For many individuals who reach the stage in life when they start thinking about estate planning, forming a trust seems like an obvious choice. Still, it can seem a bit like legal magic without a proper understanding of the basic functions and creation process of trusts.
This is particularly true of revocable trusts. These trusts offer some of the protections of irrevocable trusts, while also affording their creators the ability to retain much more control over the assets held within them.
If you have property you wish to protect, but still want to exert control over how it is used, a revocable trust may work as a good fit for you. However, the process of moving property to the trust is not always simple, and it is crucial to fund your trust correctly if you want it to stand up to scrutiny in or out of court. An experienced estate planning attorney can help you deepen your knowledge and create trusts personally tailored to protect your interests and property.
Funding your revocable trust
Depending on the nature of the property you want to protect, funding a revocable trust is often as straightforward as creating proper documents that transfer rights to the property to the trustee.
This generally applies to most types of property that do not involve a legal title, such as personal belongings like household belongings, jewelry, or even your wardrobe. This may even mean certain kinds of debts owed to you or intellectual property you own, or even royalties from a creative work. In some cases, it can involve something as significant as your interest in an LLC or partnership, depending on the nature of your contractual agreement to those entities.
However, if your property does involve a legal title, as many of the most valuable types of property do, it is necessary to actually take your name off the title and input the name of the trustee. This is generally necessary for transferring ownership of real estate, vehicles and many kinds of banking and investment accounts.
In the case of assets that name you as a beneficiary, you remove your name and replace it with the name of the trustee. This generally applies to assets like life insurance policies or retirement accounts.
Do it right the first time
Whatever your trust might hold, it is crucial to fund it properly as you establish your estate plan. Paying extra attention to the details and seeking out the professional guidance you need now can help you avoid headaches and unnecessary expenses later on.
