The process of funding a trust can be confusing and stressful. It rarely gets done properly. The right lawyer can help you through the process and ensure you don’t make any mistakes. Find peace of mind when setting up a trust with Anderson Estate Planning.
What It Means to Fund a Trust
Trusts are funded by cash or physical property. Funding a trust is the process of transferring the title of assets to the trust, which gives the trustee control of the assets.
Types of Trusts
There are two broad categories of trusts: revocable trusts and irrevocable trusts.
Revocable trusts, also known as revocable living trusts, are trusts that may be amended or terminated during your lifetime. The grantor may place additional assets in the trust—and take assets out of the trust—at any time. The trust may become irrevocable after you pass away. The trust’s assets transfer to designated beneficiaries after the death of the grantor
Irrevocable trusts, also known as irrevocable living trusts, cannot be amended or terminated easily. It also is more difficult to remove assets from an irrevocable trust. These trusts frequently are utilized to obtain or preserve a beneficiary’s needs-based government benefits. The trust’s assets transfer to the government, other designated beneficiaries, or some combination thereof after the death of the original beneficiary.
Trusts and Estate Taxes
Assets in both types of trusts may be subject to federal estate taxes. However, if the assets in your trust are valued at less than $12.06 million (or $24.12 million for married couples), they are exempt from federal estate taxes.
What Assets Can Go Into Trust?
You can put most things of value into a trust. The most common types of assets transferred to a trust are:
- Real estate
- Mineral interests
- checking, savings, CD, money market, and investment accounts
- Corporate stocks and other tangible investments
- Life insurance
Tax-deferred retirement accounts such as 401Ks and IRAs should not be transferred into a trust because doing so would trigger an immediate tax on the entire amount in these accounts. However, you may want to list the trust as a beneficiary of your retirement accounts.
Can You Add to a Trust Once It Is Funded?
Yes, you can always add to a trust. However, it is much easier to remove assets from a revocable than from an irrevocable trust. An attorney who is knowledgeable regarding living trusts can help you make these adjustments.
Work with the Experienced Team at Anderson Estate Planning
Conveniently located in McKinney, Texas, Anderson Estate Planning is ready to counsel you regarding all of your estate and asset planning needs, including the creation of a trust as well as its ongoing maintenance and distributions.
No one wants to think about death or the possibility of life-altering circumstances. It’s even worse when you have to sift through legal documents you don’t fully understand.
Seek advice from a seasoned legal team about estate planning and asset protection. Having the right legal plan in place to protect you and your loved ones gives you peace of mind and the freedom to move through life confident you’re ready for anything.
Reach out to our team at Anderson Estate Planning at (469) 207-1529 and let us help you with the process of funding your trust.