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Klein Law Firm PC

Funding a trust is the process of changing the title on assets from the individual owner to the name of the trust. In order for a trust to work properly, it has to be funded, which means it must own assets. There are certain assets that cannot be put into a trust. For example, a retirement account has to be held by an individual taxpayer. However, during the funding process, the trust could be named as the beneficiary of the retirement account.

Who Is Ultimately Responsible For Funding A Trust?

Ultimately, the trustor or the person who created the trust is responsible for funding the trust. Our firm can help a person initially fund their trust, but that person will need to update us over time in terms of what assets they have acquired and what assets need to be put in the name of the trust.

What Happens If A Trust Is Not Funded Properly Or Not Funded At All?

If there are assets that are not in the trust nor tied to the trust through beneficiary designations, then those assets may need to go through probate. One purpose of establishing a trust is to avoid having a probate court handle the administration of the estate, as that is both time-consuming and expensive.

What Assets Can Be Put Into A Trust? Is There Anything That Cannot Be Put Into A Trust?

A trust can own anything that a person can own, with the exception of qualified retirement or tax-deferred plans held by taxpayers who are still living. However, a trust can be designated as a beneficiary of a retirement account, and as long as the trust is drafted properly, the beneficiaries would receive the account with the same tax treatment as they would have if they received it directly.

Is There A Lookback Period For Putting Assets In A Trust In Terms Of Asset Protection?

In general, there’s a two-year lookback period for putting assets in a trust for the purposes of asset protection. However, it could be longer if the transfer is being done to defraud or hinder creditors. The sooner an asset protection plan is created, the better the chances of avoiding those types of arguments.

Can I Add New Assets To My Trust At Any Time?

Since the assets an individual owns throughout their lifetime will likely change, they will need to add new assets to their trust over time. For example, a new house or a new bank account would need to be properly funded in the trust.

Do I Need To Retitle Assets To Add Them Into A Trust?

Assets must be retitled in order to be added to a trust. In fact, retitling assets is the purpose of funding a trust. A trust has to be the owner of the assets in order for it to work properly.

What Is The Actual Process Of Funding A Trust? Is It Difficult?

The process of funding a trust is the process of retitling every asset in the name of the trust, or tying every asset to the trust through a beneficiary designation. The process is not difficult, but does require a significant amount of follow-up and attention to detail. For this reason, it is important to coordinate with an attorney to make sure it gets done properly. All too often, people procrastinate or don’t realize that they need to continue funding a trust once it’s been established. This is a serious oversight, because an improperly funded trust could result in a probate estate, which would undermine one of the purposes of establishing the trust in the first place.

How Is Real Estate Placed Into My Trust?

Real estate is put in a trust by drafting a new deed on the title of the real estate. The owner of the real estate would sign a deed conveying the asset from him or herself to themselves as trustee of their trust.

Do I Need An Attorney To Assist Me In Funding A Trust?

An attorney is not necessary for funding a trust, but in my experience, most trusts will never get properly funded without the assistance of an attorney. It is helpful to have an attorney ensure that funding is done in a timely manner.

For more information on Funding A Trust In The State Of Colorado, a free consultation is your next best step. Get the information and legal answers you are seeking by calling (720) 805-3444 today.

Daniel R. Klein, Esq.

Call For A Free Consultation
(720) 805-3444