A new car without fuel might be considered useless. Similarly, a trust that hasn't been properly funded won't be of much use and can be a headache for the individual charged with trust administration. It can be easy and relatively inexpensive to create a trust, but without funding it with the estate assets, the power of the trust is limited. In Florida, a person who wishes to create an estate trust may not want to neglect funding the estate vehicle.
Funding a trust simply means putting one's stuff into it. This can mean re-titling assets like the home, other real estate, bank accounts, stocks, bonds, insurance polices, etc. A person will also need to name the trust and the trustees in proper order as beneficiaries of the various accounts, including IRAs, life insurance, annuities and retirement plans. Should a person fail to fund the trust, he or she may find unexpected results upon their disability or death. Not only do individuals who fail to fund a trust risk probate, they also risk additional taxes and unintended distributions of assets.
Some are tempted not to fund the trust because of the effort and costs involved. However, the costs and effort can come during the planning phase or when the trust will be enacted; either way, the task cannot be avoided. If a person waits until disability or death, the costs may be greatly increased.
An individual in Florida also likely wishes for the trust administration to be as streamlined and stress-free as possible for the surviving beneficiaries. A properly funded trust can help to achieve this goal. When contemplating an estate plan, many people choose to consult with a lawyer to find the best approach for their individual needs.
Source: thetimesherald.com, "Making your trust work by funding it", Matthew M. Wallace, Feb. 16, 2018