A trust is a crucial component of any estate plan, helping you ensure the proper distribution of your assets even if you become incapacitated or pass away. However, establishing a trust is only the beginning of a comprehensive process.
Once you have created your California trust, the next vital step is deciding which assets to place within it. This process, known as funding the trust, transforms it from an empty vessel into a financial tool that protects your properties from probate, potential creditors and unnecessary taxes.
Real estate
Transferring your house, vacation home or investment property into a trust can help avoid probate and ensure it passes onto your beneficiaries according to your wishes. In California, you will need to create and record a new deed that removes the property from your estate, transferring the ownership from you to your trust.
Bank account
You may also transfer your bank accounts, including checking, savings and certificates of deposits, into your trust. To add your bank accounts, you will need to contact your bank and request to retitle the account in the name of your trust.
Investment accounts
If you have an extensive investment portfolio, you may also want to consider transferring them to a trust. This may include your brokerage accounts, mutual fund accounts, stocks, bonds and even retirement accounts. This can help ensure that your investments are managed according to your wishes and that they reach your intended beneficiaries when the time comes.
Business interests
If you own a business, incorporating your interest into your trust can be a smart move. This facilitates a smoother transition of ownership if something happens to you. Note that placing business interests into a trust often requires amending your business’s organizational documents, such as operating agreements or corporate bylaws, so it is essential to work with an experienced attorney.
Jumpstart your trust funding
Deciding which assets to place in your trust should align with your goals and intentions. If your primary concern is avoiding the lengthy, court-supervised probate process, you might want to focus on high-value assets. However, if your main goal is to continue providing for your family, you might prioritize income-producing properties. Remember, the assets you include in your trust can significantly affect your estate plan.