Having the insight to set up a trust for your funds and assets is forward thinking and can be a smart move. These helpful legal devices create a space where you can move property, money, and valuables, and keep them safe from certain creditors. When set up properly, you and any other named beneficiaries can receive disbursements from the trust while it increases in value. However, if you fail to move anything into the trust, it can’t work to your benefit. Here are some of the dangers of an unfunded trust:
One of the most significant problems with an unfunded trust is that there is nothing inside it to benefit anyone. If a trust is created and then forgotten, those it was intended to benefit will not receive anything from the trust. This could be a real problem especially when the beneficiary is in need of and depending on the disbursements. For instance, if your relative expected to pay for college with their trust and can’t do so because it’s empty, it could create a hardship for them. Further, a disabled loved one who is depending on a special needs trust for their extra expenses would be put in a dire position without this resource being funded.
One of the primary benefits of placing assets into certain types of trusts is that they will be protected from creditors. Further, if you have moved property or funds into a trust and pass away, they will not be part of your probate estate. Not putting assets into the intended trusts means that they are accessible to creditors and can pass through probate.
When you created your trust you probably did so with a specific intention. For some it could have been to protect assets from taxation. For others, it might have been meant to be a sustaining legacy for years to come. The trust could also have been to support the people you love the most. Without the necessary funds, your trust cannot do any of these things and will not serve the function you intended.
Setting up your trust is an essential first step but it is equally important to provide it with the necessary funds. At the Law Offices of Alice A. Salvo, we have the experience you need to plan for your trust. Schedule a consultation today to explore your options and start your solution.