Final answer:
An inter vivos trust is considered funded when the grantor transfers title of property into the trust. It is essential for assets to be placed in the trust for it to be effective; otherwise, it remains an unfunded entity. This transfer is what enables the trust to serve its intended purpose of asset management and distribution.
option c is the correct
Step-by-step explanation:
An inter vivos trust is considered to be funded at the point when the grantor actually transfers the title of property to be held in the trust. This happens during the grantor's lifetime and is a separate action from signing the trust document, providing for the transfer in a will, or the grantor's death. Without the transfer of property, the trust does not hold actual assets and is therefore not considered funded.
When discussing the establishment of a trust, creating and signing the trust document itself is only part of the process. The trust document outlines the terms of the trust and the intent of the grantor, but the funding of the trust—or the transferring of assets into the trust—is what actually gives it substance and capability to serve its purpose. Once assets are placed into the trust, the trustee has the responsibility to manage them according to the terms laid out by the grantor.
Conversely, a will is a document that does not come into effect until after the grantor's death and is subject to probate, where its execution becomes a public affair. Comparatively, a trust can grant privacy and avoid probate, allowing for a more discrete transfer of the grantor's assets upon death. It is crucial to understand that the actual funding of the trust is what differentiates it from a mere intention to pass on assets, which might be reflected in a will.
In cases where individuals die intestate, they have not left any form of estate planning instruments like wills or trusts. Consequently, the state's intestacy laws will dictate the distribution of assets, often in a hierarchical manner to relatives such as spouses, children, parents, and siblings.