Funding a trust essentially means you have legally transferred ownership of the assets from your legal name to the name of the trust. Unfortunately, many are unaware of this step, and assume that simply establishing a trust fund is enough to fulfill their wishes and protect their assets. However, to receive the estate-planning benefits and avoid probate, assets like bank accounts, real estate, and investments must be properly transferred into the fund. For more information, please follow along to find out how to properly fund your trust with assets and how a proficient Broward County trust lawyer at The Probate Lawyers can review the different procedures for each asset type.
What Does It Mean to Fund a Trust in Florida?
A trust fund is only effective if it actually owns the assets detailed in the terms and conditions of the trust. As such, funding a trust involves updating ownership records, titles, deeds, and other account information so the assets are associated with the trust fund, not your individual name.
Funding a Trust Fast Facts
- Trust funding requires you to transfer assets into the name of your trust
- Different types of assets require different paperwork and transfer procedures
- Bank accounts generally require paperwork with the financial institution
- Real estate generally requires a new deed
- Vehicles may require title updates through the Florida Department of Highway Safety and Motor Vehicles
- Life insurance and retirement accounts generally connect to a trust through beneficiary designation
- Assets left outside of a trust may be subject to probate
How Do I Fund My Trust With Liquid Assets?
You may have liquid assets (i.e., cash) saved in certain bank accounts or investment accounts with which you wish to fund your trust. Well, hopefully, the financial institution with which your accounts are being held can help streamline this process for you.
Generally speaking, a financial institution may require you to fill out and submit its version of paperwork that transfers these accounts from under your name to your trust’s name. They may even ask you to supplement this paperwork with a certificate of trust form that offers more details about the trust you are giving ownership rights to. Or, they may simply ask for a complete copy of the trust you incorporate into your estate plan.
Common Steps Financial Institutions Often Require
- Provide a copy of the trust agreement or certificate of a trust
- Complete necessary ownership transfer documents
- Update account registration information
- Confirm successor trustee information
- Review beneficiary designations if necessary
- Retain all records of account number changes and ownership updates
Why Documentation Matters
- Trustees must be able to show ownership of the trust assets
- Accurate records can reduce disputes and confusion after death
- Proper account titling helps ensure assets are administered in accordance with the instructions of the trust
How Do I Fund My Trust with Real Estate in Florida?
To transfer real estate assets into a trust fund, you generally must prepare and record a new deed that transfers ownership from the individual (you) to your trust fund.
In Florida, trust funding requirements vary based on the type of asset, county recordation procedures, available homestead protections, and lender requirements. As such, Broward County residents often utilize revocable living trusts to streamline estate administration and maintain continuity in real estate management.
Florida Real Estate Transfer Considerations
- Preparation of a new deed transferring ownership of the property into the trust is required
- The trust and trustee must be adequately identified
- The deed must be signed in accordance with Florida’s legal requirements
- The deed must be recorded with the County Clerk’s office where the property is located
- A thorough review of homeowner’s insurance policies should be conducted after the transfer
- Notification to mortgage lenders may be required
- Homestead considerations should be verified with the assistance of a Broward County estate planning attorney
Common Real Estate Trust Transfers Mistakes to Avoid
- Failing to record the deed
- Forgetting to inform mortgage lenders
- Forgetting to update insurance records
- Using incorrect trust names
- Assuming property automatically transfers to a trust when the fund is established
How Do I Fund My Trust With Life Insurance and Retirement Accounts?
At first, grantors of trusts forget that they may fund their trust with many different assets besides liquid assets. That is, you may find it strategic to use your life insurance policy and/or retirement accounts. While you may simply name your spouse and/or children as the beneficiaries of these plans, you may list your trust’s name instead.
In this way, the proceeds from these plans may go directly to your trust upon your unfortunate passing.
When Naming a Trust as a Beneficiary May Make Sense
- Minor children are set to inherit assets
- Beneficiaries require asset management assistance
- Staggered distributions are desired
- Asset protection concerns exist
- The grantor wants increased control over distributions
What Happens If a Trust Is Not Properly Funded?
Establishing a trust fund without ensuring it is adequately funded in Florida can leave you and your loved ones exposed, as failure to fund a trust can reduce its effectiveness.
Potential Outcomes
- Assets not included in the trust are subject to probate
- Beneficiaries may face delays in receiving funds
- Probate administration can result in additional expenses
- Family disputes and conflicts are more likely to occur
- Administration of the estate will grow more complex
Contact a Broward County Estate Planning Attorney Today
If you are interested in establishing a trust fund, ensuring you do so under the guidance of an experienced estate planning attorney with The Probate Lawyers is in your best interest. Our firm understands how difficult these matters can be to navigate, which is why we will do everything in our power to assist you during these difficult times. Contact us today to learn more.
