Creating a revocable living trust is one of the best strategies for avoiding probate and leaving a lasting legacy for your family. However, the true protection afforded by a trust does not come after all the documents are signed – trusts need to be fully funded in order to make a real impact on your plans. Trust funding is one area that must be done by yourself, though experienced estate and elder law attorneys will offer advice on funding a revocable living trust.
To fund a trust, you must take any assets or property that you’d like to be under the trust protection and turn ownership of those assets or property over to the trust. This doesn’t mean that you won’t get to control the assets or property – on the contrary, as trustee of your own trust you would have just as much control as you did when you had sole ownership. The difference is that in legal terms, the trust is a living document that holds true ownership of the property. This is how revocable living trusts help people avoid probate.
The most common items that are used to fund trusts are real property and financial assets that are titled solely in one person’s name. This is because jointly-held property is not subject to probate until the other joint-holders pass away, though joint-ownership can lead to more problems down the road. Real property is usually transferred to a trust through quit-claim deeds, which give the trust all of a person’s interest in the property.
You can also fund the revocable living trust with other property that does not have a title, such as artwork or family heirlooms. To fund the trust in this way, you would work with an experienced elder law attorney to make a list of the items you’d like the trust to own, which will then be added to the trust as a schedule. This will allow these items to transfer to your beneficiaries without going through probate, and will also leave legal documentation for your beneficiaries so they know exactly which items you intended for them to receive.
If you have any questions about revocable living trusts and funding, or if you’d like to have your current revocable living trust reviewed by an experienced will and trust attorney to make sure it still fits your needs, please contact our North Carolina estate and elder law office at (336) 378-1122 to schedule an initial consultation.