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Funding Trust Agreements through Asset Transfers

Once you have set up a Trust, you will need to fund it.  You are not required to include all of your assets in your trust,but your decisions may limit tax benefits and consequences and should be discussed with your attorney. 

Sitting down and making a list of all of your assets is the first place to start.  Things such as real estate, vehicles, and bank accounts may require you to modify or change the documents on file with those organizations.  The account will be transferred to the trust and this process may take some time.  In the case of smaller things, personal items, jewelry, etc. they should be named specifically in the trust to identify them.

It is important to understand that once you place assets in a trust, they are no longer yours.  They are under the care of the trustee.   If you happen to be the trustee, there may be no issue with their use or disposal.  One important advantage in this is that you no longer pay income tax on money made from those assets and this may be a key in determining what you will place in your trust.   Remember also, trust items may not be counted as an asset for Medicaid applications for nursing home care but you will need to keep in mind they are subject to the Medicaid 60-month “look back” period.  If you form your trust less than 5 years before you need to have nursing home care, you may incur a waiting period before benefits will be paid. 

An attorney should be consulted regardless, to be sure the right things have been done to fund your trust  legally.