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February 8, 2023

What You Need to Know About Funding Your Revocable Trust


Revocable trusts, sometimes called “living trusts,” can offer substantial benefits. In the event that you become incapacitated, for example, they facilitate the management of your assets. They can also help avoid probate of said assets. 

But before you can obtain these benefits, you must fund the trust. In other words, you must transfer the title of assets to the trust, or designate the trust as a retirement account or insurance policy beneficiary. 

Take inventory of your assets 

If a revocable trust isn’t fully funded, such as if you acquire new assets but do not transfer title to the trust or name the trust as the beneficiary, those assets may be subject to probate. Additionally, in the event that you become incapacitated, the assets won’t benefit from the established terms of the trust. 

To ensure this is not the case, it’s important to take inventory of your assets on an ongoing basis to ensure it is fully funded. 

Maximize FDIC coverage

FDIC insurance coverage is another important reason to fund your revocable trust. Typically, you can benefit from FDIC insurance protection on bank deposits of up to $250,000. But with a properly structured revocable trust account, you may be able to increase that amount up to $250,000 per beneficiary—that’s $1.25 million, or $2.5 million for jointly owned accounts. 

Because FDIC insurance is offered on a per-institution basis, coverage can be multiplied when you open similar accounts at different banks. That said, FDIC rules pertaining to revocable trust accounts can be complex, such as with trusts that have more than five beneficiaries. 

Consult with a professional

Interested in avoiding probate? A financial advisor can help you take a periodical inventory of your assets and/or maximize the insurance coverage of your bank deposits. Contact us to speak with one of our financial professionals today. 

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