A comprehensive estate plan should include far more than just a Last Will and Testament. While there are a virtually limitless number of additional documents that may be included in your estate plan, one of the most common additions is a trust agreement. Trusts have steadily gained in popularity over the past several decades for several reasons, including the wide variety of estate planning goals that can now be achieved using the right type of trust agreement. If you have decided to include a trust in your estate plan you may be wondering how to go about funding a trust once it has been established.
At its most basic, a trust is simply an agreement wherein the Maker (the person creating the trust) appoints a Trustee (the person responsible for administering the terms of the trust and managing trust assets) to protect and manage assets for the benefit of a third party (the Beneficiary). Once established, a trust is a separate legal entity.
There are two basic types of trusts – revocable and irrevocable. Once you transfer assets into an irrevocable trust you lose all control over the assets because nothing about an irrevocable trust can be changed by the Maker once the trust is created. Assets transferred into a revocable trust, on the other hand, can be removed at any time by the Maker. For this reason, care must be taken when deciding which type of trust to create and which assets to use to fund the trust.
Almost any type of asset can be used to fund a trust, including cash, real property, securities, art and jewelry, and collections. The manner in which an asset is transferred into a trust depends on the type of asset. Cash is simply deposited into the trust account. Assets that have a title document, such as real property, vehicles, stocks, as well as securities, life insurance policies, and retirement accounts will require you to sign over the title document to the trust. Assets that do not have a title document, such as artwork, jewelry, or valuable collections can be listed on the trust agreement itself or you may wish to execute an “Assignment of Property” to ensure that the asset is legally transferred into the trust.
If you have additional questions or concerns about creating or funding a trust agreement, or about your Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.