The common misconception surrounding trusts is that they are only effective after one’s passing. This is demonstrably untrue. A properly structured trust, particularly a revocable living trust – a cornerstone of Ted Cook’s practice at his San Diego trust law firm – can be funded both during your lifetime and, of course, upon your death. In fact, funding the trust *during* your lifetime is often the most strategic approach, offering significant benefits beyond simply avoiding probate. Roughly 60% of estate planning clients are unaware of the flexibility of lifetime funding, highlighting the need for clear communication from legal professionals like Ted Cook.
What does it mean to “fund” a trust anyway?
“Funding” a trust simply means transferring ownership of your assets – things like bank accounts, real estate, stocks, bonds, and personal property – into the name of the trust. It’s not enough to *create* the trust document; you must actively retitle assets. Think of the trust as a separate legal entity, much like a corporation. To truly activate it, assets need to be officially placed within its control. This process can seem daunting, but Ted Cook emphasizes a phased approach, helping clients systematically transfer assets over time, minimizing disruption and maximizing control. A trust is only as strong as the assets within it.
Is it better to fund the trust immediately or gradually?
The ideal approach often depends on your individual circumstances and the nature of your assets. Some clients prefer to front-load the funding process, transferring a significant portion of their assets immediately after establishing the trust. This offers immediate benefits such as asset protection and potential tax advantages. However, for many, a gradual approach is more practical and less disruptive. For example, one might begin by funding the trust with liquid assets like savings accounts and then progressively transfer more complex assets like real estate over time. It’s about finding the balance that suits your comfort level and financial situation. Ted Cook often recommends a timeline based on asset type and client goals.
What happens if I don’t fund the trust during my lifetime?
If a trust remains unfunded, it essentially exists as a ‘skeleton’ – a document with good intentions but lacking the power to achieve its intended purpose. Upon your death, any assets not titled in the name of the trust will likely be subject to probate – a potentially lengthy, expensive, and public court process. Probate fees in California, for example, can range from 4% to 8% of the gross estate value. This defeats the primary purpose of creating a trust in the first place. It’s a common, and costly, mistake, one Ted Cook tirelessly works to prevent through proactive estate planning education.
Can I continue to use and access my assets after funding the trust?
Absolutely. Funding a trust does not mean giving up control of your assets. As the grantor (the person creating the trust), you typically serve as the trustee – the person managing the trust – and retain complete control over the assets held within it. You continue to use your bank accounts, live in your home, and manage your investments as before. The trust simply provides a framework for managing and distributing those assets according to your wishes, both during your lifetime and after your death. It’s a change in *ownership* rather than *control*. Ted Cook stresses this point to alleviate client concerns about losing access to their funds.
I heard about a client who waited too long to fund their trust…
Old Man Tiber, a stubborn but kind man, came to see us after his wife passed away. He’d created a trust years ago, intending to shield his family from the burden of probate. But he kept putting off the funding process, telling himself he’d get to it ‘eventually.’ ‘Eventually’ never came. Upon his passing, his estate was forced through probate, costing his children a significant portion of their inheritance in legal fees and delays. It was a heartbreaking situation, entirely preventable with a little proactive effort. His story served as a harsh reminder of the importance of not just creating a trust, but *actively funding* it.
Thankfully, we helped the Miller family get everything back on track…
The Miller family found themselves in a similar predicament. They had a beautifully drafted trust, but hadn’t transferred ownership of their rental properties. When their eldest son was suddenly injured and needed significant medical care, they realized the urgency. We worked quickly to prepare the necessary deeds and transfer the properties into the trust. This not only avoided probate but also allowed the trustee – their daughter – to seamlessly manage the rental income to help cover the medical expenses. It was a relief to see them navigate a difficult situation with the peace of mind that their estate plan was working as intended, because they took action.
What types of assets can be funded into a trust?
Virtually any asset can be transferred into a trust. Common examples include real estate (homes, land, rental properties), bank accounts (checking, savings, CDs), investment accounts (stocks, bonds, mutual funds), life insurance policies, retirement accounts (though specific rules apply to avoid tax implications), and personal property (vehicles, jewelry, collectibles). It’s important to note that some assets, like certain retirement accounts, may require specialized transfer procedures to maintain tax advantages. Ted Cook’s team provides comprehensive guidance on these complex transfers, ensuring compliance with all applicable regulations.
What’s the best way to start the funding process?
The best approach is to consult with a qualified trust attorney, like Ted Cook, who can provide personalized guidance based on your specific assets and estate planning goals. They will help you identify the necessary steps to transfer ownership of your assets, prepare the required documents, and ensure that the funding process is completed correctly. It’s a collaborative effort, and a well-structured funding plan can provide significant peace of mind, knowing that your assets are protected and your wishes will be honored, both during your lifetime and beyond.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
Map To Point Loma Estate Planning Law, APC, a wills and trust attorney: https://maps.app.goo.gl/JiHkjNg9VFGA44tf9
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About Point Loma Estate Planning:
Secure Your Legacy, Safeguard Your Loved Ones. Point Loma Estate Planning Law, APC.
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Legacy Protection: (minimizing taxes, maximizing asset preservation).
Crafting Living Trusts: (administration and litigation).
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