Those who are planning for the future may create a trust as a way of structuring support for dependent family members or charitable organizations. They can provide detailed criteria for distributions from the trust and even name a final beneficiary to receive whatever is left at the end of trust administration.
Of course, for a trust to have any significant impact on beneficiaries, needs to have sufficient assets funding it. What do people often use to fund a trust?
It is very common for people to move the title for real property into a trust, and the value of that property can contribute significantly to the overall value of the trust. Those creating a trust for a blended family situation, a family member with special needs or a beneficiary with an addiction issue may be among those most inclined to use a trust to hold real estate, thereby ensuring that the beneficiary has someplace to live without giving them control over the property.
Financial resources, like investment accounts
Perhaps the most traditional means of funding a trust is to move a large amount of capital into the trust. A trustee can both manage those resources, possibly by investing them, and will also distribute them in accordance with the testator’s instructions. Some people even arrange to have the balance of a retirement account or their personal checking and savings accounts transferred into a trust at the time of their death.
Those with young children and still working to establish themselves professionally may not have hundreds of thousands of dollars to earmark to fund a trust. They might instead choose to name the trust as the primary beneficiary of their life insurance policy. Then, when they die, the payout from the life insurance will fund the trust and be subject to the rules put in place during the trust creation process.
Properly funding a trust so that it has the resources to accomplish someone’s goals can be as important as clearly communicating those goals in one’s trust paperwork.