Funding Your Revocable Trust A Critical Step Many People Miss
Many individuals today choose to implement their estate plan through a revocable living trust. One of the primary advantages of a revocable trust is that it helps keep your assets out of the probate process after death.
However, that benefit only works if your assets are properly titled in the name of the trust. This process is commonly referred to as trust funding or re titling assets. Unfortunately, this step is often overlooked, which can defeat the very purpose of having a trust.
Below is a general overview of how common assets are typically transferred into a revocable trust.
Household Items and Heirlooms
Personal property such as furniture jewelry artwork and family heirlooms is usually transferred through a general assignment or conveyance document executed when the trust is created.
Vehicles
To place a vehicle into a revocable trust the title must be reissued in the name of the trust.
If the vehicle has an outstanding loan the lender may prohibit re titling until the lien is paid off.
Bank Accounts
Most banks require you to visit a local branch and provide trust documentation. You will complete the bank’s internal forms so that the account and statements reflect ownership by the trust.
Brokerage Accounts Non Retirement
For non qualified investment accounts brokerage firms typically provide paperwork to retitle accounts into your trust. This can often be initiated with a phone call to your brokerage provider.
Real Estate
Real property must be transferred into the trust through a new deed recorded with the appropriate land records office.
If there is an existing mortgage this process can become more complex. Legal guidance is essential to avoid triggering loan issues or unintended consequences.
Business Interests
Ownership interests in LLCs or corporations often require updates to membership certificates or stock certificates. Transfers must also comply with any operating agreements bylaws or transfer restrictions.
Once again the advice of an attorney is critical.
Retirement Accounts
Retirement assets require special consideration. Naming a trust as a beneficiary can have significant tax and distribution implications. This is not something that should be done without professional legal advice.
The Bottom Line
While trust funding may sound straightforward it is frequently left unfinished. When assets are not properly titled they may still be subject to probate causing delays expenses and frustration for your loved ones.
We strongly encourage you to work closely with your estate planning attorney to ensure your trust is fully funded and your plan works exactly as intended.
We can help.
Contact us today to review your trust and make sure nothing has been missed.
