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4 ways to fund your living (revocable) trust in Minnesota

On Behalf of | Apr 12, 2024 | Estate Planning

Living trusts, also called revocable trusts, are valuable estate planning tools. They allow individuals to protect and distribute assets according to their wishes. However, establishing a living trust is only one step.

To ensure the effectiveness of a living trust, you must fund it properly.

1. Inventory your assets

Create an inventory of all your assets. They may include real estate, bank accounts, investments, vehicles and personal belongings. By compiling a comprehensive list, you can determine which assets you want to transfer into the trust.

2. Transfer ownership of assets

Once you identify the assets to include in your living trust, you must transfer ownership from your name to the trust. For real estate, this typically involves drafting and recording a new deed that names the trust as the owner. For bank accounts and investments, change the ownership designation to the trust’s name.

3. Update beneficiary designations

It is important to update beneficiary designations on accounts such as retirement plans, life insurance policies and annuities. By naming the trust as the beneficiary, you ensure that these assets undergo distribution according to the terms of the trust.

4. Consider funding mechanisms

Certain assets, such as life insurance policies and retirement accounts, can be funded into a living trust through designated beneficiaries or payable-on-death designations. This allows these assets to bypass probate and go directly to the trust upon your passing.

By following these steps, you can create a comprehensive estate plan that provides peace of mind for you and your loved ones.