What does "funding" a trust mean?

"Funding" a trust refers specifically to the process of transferring assets into the trust so that it can effectively function according to the trustor's intentions. This step is critical because a trust requires assets to operate as intended; without funding, the trust holds no value or purpose. Once the assets are placed into the trust, they are managed by the trustee for the benefit of the beneficiaries as outlined in the trust agreement.

Creating the legal document for the trust is the initial step in the establishment of a trust but does not encompass the act of transferring assets. Investing the trust's assets for growth pertains to the management of the trust after it has been funded, and distributing funds to the beneficiaries is part of the trust's operational process but is not related to funding the trust itself. Thus, the focus on transferring assets into the trust beautifully encapsulates the essence of what funding a trust entails.