There are many scenarios in which testators may want to establish trusts. Those who need to provide long-term support for loved ones with special needs often create trusts. People with particularly valuable assets or large families also sometimes rely on trusts. A trust allows for a more structured inheritance and can provide regular support for beneficiaries over years or even decades.
In addition to choosing the type of trust and establishing the instructions for trust administration, the party creating the trust must also properly fund it. They do so by transferring assets to the trust. For those who do not want to compromise their control over personal assets, life insurance can be a way to fund a trust.
Proper funding is critical
Trusts are legal entities created to control resources and distribute them in a specific manner. People use trusts to provide structured support for vulnerable loved ones or to leave a specific meaningful legacy after they pass.
The assets used to fund a trust ultimately determine its impact. Therefore, adequate funding is crucial to a positive legacy. Some people transfer real property, businesses or financial resources to a trust. They may select a trustee to manage those resources on their behalf.
People who do not want to give up control of personal resources or who do not yet have adequate personal wealth to properly fund a trust can make arrangements to fund a trust with life insurance. They need to establish a trust and then file paperwork with the insurance company designating the trust as the beneficiary of their policies.
People in a variety of different circumstances may need to employ different solutions to support themselves and their loved ones. Looking into different ways to properly fund a trust can help people maximize the legacy they leave after they pass.