While there is no "Binding Law" that requires that you trim the corners when you are self-binding your quilt, I have found that trimming the edges reduces the bulk in the corners of the finished quilt.In addition, sometimes my corners aren't perfect, and without trimming the points of in the corner, I end up with extra fabric sticking out. Rather than dealing with that, I have found that it is easier to just trim the corner.
As you can see in the picture, I have trimmed a small triangle off of each corner and then folded the fabric down into the corner. The next step is to fold a 1/4 inch seam allowance down on each side and then fold the backing over to finish the quilt.
Penny Halgren
www.HowToBindAQuilt.com - for answers to your binding questions and video demonstrations showing 6 different ways to bind a quilt
