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Funding trusts is a crucial step in the estate-planning process

| May 1, 2019 | Trusts |

After San Jose residents spend a substantial amount of time thinking about, creating and executing an estate plan, they often hope that is the end of the process so they can stop thinking about it. For many of the documents included in an estate plan, that could be the case. However, when it comes to trusts, the work is not done after one is created.

Trusts need to be “funded” in order for their users to receive the benefits they offer. Otherwise, it is just a document. Therefore, a San Jose resident is not finished with this estate-planning process until this step is completed. What does it mean to fund a trust? It means changing the ownership of an individual’s assets into the trust.

For example, executing and recording a deed changing the name of the property owner from the individual to the trust puts that asset into the trust. The same could be done with other assets such as bank accounts, investment accounts and stocks. The trust could be named as the beneficiary on life insurance policies and retirement accounts as well. Essentially, any asset the maker of the trust wants to distribute under the trust should be put into it.

Funding trusts does require some additional leg work and paperwork, but it is worth it. A trust can only ensure the assets stay out of probate, get distributed under certain conditions and remain available to surviving loved ones immediately if it is properly funded. For this reason, this part of the estate-planning process is vital.

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