You should feel proud of yourself if you have done your estate plan. You made it easier for your family to care for you if you become incapacitated, and you have avoided the probate process at your death by creating a living trust.
Did you finish your estate planning homework? Did you fund your trust?
Funding your trust refers to the process of transferring your assets into your living trust. This is done by changing title on your assets from your individual name (or sometimes joint if you are married) to the name of your trust. Typically, an attorney will assist you with your house or other real property you own. As part of your estate plan, an attorney will usually draft a deed to record on your property and formally transfer title of your house to your trust. However, you must do the homework to retitle the rest of your assets (e.g., bank accounts, brokerage accounts, bonds, etc.).
Transferring title to your trust is not difficult, but the process does vary by each financial institution and type of asset. Usually, the work begins with an in-person visit to a financial institution with your original trust documents. It is often best to bring all your documents, and banks can decide which forms they need. Some assets can be dealt with by phone or mail, if you have questions about titling you should contact your attorney and potentially your financial advisor to assist you.
It is advisable to put most of your assets into your trust; however, your traditional IRA and other tax-deferred plans always remain outside of your trust. Be sure to complete beneficiary forms for these accounts. Typically, it is best to name people as beneficiaries on these types of accounts because they have better income tax advantages than your trust as a beneficiary.
Leaving assets outside of your Trust can create complications for your family at your death. In California, if the assets left outside your Trust, in your individual name alone without designated beneficiaries are either not real property or do not exceed $150,000.00, then forms can be used to release the assets. However, if the asset is real property located in California or personal property that exceeds $150,000.00, then your family must go through a court process to ask the court to put the asset into your trust. This is not probate, but still costs time and money. If you leave property outside of your Trust and it is real property located in another state, you may have to go through probate.
If you have questions about funding your trust or are concerned whether new assets are titled appropriately in the name of your trust, please contact the Law Offices of Lisa C. Bryant, INC. for a free consultation to discuss.