What does funding a trust mean, and why is it important?
A. Once a revocable living trust is implemented, it needs to actually become the owner of your assets. The process of transferring ownership to the trust is called funding the trust. In some cases, funding also includes naming the trust as beneficiary of annuities, life insurance, IRAs, and retirement plans. Trust funding is vitally important because without it your trust is largely ineffective and you will have wasted your time and money creating it. Think of it this way: Your trust is a brand-new automobile, and you are its proud new owner. It looks great, smells wonderful, and has every driving convenience available. But if you don’t put gas in the tank, it can’t function to take you anywhere. It might as well be a lawn ornament. It’s the same for your trust: your property is the gas that makes it run.
