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What assets should you use to fund your living trust?

On Behalf of | Nov 14, 2022 | Estate Planning

If you have included a living trust in your estate plan, you have taken a crucial step to protect your estate, provide for your loved ones and safeguard your legacy when you pass on. And as the ink dries on your living trust, your next concern should be how you are going to fund the trust.

For your trust to serve its purpose, it must be “funded.” This means transferring assets into the trust. While a living trust allows you to apportion assets to your loved ones, it is important to understand that not all assets belong in this estate planning tool.

Understanding a living trust

To understand what belongs in your trust and what does not, it helps to start by getting a clearer idea of what a living trust is and how it works. A living trust, also known as a revocable trust, allows you to name yourself as the initial trustee. This gives you significant control over the entire trust document.

Here are some of the assets you can use to fund a living trust

Your bank accounts

Transferring your financial accounts into a living trust allows you to determine how these assets will be distributed to your designated beneficiaries upon your passing. And since these accounts do not go through probate, it makes it easy for your beneficiaries to access the funds as soon as you are gone. Here are some of the bank accounts that you can include your savings and checking accounts, money market accounts, safe deposit boxes and certificates of deposits (CDs). You can also add non-retirement investment accounts into your living trust.

Real estate assets

If you own any real estate – like a home or land – it helps to include them in your living trust, especially if the property is located in a different state. In so doing, these out-of-state assets will not be taken through ancillary probate when you pass on.

A properly set up living trust can give you peace of mind knowing that you will control your assets both in life and in death through the trust instrument. Find out how you can create a living trust that will reflect your wishes.