You've heard repeatedly about the benefits of having a living trust as part of your estate plan. You can keep your assets from having to go through probate. You can retain control of assets during your life, and exercise control over how they are managed and used after your death. A trust can reduce, and in some cases eliminate income, estate, and capital gains taxes on assets.
Meeting with an experienced Ohio estate planning attorney and creating the best type of trust for your particular needs is a big step. But creating the trust isn't all you need to do. Creating a trust without funding it is like getting a safe deposit box at the bank and leaving it empty. It can only protect your assets if they're inside. If you die or become incapacitated and your trust is not funded, it is mostly useless, no matter how well-drafted it might have been.
How does one go about funding a living trust? That depends on the nature of the assets intended to be placed in the trust. Many types of assets can be used to fund a trust by re-titling them in the name of the trust.
For instance, if your name is Bill Smith and you currently have a bank account or cars in your sole name, you could change the name on the bank account or vehicles to that of the trust, with yourself listed as trustee of the trust. If you are married, you and your spouse can both be listed on an account as co-trustees.
Other assets that can be re-titled in order to fund a trust in Ohio are real estate, stocks, and other investment accounts. Legal requirements for funding a trust with real estate are somewhat complicated, and it is best to have an attorney's assistance to make sure you use the right type of deed and that it is properly prepared. More likely than not, you will deed the property directly to the trust.
Certain types of assets may be used to fund a trust by designating the trust as the beneficiary of those assets. Many people choose to make their trust the primary beneficiary of their life insurance policies. Annuities or retirement accounts, including 401(k), 403(b), and IRAs can also fund a living trust after death through beneficiary designations.
Having retirement account assets payable to certain trusts can significantly reduce the tax deferral period for your taxes. On the other hand, other trusts can enhance the likelihood of attaining the maximum stretch-out period for your heirs. An experienced estate planning and tax attorney can assist you in re-titling your accounts to avoid a bad outcome.
If you have not yet had your attorney draft your trust, prepare a list of the assets that you want to place in the trust. Understanding how you plan to fund your trust will help your attorney guide you in doing so efficiently. If you have created your trust, but have not yet funded it, don't delay, and don't be embarrassed. Estate planning attorneys regularly encounter clients who have put off funding their trusts for various reasons, and they see the consequences of such hesitation.A handful of attorneys teach funding workshops to help clients better understand the funding process.
If you need guidance about creating or funding a trust, we invite you to contact Gudorf Law Group online or call 1-937-898-5583 today for a free consultation.