You were very responsible, you hired an attorney, and your trust is signed. You have taken a very important step. Now what do you do? It’s super important that you fund your trust by transferring your assets into it.
Through your trust, you have:
- Named people to manage your assets for your benefit if you cannot do it anymore in the future for some reason; and
- Named people to receive your assets after your death.
Trust Terms Apply Only to Assets Transferred into Trust
Now you need to make sure that all of this will happen. The words of the trust document apply only to assets that you “fund” or “transfer into your trust”.
Funding your trust and transferring assets into it are the same thing. You do it by changing the owner of each asset from your name outright to your name as trustee of the trust. For example, a bank account owned by “John Smith” would need to have the owner changed to be “John Smith, Trustee of the John Smith Trust dated January 19, 2022.”
Because Your Trust is Signed, it Acts Like a Moving Van That Moves the “Beneficial Interest” of Your Assets
Think of the trust as a moving van because essentially that’s what it does—it moves assets from one place to another, or from one person to another, at different times.
Really the trust is moving the beneficial interest in the assets. The beneficial interest is the right to benefit from those assets. You would have that beneficial interest until your death, and then the people you selected would have that beneficial interest after your death.
The trust document is like Google Maps, Ways, or any other way of providing directions—it tells the driver of the moving van where to take the assets. And the trustee of the trust is the driver of the moving van in this example.
It would be silly to pay for a moving van to arrive at your home to move all of your furniture to a new home, provide the driver with directions, and then send the driver to your new home with an empty moving van. That’s essentially what would happen if you don’t change the owner of your assets from your name outright to your name as trustee of your trust.
Your Trust Also Holds Property Like a Box Does
Another way to think of a trust is as a box that holds things. You’re free to put things in the box (by changing the owner of the assets from your name outright to your name as trustee of the trust), and you’re free to remove things from the box (by changing the owner of the assets from your name as trustee of the trust to your name outright). Similarly, you could sell something like a house that’s in the box and replace it with another house that you place in the box. You don’t need to change the trust document to move things in and out of it.
Doing this is extremely important. There are so many cases where a person’s trust is signed, but assets were not transferred to it. A lot of the trust’s benefits did not happen just because of that.
Contact Meinzer Law Firm, P.C., in Torrance to assist you with your estate planning so your trust is properly funded and works as you need it to.