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Trust Funding: Maximizing Benefits In Georgia

Posted by Joel Beck | May 24, 2024 | 0 Comments

At Peach State Wills & Trusts, we understand that trust funding can seem challenging or difficult, but it doesn't have to be that way. Ensuring your assets are adequately funded into a trust is a crucial step in estate planning, and maximizing its benefits is essential. Let's break down the process and explain how it can protect your estate and provide peace of mind.

Understanding Trust Funding

Trust funding is the process of transferring your assets into a trust. When you establish a trust, you must take the additional step of funding it, which means changing the title of your assets from your name to the name of your trust. This step is vital to ensure your assets are managed and distributed according to your wishes, as the trust document outlines.

Consider the trust as a suitcase.  If you were going on vacation, you take the items along with you that you actually packed into the suitcase. With a trust, the assets that it controls are the assets that are funded into the trust (or, packed into the suitcase). 

Types of Assets to Fund into a Trust

Funding a trust involves several types of assets. It's important to consider the different categories and how they can be incorporated into your trust:

  • Real Estate: Your home and other real properties should be retitled in the name of the trust (by titling it in the name of the trustee as trustee of the trust). This ensures that they are managed by the trustee and distributed to beneficiaries without going through probate.

  • Bank Accounts: Savings accounts, checking accounts, and certificates of deposit can be transferred into the trust. This allows the trustee to manage these funds according to the trust's terms.

  • Investment Accounts: Stocks, bonds, and mutual funds should also be transferred to the trust. This facilitates continued management and helps ensure a smooth transfer to beneficiaries. But, note that your qualified retirement accounts, such as IRAs 401(k)s and 403(b)s etc., will stay in your own name during your lifetime. Those retirement accounts can be left to others via beneficiary designations or can be funded into the trust at your death, if desired, via a beneficiary designation. 

  • Personal Property: Valuable items like jewelry, art, and antiques can be included in the trust by assigning personal property.

  • Business Interests: If you own a business, transferring your ownership interest to the trust ensures that your business is managed and transferred according to your wishes.

Benefits of Proper Trust Funding

Fully funding your trust offers numerous benefits, including:

  • Avoiding Probate: One of the most significant advantages is that assets in a trust bypass the probate process. This means a quicker and more private transfer to your beneficiaries.

  • Continuity of Management: In case of incapacity, the trustee can manage the trust assets without court intervention. This ensures that your financial affairs are handled smoothly.

  • Asset Protection: Trusts can offer protection against creditors and legal claims, safeguarding your wealth for your beneficiaries.

  • Tax Benefits: Depending on the type of trust, tax advantages may help preserve your estate's value.

Steps to Fund Your Trust

Now that we understand the benefits let's look at the steps involved in funding your trust:

  • Identify Assets: Begin by making a comprehensive list of your assets. Include real estate, bank accounts, investments, personal property, and business interests.

  • Retitle Assets: Change each asset's title to reflect the trust's name (technically, the trustee's name, as trustee of the trust). For real estate, this involves preparing a new deed. For bank and investment accounts, you'll need to fill out the necessary paperwork provided by the financial institution.

  • Update Beneficiary Designations: For assets like life insurance and retirement accounts, update the beneficiary designations to ensure they align with your trust or are otherwise passed along according to your wishes. You can name the trust as the primary or contingent beneficiary if you desire.

  • Document Everything: Keep detailed records of all the changes you make with respect to trust funding. This ensures clarity and helps the trustee manage your estate according to your wishes.

  • Review Regularly: Estate planning is not a one-time event. Regularly review your trust and its funding to account for new assets or changes in your financial situation.

Common Mistakes in Trust Funding

While trust funding is straightforward, there are common mistakes that people make:

  • Not Transferring All Assets: Failing to transfer all eligible assets into the trust can result in those assets going through probate. Ensure you have included everything, from bank accounts to personal property.

  • Incorrect Titling: Make sure the titles of your assets are correctly transferred. Any errors can lead to complications in managing and distributing the assets.

  • Not Updating Beneficiaries: Neglecting to update beneficiary designations on life insurance policies and retirement accounts can lead to assets not being distributed according to your wishes.

  • Failing to Communicate: Not informing your trustee or beneficiaries about the trust and its contents can lead to confusion and disputes. Clear communication is key.

How Trust Funding Applies in Different Scenarios

Understanding how trust funding works in various scenarios can help you see its importance:

  • Incapacity: If you become incapacitated, the trustee can manage your assets in the trust without the need for court intervention. This ensures that your financial affairs are handled seamlessly.

  • Death: Upon your passing, the trustee can distribute the assets in the trust according to the trust's terms without probate, providing a quicker and more private transfer to your beneficiaries.

  • Marriage and Divorce: Trusts can protect your assets from being divided in a divorce or ensure they are passed to your children from a previous marriage.

Practical Advice for Trust Funding

Here are some practical tips to ensure adequate trust funding:

  • Work with Professionals: Engage with an estate planning attorney to guide you. Their experience ensures that all assets are correctly transferred and that your estate plan is comprehensive. There's a lot of bad information about trusts out there online, and you owe it to yourself to ensure you have a well written plan that is going to work and fulfill your wishes. 

  • Keep a Record: Keep an updated list of assets and their titles. This record helps the trustee manage your estate effectively.

  • Review Regularly: Periodically review your trust and its funding. Life changes, such as acquiring new assets or changes in family dynamics, may necessitate updates to your trust.

Contact Peach State Wills & Trusts

Trust funding is a vital component of estate planning that maximizes the benefits of your trust. By transferring your assets into the trust, you can avoid probate, ensure management continuity, protect your assets, and potentially gain tax benefits. At Peach State Wills & Trusts, we are here to help you through every step of the process.

Contact us at 678-344-5342 or online to learn how to plan for your estate in Georgia today. If you have any questions about estate planning in Georgia, you can download our free guide here, no strings attached. We are committed to providing friendly, professional, and approachable legal services to help you with all your estate planning needs.

About the Author

Joel Beck

Joel Beck founded The Beck Law Firm, LLC in 2007. His firm focused on business law and estate planning needs of clients, two areas that he was drawn to based upon personal and business experiences in his life, including a ten-year career at NASD (now known as FINRA).

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