What's a Trust and Why Fund It?

Think of a trust as a special box where you can keep your valuables safe. But for the box to work, you have to put something in it. This is where trust funding comes in—it's the process of putting assets into the trust. If the box is empty, it can’t do its job.

Creating a well-drafted trust is crucial. It gives clear instructions on what to do with the box’s contents. Without proper trust funding, or if the trust is poorly drafted, it's like having a fancy box with nothing in it or not knowing how to use it.

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The Real Work of Estate Planning

Estate planning is not just about the documents—it's about putting those documents to work. It's an ongoing process of problem-solving, making sure that what we've set up on paper actually happens the way it's supposed to. This involves a lot of follow-up, updating, and sometimes correcting course along the way. 

Trust funding is a key piece of this puzzle. It helps keep everything in order if someone can't manage their own affairs anymore and avoids the court’s involvement when someone passes away. This saves time, money, and keeps personal matters private.

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Why Trust Funding Is Essential

If trusts are not properly funded, especially revocable living trusts, the main goal of using a pour-over will and trust format—to avoid probate—can fail. Probate can be a lengthy and costly process, but by funding a trust correctly, assets pass directly to beneficiaries without getting stuck in court. 

Many people choose a revocable trust and pour-over will to make sure their estate skips the probate process, but this only works if the trust is actually holding their assets. Without funding, the estate will end up in probate, defeating a key objective, given the format of their estate plan.

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Common Slip-ups to Avoid

Mistakes like not funding the trust, putting assets in the wrong way, confusing the trust with its rules, or mishandling retirement accounts can make an estate plan fall apart. These errors can create unnecessary complications, undoing the careful planning we’ve done.

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How This Benefits Your Practice

Helping with trust funding sets you apart as a lawyer. It shows you think ahead and care about making plans work. You’re not just creating documents; you’re offering solutions and ongoing support. This means more work as your clients' lives and assets change, building trust and lasting relationships. They’ll see you as someone who’s there to help, not just at the start but throughout their lives.

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In Conclusion

Estate planning is more than drafting documents. It's a continuous process of ensuring those plans are executed effectively. Trust funding is crucial in this process, helping to avoid probate and ensuring that the estate passes smoothly to the beneficiaries. By mastering trust funding, you can offer comprehensive support to your clients over their entire lifetime, making their estate planning successful and your practice more robust.

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