When you set up and fund a living trust in California, you may receive some exciting benefits from using this estate planning structure. First, you need to figure out how to fund your trust and keep it running during your lifetime.
Why to Fund Your Living Trust
If you are setting up a living trust, you may wonder whether to fund it right away or wait. Funding a trust with property means that the property will no longer be titled in your name. For example, if you transfer a house to your trust, the deed will indicate that the trustee (usually you) has legal title to the property. The trustee holds the trust property for the benefit of the beneficiaries. The trustee does not own the property outright to do whatever he or she wishes with it.
As a result, you should fund your trust with property of which you want the beneficiaries to receive the benefit. This benefit could be rental income, interest, or gains, and it does not have to get paid out now. By funding the trust now, you allow beneficiaries to potentially receive more money in the end, because the property could grow in value while it is held by the trust. In addition, funding now safeguards against the possibility that you die before you can sign over certain property to the living trust.
Alternatively, you can set up your will in such a way that some or all of your estate automatically gets “poured over” into the trust upon your death. At that point, a successor trustee takes over management of the trust and it becomes “irrevocable” in legal terms. You should discuss issues related to timing of trust funding with a qualified estate planning attorney.
How to Fund Your Living Trust
Funding a living trust is fairly straightforward. If you will fund it with cash, securities, or personal property, the trust will need a bank account, brokerage account, or safety deposit box. Most banks can help you set up an appropriate bank account. While your name may be on the account, it will be as trustee of the trust. The name on the account indicates that you do not own property in it outright. For securities, you may need to change the name on your existing brokerage account or change over the titles listed on the stock certificates. Ask your brokerage or financial advisor for help with this.
If you will fund your trust with real estate or other property that passes by deed, you need to execute a deed and possibly other conveyance paperwork. Executing the deed and properly recording it retitles the property in the name of the trust. Talk to your estate planning attorney about how to properly fund the trust.
Are you interested in creating and funding a living trust? Angela Klenk, Esq. and the team at Beach Cities Estate Law couple personalized attention to your estate plan with big law firm experience for a winning combination to give you peace of mind. To schedule a case evaluation, visit Beach Cities Estate Law online or call Angela’s office at (424) 400-2125.