A revocable living trust is a legal entity created to serve any number of purposes. Your trust could help you qualify for Medicaid if you need it when you get older. It could provide resources for a child with special needs. It could even help you minimize any tax liabilities for your estate.
Trusts can also protect your property from creditor claims or lawsuits against you as an individual. The way you structure a trust will have a big impact on the kinds of benefits it offers you and its beneficiaries.
Creating a trust involves drawing up documents and setting certain terms. You also have to fund the trust for it to truly benefit you. How do you do that?
Funding a trust involves transferring the ownership of assets
The purpose of a trust is to own, invest and possibly distribute assets. All of the planning you do will amount to nothing if you don’t move your property into the trust.
Funding a trust essentially means making it the legal owner of certain valuable assets. People often use their major assets to fund their trust. You might change how you hold title on your home from your own name to the name of your trust. It’s also possible to transfer financial accounts and other valuable assets to the trust.
At that point, you are no longer technically the owner of that property, but you can still access those resources through the trustee that you name. Understanding what goes into creating a trust and funding it is important for those trying to plan their estates.