directions to achieve the Trustmaker's estate planning goals.

            A Living Trust only controls assets that are either owned by the trust or for which the trust is named as the beneficiary.  As a result, it is imperative to "fund" the trust.  What is trust funding? Trust funding or asset integration is the process whereby assets are re-titled from the Trustmaker’s individual name (or joint names, if married) to the name of the trust. Beneficiary designations are also updated to reflect the trust as the primary beneficiary.  When properly funded, a Living Trust can avoid the public, costly and time-consuming court processes at death (probate) and at incapacity (conservatorship or guardianship).

             Why is funding so important?  Until a trust is funded it doesn’t own or control anything, and is therefore, ineffective. In order to achieve the Trustmaker's goals, every asset should be evaluated and a decision made regarding the proper title or beneficiary designation for that asset.  Assets that remain 'unfunded" or owned in the individual name of the Trustmaker will be controlled by the Trustmaker's Last Will.  This “pour over will” serves to distribute these assets to the Living Trust, thereby allowing the Trustmaker's directions to be followed.  Jointly owned assets, with rights of survivorship provisions, will become the sole property of the surviving owner. 

            Asset integration is arguably one of the most important aspects of your estate plan.  While attorneys will assist  or guide the Trustmaker through the trust funding process, ultimately, the Trustmaker is responsible for making sure all of the appropriate assets are transferred to the trust.

            If you have questions regarding proper asset ownership and asset integration with your estate plan, please do not hesitate to call on us at 407-977-8080 or visit our website at HoytBryan.com.