After you establish a living trust in your estate plan, there is one essential step that is easy to overlook. In order to be effective, a trust must be “funded”. One important benefit to creating an estate plan and living trust is to avoid probate. However, your trust is only as effective at avoiding probate as the assets that are held in the name of your trusts. Assets that are still held in your name as an individual will still go through probate to be transferred upon your passing.
Your assets, bank accounts, financial accounts, and real estate must be titled in the name of your trust, or your trust should be listed as a beneficiary as necessary, to properly fund your trust. Though every situation is different and should be evaluated personally, below is a list of common assets:
1. Real Property : A transfer deed is needed to transfer your real property into the name of your trust. You need to consult with an experienced professional to ensure this is done properly.
2. Bank Accounts: Your bank accounts, including checking and savings accounts, should be titled in the name of your trust as well. Your bank representative should help you make this change.
3. Retirement Accounts: Retirement accounts are always individual accounts and cannot be titled into the name of your trust. However, you can list your trust as a beneficiary. It is important to talk with your tax professional, financial advisor, as well as your estate planning attorney to properly decide how to include retirement accounts in your trust. Any deferred compensation account will have income tax consequences to your ultimate beneficiary recipient, so there should be a careful decision about the beneficiaries of these accounts.
4. Life Insurance: If you want your trust terms to control the assets included in life insurance policies, you should either (1) have a life insurance trust to own your life insurance policy; or you should (2) list your trust as the beneficiary. You can get a change of beneficiary form, sometimes called a beneficiary designation form, from your life insurance company.
5. Investment Accounts: Generally, investment and brokerage accounts should be titled in the name of your trust. Consult with your financial advisor to get this changed, or contact the investment firm for the appropriate forms.
6. Vehicles: Your vehicles, including cars, motorcycles, boats, motors homes and others, do not need to be titled into the name of your trust. The DMV and Probate Code specific provide a separate transfer procedure upon passing.
7. Other property: It is important to consult an experienced attorney to decide how other property should be held, including businesses, intellectual property, and art work.
Every situation is different and it important that you work with an experienced estate planning attorney that will look at all of your property to ensure your plan structured and implemented properly.
The above is not intended to be legal advice, but a guide to help evaluate your situation. Please seek the assistance of an experienced attorney to help make decisions on the proper titling of your property.