If you are one of the few adults in Massachusetts who have visited a legal professional to start the process of making an estate plan, you deserve a hearty congratulations. Not only are you protecting your wishes for your assets and belongings, but you are also saving your loved ones the confusion and frustration of dealing with an unprepared estate.
As part of a complete estate plan, you likely drafted a will, designated a power of attorney and created a revocable living trust to hold your assets, minimize probate and protect your estate’s privacy. However, once you create the trust, your work does not end. If you fail to fund your assets to the trust, your document will be worthless to your heirs.
How to fund your trust
Since the trust essentially becomes the owner of any assets you fund to it, the process of including these assets is a little more complicated than simply signing the trust documents. You must individually transfer ownership of each item to the name of the trust. There are several ways to do this, and the manner you choose will depend on the type of asset you are transferring.
For example, if you have real estate, investments other than IRAs or 401(k)s, or stock certificates, you can fund these to your trust by changing the owner of the asset on its title. The new title will include your name as the trustee and any successor trustees you have appointed under the name of your trust. If your investments include IRAs or 401(k)s, or you have pensions, certain savings accounts, or life insurance policies, you can simply add the name of the trust as the primary or secondary beneficiary.
You may have valuables that do not have deeds, titles or legal documentation, such as money, jewelry, art or antiques. This may include your personal belongings, specific rights, royalties or interests in a business. These assets require you to assign your right to ownership to the name of the trust. You do this with a legal document that names or describes the asset and its value and reassigns your interest in the asset to the trust.
Taking any of these steps may involve certain legal language that can be confusing unless you have experience in Massachusetts estate planning law. Making a mistake in the wording or execution of these transfers may jeopardize the assets in your trust and leave your heirs with a legal dispute to resolve. You would be wise to work with a skilled attorney through the entire estate planning process.