The use of a trust can benefit both you and your family, providing money for you if you suffer incapacitation, allowing your assets to avoid probate, and providing your children money and property while cutting down on estate taxes. However, creating a trust is just the first step. You must also fund the trust as well.
Creating a trust does not mean that you have to fund it right away, although that option is available to you if you want. When you want you to fund your trust will likely depend on your wishes for your estate. Forbes describes how and when you may fund your trust.
Funding the trust now
As the person creating the trust, you have the option of placing whatever assets you want into the trust right now. To do so, you will have to transfer ownership of your assets to the trust, which will vary depending on the kinds of assets you want in the trust. You may need the advice of financial advisors or legal counsel to figure out how to properly title assets to the trust so that you do not find out later on that titling errors have prevented your assets from going into the trust.
Funding the trust later
You may have reasons not to fund your trust now. If so, you can place instructions in your will for your executor to transfer specific assets or all your assets into your trust after your death. You might also partially fund your trust and then use a pour over will to instruct your executor to place your remaining assets into the trust after you die.
Be aware that if you place the task of funding your trust in the hands of your executor, your assets will still have to go through probate before they make it into the trust. This means your assets will be subject to court actions and possibly litigation if you have heirs that dispute your will. Putting your assets into your trust now may avoid these pitfalls.
The importance of setting a plan in motion
No matter your preference, choosing how you to fund your trust is important to take care of while you are alive. Some trust creators forget to fund their trusts at all. If you die without any plan in place to fund your trust, your trust will be empty, making it unable to convey assets to your beneficiaries.