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How to fund a trust as part of your estate plan in Washington

On Behalf of | Jul 15, 2019 | Uncategorized |

The creation of a trust is usually the first step toward structuring your legacy or protecting your loved ones from estate taxes after you die. A trust can offer tax benefits, as well as more control over how people in your family use the assets that you leave for them.

However, simply creating the legal structure of a trust is only the first step. You will also need to put assets in the trust, a process known as funding the trust. You have many options available for the exact form of your trust and for the way that you fund it.

You should review your various options and make a choice that reflects your current and potential future financial and familial circumstances. When and how you fund your trust will impact your life, as well as your estate.

You can fund a trust now or after you die

The single most important decision about your trust will be when you choose to fund it. For many people, the ideal structure of a trust involves funding at the time of death. This may mean that the various assets must go through probate. It can also mean that the trust itself has to go through probate. Assets like the house or the proceeds from an insurance policy can be part of this funding process.

Clearly, there are disadvantages to trusts that fund on death. There could even be issues related to the trust itself that prevent the funding from occurring as planned. However, waiting until you die for your assets to transfer into the trust ensures you have total control over those assets with no oversight while you are alive.

Funding a trust while you live usually means letting go of some control of certain assets. You can move financial assets, such as investment funds, as well as real property, including your own home, into a trust. Typically, you will either name yourself trustee or include language in the trust that protects your right to access and utilize those assets until your death.

How you fund a trust is a personal decision

From the behavior of individual family members to the necessity to retain access to certain assets, there are many personal and unique considerations that impact how and why people create, structure and fund their trusts.

You may even choose to share trustee responsibilities with someone else in your family or assume them on your own until the time of your death. In that scenario, your trust will have greater protection from probate court and challenges brought by family members after your death. Talking with an experienced estate planning attorney can help you make the right decisions about the trust that you want to use to create a legacy for yourself.

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