MASSACHUSETTS FUNDING ASSISTANCE
What Is “Funding” for a Revocable Trust?
Our philosophy is that a Trust is only as good as the paper it is printed on if it is not funded properly. Think: a funded Trust is a functioning Trust. The concept of funding a revocable trust is rather simple and involves:
- Retitling ownership of certain assets (e.g. investment accounts, bank accounts, real estate, brokerage accounts) to your revocable trust from yourself individually or jointly with a spouse;
- Adding the revocable trust as a beneficiary on certain assets (stocks, life insurance, checking accounts); and
- Assigning business interests and ownership for certain entities, like an LLC, to the revocable trust.
It is imperative that we know what you own, and how you own it. The specific recommendations on how to properly fund a client’s revocable trust involve complex analysis for each client’s specific circumstances and goals.
As part of our Tree Plans, we provide specific recommendations and guidance on each asset you own, and how to properly tie that asset, if applicable, into your revocable trust through funding recommendations. However, some clients also desire assistance with the implementation of our funding recommendations (i.e. funding assistance). For funding assistance, we help you retitle your assets, assign beneficiaries, deal with banks, fill out paperwork, handle follow-up and all tasks necessary to properly and fully fund your revocable trust. We take the burden of funding off you!
Why Is Funding a Revocable Trust Important?
Funding a revocable trust ensures that the goals and concerns that drove the design of your plan come to fruition.
If you created a revocable trust to minimize or avoid probate and the court process, then this cannot be accomplished without proper funding. Even with a well-drafted revocable trust, if you keep the ownership of your assets in your individual name or jointly with a spouse without proper beneficiary designation, then probate will be necessary either at the death of one or both of you.
If you created a trust to ensure assets pass down to your children some day and are not subject to division if your surviving spouse were to remarry and then get divorced, then this cannot be accomplished without proper funding. If assets pass outright to a surviving spouse, and not under the terms of the Trust, then there is no protection of these assets for your children, and they could be divided in the event of a divorce.
If you created a trust to reduce estate taxes and shelter the Massachusetts or Federal exemption amount at the first spouse’s death, then this cannot be accomplished without proper funding. It is imperative that the trust owns assets during your lives in order to pass them through this trust structure. If the trust is not properly funded, the assets will simply pass outright to the surviving spouse, and there will be no assets to shelter at the first spouse’s death.