Funding a Trust as Part of Your California Estate Plan

For some people, the word “trust” conjures up images of spoiled college-age children living off the largesse of their families. However, trusts are not solely the domain of the incredibly wealthy and elite. Instead, trusts are wonderful estate planning tools for Americans of all incomes.

The creation of a trust gives you more control over the use of your assets after you die. They can reduce the risk of your family challenging your last will, protect your heirs and family members from their own habitual mistakes, such as excessive shopping and even ensure that people can connect with state benefits after an inheritance.

Your trust can also be one of several planning tools that can reduce the potential for estate tax. For those hoping to use the trust to structure their legacy rather than shelter their assets from taxes, finding a way to properly fund the trust can prove challenging.

Consider using your home as an asset

It is relatively simple to change the vesting for your home with a simple deed. You can quitclaim your personal right to the title to the trust that you establish. You can include rights of tenancy for yourself, your spouse and your children in the documentation for the trust.

That way, you know that no matter what happens, you still have the right to live in the home. Putting the home in a trust can be a great option if you don’t want someone in your family to sell the house after your death or if you want to ensure residency rights for certain people.

You can fund a trust with financial assets

If you have stocks, bonds or investment accounts, those can become assets that belong to the trust. Not only can transferring assets to the trust make it less likely that you will access them frivolously, but it can also ensure that the trust has adequate funding regardless of what else happens in your life.

One of the primary drawbacks to this solution is the loss of immediate control over financial assets that you may find you need later in life.

You can have future assets like an insurance payout fund the trust

If you don’t have liquid assets to place in the trust or if your legal circumstances make doing so inadvisable, it may be possible to create a trust that will fund at the time of your death. Either by ordering the transfer of assets into the account at the time of your death or funding the trust with assets you will not acquire until the time of your death, such as the payout from a life insurance policy, you can ensure that there are funds in the trust without impacting your financial assets while you remain alive.

There are many other options as well for funding one or more trusts as part of your estate plan and legacy. Exactly what kind of trust you create and how you fund it will vary drastically depending on your family circumstances. An attorney with experience in complex estate planning and trusts can help you put together the documents that will protect your wishes and your loved ones in the future.