KPM

LTC Expenses Incentive Trusts Gift Tax Return Family Business Succession Planning Special Needs Trust Elderly Parents In Your Estate Plan Beneficiary Designations Turn Down An Inheritance Power Of Attorney Inter Vivos Securities Laws DAPT College-Age Children Do Need An Estate Plan Estate Planning Documents Annual Gift Tax Exclusion CRT Name A Guardian Power To Remove A Trustee Living Trust Owning Assets Silent & Incentive Trusts Payable-On-Death Accounts Reduce your estate tax Executor Art Collection QTIP Trust portability Life insurance Portability Probate Original Will Estate Planning Estate Plan Estate Planning Estate Planning Asset Protection Strategies

Make Sure Your Revocable Trust Is Fully Funded

A revocable trust can provide significant benefits. Otherwise known as a ‘living trust,’ they can include the ability to avoid probate of the assets the trust holds and facilitating management of your assets in the event you become incapacitated. However, to obtain these benefits, you must fund the trust — that is, transfer title of assets to the trust or designate the trust as the beneficiary of retirement accounts or insurance policies.

Inventory Your Assets
To the extent that a revocable trust isn’t funded — for example, if you acquire new assets but fail to transfer title to the trust or name it as the beneficiary — those assets may be subject to probate and will be beyond the trust’s control in the event you become incapacitated.

To avoid this result, periodically take inventory of your assets to help make sure that your trust is fully funded.

Max Out Federal Deposit Insurance Corporation (FDIC) Insurance Coverage
Another important reason to fund your trust is the ability to help maximize FDIC insurance coverage. Generally, individuals enjoy FDIC insurance protection on bank deposits up to $250,000.

But with a properly structured revocable trust account, it’s possible to increase that protection to as much as $250,000 per beneficiary. 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).

Note that 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 regarding insurance coverage of your bank deposits.

Related Articles

Talk with the pros

Our CPAs and advisors are a great resource if you’re ready to learn even more.