When you create a trust, it’s like a big basket and it doesn’t have anything in it – or rather, it doesn’t own anything. It’s like when you were first born, you didn’t own anything. Later on in life you acquire things. Funding is the way that you make a trust own something. If the trust is a basket, it’s putting things into the basket or titling things in the name of the trust. For example, if you want to fund the trust or if you want the trust to own a bank account, it means you are transferring the bank account from your name to the name of the trust. Once you do that, it’s called funding. Funding is not just for bank accounts, it’s for vehicles, real estate, stocks, bonds, mutual funds, and any type of asset that you want your trust to own. If you want your trust to own it, you need to fund it into the trust. That’s what funding means.
Who Controls The Assets That Are Put Into A Trust?
It really depends on who is the trustee. When you make a trust, you are what’s called the grantor or the settlor or the trust-maker. Those are pretty much the 3 universal terms when people create a trust. But when you create a trust, it doesn’t mean that you control the trust. You have to be named trustee. Sometimes there are co-trustees meaning there are 2 or maybe 3 people who work together to control the assets in a trust. But if you are not the trustee, and you are just the one who creates it, then you don’t have control. It’s whoever the trustee is. That’s the person who controls the trust.
Why Is Funding A Trust So Important?
It is something that most people overlook. Most people, when they get an estate plan done or a trust for whatever reason, whether it be asset protection, estate planning, etc., most people just get that done and then they forget about it. It’s kind of like the itch you scratch on your back and then it’s gone and so you don’t think about it again. Most people create a trust and then they will never fund it, meaning they will never transfer their assets into the trust. It’s important because if you’ve done an estate plan or you’ve created a trust and then if you were to pass away, we have to go through probate court in order to move your assets into the trust if you didn’t do it while you were alive.
It’s really important because most estate planning attorneys just don’t do that. It’s an extra step. They charge more if they do it. It’s extremely important because if you don’t do it, we are going to have to go through court to do it and it’s going to be more expensive and much more time consuming to do it after the fact than to do it while you are alive.
What Happens If I Forget To Transfer An Asset Into A Trust?
If you forget to transfer an asset into the trust, a couple of things can happen. If you have a will, and we are assuming now that you have passed away and you didn’t transfer something while you were alive into the trust, we can probate that will through court and whatever the terms of the will are, hopefully the will says I wanted to put it into the trust while I was still alive, so please put it into the trust now that I’ve passed away. Hopefully it says something like that because if it doesn’t we have to follow whatever the terms of the will are because it’s not owned by the trust. The trust doesn’t control it, so now it passes outside of the trust.
If there is no will and the trust is empty or that asset wasn’t put into the trust, then it follows what’s called the intestacy code. So now we are going to follow the Utah Intestacy code and we are going to transfer the asset maybe to somebody else or to someone that you didn’t intend to give that asset to. It can create a mess and it can be complicated depending upon what happens. That’s why it’s really important to put the asset into the trust when they are alive.
Who Is Responsible For Ensuring That The Trust Gets Funded Properly?
The attorney won’t do it unless you ask and pay for the attorney to do it. Usually, it’s up to the client to do it. Sometimes, transferring things to the trust is very easy. It’s going to the bank and saying I need to transfer this account into my trust. The bank will say “Okay, we need your driver’s license, I need a copy of the trust (or what’s called a certification of the trust or the affidavit of the trust).” They have the essential trust terms and then they will transfer that bank account or whatever type of account it is into the trust. That’s something which can be done very easily for a client. That is very difficult for an attorney because the attorney isn’t on the bank account.
If the attorney called the bank and said “I want you to transfer this account,” they’ll say no. Those types of things are very easy for the client to transfer. The things that are difficult or usually difficult are transferring complicated assets like derivative funds or sometimes some stocks or brokerage accounts. These can be somewhat trickier and real estate can be a bit harder. If the client needs assistance in transferring those into a trust or funding a trust, the attorneys are more than willing to help to do it. They just won’t do it for free; they’ll charge for this. Sometimes people think if I do it myself, I’ll save some money which is fantastic. Go do it, just make sure it gets done one way or the other.
For more information on Funding A Trust In Utah, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (801) 676-5506 today.