What does "funding a trust" entail?
The most basic estate planning tool is a will, which allows an individual to establish how his or her property will be distributed, and to name beneficiaries who will receive the estate assets. Because a will must be probated - a time consuming and costly process, another alternative is to create a revocable living trust.
What are the benefits of a revocable living trust?
The main benefit of a trust is that it takes ownership of your property while enabling you to act as the trustee and manage the trust assets during your lifetime. A trust also allows you to designate another individual to manage the trust assets in the event you become incapacitated. Lastly, a well though-out trust will also name a successor trustee to distribute the assets to your beneficiaries when you die, and bypass the probate process. Once the trust is established, however, it is also necessary to transfer property into the trust, which is known as "funding the trust."
How is property transferred into a trust?
Property that is titled, including real estate, bank accounts, stocks and automobiles need to be re-titled in the trust's name. If you neglect to do so, the trust will not be valid and the property will need to be probated. So, if you are transferring your home, a new deed must be properly prepared, signed and recorded and accurately reflect that the property is being held by the trust. If the deed is not prepared properly, the property will be subjected to the probate process.
In addition, property that is acquired after the trust is put in place must also be transferred, or else it will also need to be probated. This situation can be avoided by creating what is known as a "pour-over will." This document allows assets that were intended to be transferred pass through the will and poured into the trust. Lastly, property such as furnishings, artwork, and jewelry that are not titled can be transferred into the trust by executing an assignment of tangible personal property.
In short, establishing a revocable living trust allows you to protect your assets during your lifetime and distribute property to your beneficiaries without going through a probate proceeding. In order for a trust to be valid in the state of Nevada, however, it is necessary to properly fund the trust. For this reason, it is crucial to engage the services of an experienced trusts and estate planning attorney who can help prepare the trust document, a pour over will and transfer any property into the trust.