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Simple English definitions for legal terms
funding a trust
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A quick definition of funding a trust:
Funding a trust means putting your things into a special container that keeps them safe. This container is called a living trust. You can choose when to put your things into the trust, but some people like to do it right away in case something happens to them. Big things like houses and stocks are easy to put into the trust, but other things like money in the bank or special things like jewelry need special forms. It's important to make sure everything you want in the trust is put in there so that it can be taken care of the way you want it to be.
A more thorough explanation:
Funding a trust is the process of transferring assets to a living trust after it has been created. This means that the owner of the assets, also known as the trustor, transfers ownership and control of their assets to the trust and trustee. The trustor may choose to add assets to the trust over time, but it is important to transfer all desired assets to the trust to avoid probate.
- Real estate: The trustor can transfer ownership of their home to the trust by changing the deed to the name of the trust.
- Securities: The trustor can transfer ownership of stocks and bonds to the trust by changing the ownership documents to the name of the trust.
- Bank accounts: The trustor can transfer ownership of their bank accounts to the trust by changing the account name to the name of the trust.
- Antiques: The trustor can transfer ownership of their antiques to the trust by completing an assignment of property form.
These examples illustrate how different types of assets can be transferred to a living trust. It is important to properly transfer ownership of all desired assets to the trust to avoid probate and ensure that the assets are distributed according to the trustor's wishes.