Funding Your Trust

Working with an attorney to draft a trust agreement for estate planning purposes is an important step. But just getting the document drafted and signed is not enough. For any trust to be effective, you must complete the process of funding your trust as soon as you can. But what exactly is funding?

Your retirement account provides asset protection during your lifetime, but as soon as you pass that account to a loved one, that protection evaporates. When your spouse, child, or other loved one inherits your retirement account, creditors have the power to seize it and use the funds to satisfy their claims. This means one lawsuit and POOF!—your life-long, hard-earned savings could be gone. Your loved one could be left penniless. Fortunately, there is a solution to this problem.
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Though many people are familiar with life insurance policies and have a general understanding of how they work, the process of selling a life insurance policy to a third party may be less commonly understood. When an insured party sells a life insurance policy to a third party investor, the transaction is called a life settlement.

How Life Settlements Work

Though the idea is counterintuitive to many people, life insurance policies are considered property and therefore can be bought and sold. A life settlement begins when an insured party chooses to sell this property for cash. The difference between the sales proceeds (the total amount you received) and the cost basis (the total amount you paid into the insurance policy) is a taxable gain.
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The death of a loved one can be one of the most disorienting life events. But if the loved one dies while traveling in a foreign country, the emotional and bureaucratic burdens can multiply exponentially.

Contact the United States Bureau of Consular Affairs

If foreign local authorities report a death to a US embassy or consulate, the United States Bureau of Consular Affairs located in that country will attempt to identify and contact the next of kin of the deceased US citizen. In many cases, an individual who dies abroad is traveling with friends or family, who will contact the deceased’s family back in the United States. But even if you first learn of your loved one’s death through friends and family, you should still contact the Bureau of Consular Affairs in the country where your loved one died.

The mortgage business is booming in many parts of the country. Historically low interest rates have created an almost frenzied environment with homeowners scrambling to refinance their home loans at these low interest rates. Even a few tenths of a percentage point of interest, over thirty years, can make a massive difference in the amount of interest that is ultimately paid on a loan. For many, it makes perfect sense to take advantage of these interest rates. Besides the associated transaction fees of refinancing, there is frequently little to no downside to refinancing in times like these.
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For many people, a revocable living trust is a valuable tool to ensure that their finances are well managed during periods of incapacity and that their loved ones are financially secure upon their passing. However, signing the trust agreement doesn’t end the estate planning process: To work properly, the trust needs to be funded.

What Is Trust Funding?

Trust funding is the process of transferring the ownership of accounts and property to the trust during your lifetime, or designating the trust as a beneficiary of an account or piece of property so that the trust will receive ownership upon your passing.

Trust Funding as a First Step for Trust Administration

Not only does a completely funded trust avoid the dreaded probate process, it can also make the trust administration process much easier.

• ●Accessing your accounts and property will be less complicated.
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