By Lane V. Erickson, Idaho Estate Planning Attorney
Idaho estate planning is all about determining what the needs are for you, your family and your loved ones so that those specific needs can be met. Often, creating a thorough and complete estate plan sometimes includes using a trust. A qualified Idaho estate planning attorney can help you create your trust by getting the documents together that describe the purposes of the trust and who will be in charge of it as well as who the beneficiaries of the trust will be. However, just completing the paperwork alone is not enough for the trust to actually be created. Rather, a trust is very much like a pie. When the paperwork is completed it's like having the pie crust in the pan ready to be filled with the pie filling. Funding the trust, or rather, transferring items into the trust such as property, assets, or money, is the pie filling that actually makes the pie complete. Without funding the trust, the trust is actually not completed.
At the Racine Law Office, our team of Idaho estate planning attorneys have assisted clients in the creation of their customized estate plans for over 70 years. We've assisted our Idaho clients in using trusts as part of their estate plan and we have experience and knowledge concerning how and when a trust is a good idea. Additionally, our team of Idaho estate planning attorneys, which consists of partners Randy Budge and Lane Erickson and attorneys Nate Palmer and Dave Bagley have assisted numerous clients in funding their trusts so that they are complete.
There have been numerous clients who come to our offices after a loved one has passed away and have brought us thier estate planning documents which include paperwork for a trust. However, in many instances we find that the trust was never funded, and was therefore never actually fully created. As a result of this, we often have to tell our clients that the trust doesn't do them any good. Our goal is to make sure that when a person creates a trust, it is completed so that it accomplishes exactly what they want. Below, are the different ways that a trust can be funded to make sure that it is in fact complete and you aren't left with an empty pie crust.
1. Transfer Money / Property Into Your Trust While You are AliveThe number one and easiest way to fund a trust is to transfer property, money, or assets into the trust while you are alive. If, for instance, you wanted to transfer a home or other land into the trust, the transfer is complete when you sign and record a deed that transfers the property away from you individually and to the trustee of the named trust. Once that deed is recorded, the trust then becomes the titled owner of that property or land. Likewise, bank accounts, vehicles, and all kinds of other property, money, or assets can be transferred into a trust so that it is actually funded. By doing this when you are alive, you have the assurance of knowing that your trust is in fact completed.
2. Transfer Money / Property Into Your Trust When You dieThe second way that your trust could be funded is by transferring your money, property, or assets into the trust upon your death. In other words, you can use your estate planning documents to both create a trust and or to fund a trust once you had passed away. Below, are several different ways that a trust can be funded when you pass away.
Through Your WillOne way that you can find your trust upon your death is through your own last will and testament. Moreover, you can actually use your last will and testament to create a trust in the first place. This is often called a testamentary trust because it is your last will and testament that creates it. A common testamentary trust is a Minor's trust which is created if your children or other beneficiaries haven't reached a certain age by the time that you die. In this instance, a trust is created through your will, and you will also funds the trust so that it holds the money and property that you want to go to that young child when they reach the age that you specify in the trust.
Additionally, you do not need a Minor's trust to fund a trust through your last will and testament. You could have easily have created a trust earlier as part of your regular estate planning documents. Then you can choose to use a pour-over will as the method to fund your trust upon your death. In this instance, in your last will and testament, the beneficiary that you name is in fact the trust that you have already created. Then, through probating your estate, the property and money that you have specified will be transferred directly to your trust to fund it.
Through InsuranceAnother common method of funding a trust is through life insurance or other insurance products. In this instance, just like the last will and testament example listed above, you name the trust as the beneficiary of your insurance policy. When the triggering event occurs that requires payment from the trust to the beneficiary, which is usually the death of the person who purchased the policy, the trust will then be funded by the insurance payout.
Through POD AccountsPayable on Death (POD) accounts are also a method used by individuals to fund a trust that have previously been created. These types of accounts can be bank accounts, retirement accounts, or other accounts that allow a POD beneficiary designation.
The most common types of these accounts are in fact retirement accounts such as IRAs, 401ks, pensions, and similar retirement accounts. These types of accounts are controlled by contract and allow the individual who owns them to name of the trust as the beneficiary of the account. Then, when the account owner passes away the account administrator who holds the contract to the account and make a distribution directly to the trust from the POD account.
If you have questions about creating a trust, or if you have a trust already created but you have not yet funded it and you are concerned about getting this done, we can help. We would be happy to sit down with you and discuss this through a consultation to answer your questions and advise you about your options.
Enlist an Idaho Estate Planning and Probate Attorney to Help YouOur experienced Estate Planning team of attorneys can help you and your family with your Idaho estate plan or with your probate needs. Whether you are seeking your own customized Estate Plan or are in need of a Probate for a loved one who has passed, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation with the Racine Olson team. You can also email us directly at racine@racinelaw.net. We will answer your questions and will help you solve your Idaho Estate Planning and Probate problems.