Choosing the Right Assets to Fund Your Trust
Creating a trust is a big step in making sure your estate plan is solid and your loved ones are taken care of. But a trust can only do its job if it’s properly funded. That means transferring your assets into the trust. If you’re wondering what kinds of assets can or should go into a trust, you’re not alone. Let’s break it down so you can make informed decisions and feel confident about this important part of the process.
Assets You Can Use to Fund a Trust
Real Estate
Whether it’s your primary home, a vacation house, or rental properties, real estate is a common asset to place in a trust. This not only keeps it out of probate but also ensures it’s handled according to your wishes.
Bank Accounts
Savings, checking, and money market accounts can be transferred into a trust. Doing this allows your trustee to manage those funds if you’re unable to.
Investment Accounts
Stocks, bonds, and mutual funds can go into a trust, giving your trustee the ability to oversee your investments and distribute them as you’ve outlined.
Retirement Accounts
While you can’t transfer retirement accounts like an IRA or 401(k) into a trust, you can name the trust as a beneficiary. This can be a useful strategy depending on the type of trust you have.
Life Insurance Policies
By naming your trust as the beneficiary of a life insurance policy, you create a source of funds that can help cover expenses like taxes or provide for your loved ones.
Business Interests
If you own a business, transferring ownership or shares into a trust can help ensure a smooth transition in case something happens to you.
Personal Property
Think about high-value items like vehicles, artwork, or jewelry. Including these in a trust can streamline their distribution and help avoid family conflicts.
Heirlooms and Sentimental Items
Trusts aren’t just for financial assets. They can also be a way to ensure family treasures and sentimental items go to the right people.
What to Keep in Mind
Title Transfers
When funding a trust, most assets need to be retitled in the trust’s name. This step is essential to ensure they’re legally part of the trust.
Tax Considerations
Some transfers can have tax implications. Talk to your attorney or tax advisor to make sure you’re making the best decisions.
Liquidity Matters
Including some liquid assets, like cash or easily sold investments, can help the trust cover expenses like taxes, bills, or care for beneficiaries.
Type of Trust
The kind of trust you’ve set up—whether it’s revocable, irrevocable, or another type—affects what assets should or shouldn’t be included.
The experienced team at the Estate Planning Law Office of Jonathon L. Petty, Inc. is here to guide you through every step of the process, ensuring your trust is properly funded and set up to meet your goals. Ready to take the next step? Call us at 559-374-2223 or fill out our online form, and we’ll contact you to schedule an appointment at a time that’s convenient for you.
