Is your revocable trust fully funded? A revocable trust — sometimes known as a “living trust” — provides significant benefits. They include the ability to avoid probate of the assets the trust holds and facilitating management of your assets in the event you become incapacitated.
To obtain these benefits, however, you must fund the trust. Transfer your title of assets to the trust or designate the trust as the beneficiary of retirement accounts or insurance policies to fund properly.
Inventory your assets
By not funding your revocable trust, those assets can probate, going beyond the trust’s control if you become incapacitated. Failing to transfer the title to the trust or name it as the beneficiary can have a negative impact.
Taking inventory of your assets can help avoid this result by making sure that your trust is fully funded.
Max out FDIC insurance coverage
Another important reason to fund your trust is the ability to maximize FDIC insurance coverage. Generally, individuals enjoy FDIC insurance protection on bank deposits up to $250,000.
However, you can increase that protection to as much as $250,000 per beneficiary. All you have to do is have a properly-structured revocable trust account. So, for example, if your revocable trust names five beneficiaries, a bank account in the trust’s name is eligible for FDIC insurance coverage up to $250,000 per beneficiary, or $1.25 million ($2.5 million for jointly owned accounts).
FDIC insurance is provided on a per-institution basis. So, coverage can be multiplied by opening similarly structured accounts at several different banks. FDIC rules regarding revocable trust accounts are complex, especially when a trust has more than five beneficiaries, so talk to us to maximize insurance coverage of your bank deposits.
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