THE ATTORNEY'S CORNER: FUNDING YOUR REVOCABLE TRUST

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By Stephen C. Ross, Esq.

April 11, 2014 (San Diego County) – “Funding” a trust is the process of taking assets titled in your individual name, or in joint names with others, and changing the title into the name of your revocable trust, or taking assets requiring a beneficiary designation and naming your revocable trust as the primary or secondary beneficiary of those assets. An asset not retitled into the name of your trust is not governed by the trust terms, the trustee has no power over the asset, the asset may be subject to probate and the asset may not transfer to your intended beneficiaries at your death. The following are trust funding suggestions to ensure assets are included in your trust.

1. Keeping the trust funded.  In addition to the assets being transferred into the trust at the time you initially prepare your trust, title to assets you acquire in the future should also be placed in the trust.  If you take title to property in your own name at any time without disclosing the trust, you may disrupt your estate plan.

In general, title to your assets should be held as follows: “[Your name(s)], trustee(s) or [his/her/their] successors in trust, under the [name of your trust], dated [date you signed your trust], and any amendments thereto.”

2. Real Property. To transfer your residence and other real property to the trust, you as settlor(s) must execute a grant or quit claim deed (and possibly other County-required forms) showing the property transferred to the trustees of your revocable trust. These documents must be taken to the County Recorder’s office in the County where the property is located to be recorded. There should be no reassessment of your property because the property has not been sold. However, check with the Assessor’s Office in the County where you are recording the deed.

Notify your lender of the transfer of your property to the trust, and obtain its written consent, prior to recording the deed. Also, notify your property insurance company of the transfer of the property to the trustees, and request the insurance company name the trustees as additional insureds on the policy. Transact all business with the insurance company in writing, and confirm any verbal communication in writing.

Check your title insurance policy prior to recording the deed. If your policy is a 1990 CLTA Homeowners Policy, contact your title insurance company and obtain a CLTA 107.9 Endorsement adding you as trustee(s) as insured(s) under the policy.

3. Checking/Savings Accounts and Mutual Funds:  These assets can be transferred into the trust by presenting the Certification of Trust to the institutions holding those assets and filling out the required paper work.  To avoid confusion, I suggest you record your checking account(s) in the name of the trust, but request that your checks read as they did prior to the transfer.

4. Life Insurance: To transfer life insurance policies (other than single-premium policies) into the trust, request forms from the insurance company to change the beneficiary(ies) named in the policy to the name of the trust. I suggest you obtain legal advice prior to naming your trust as beneficiary as doing so may disrupt your intended distribution plan.

5. IRA Accounts and Profit Sharing Plans: You may want to name the trust as primary beneficiary of these assets. I suggest you review your options with a competent financial adviser.  Title (“ownership”) of your IRA account(s) must remain vested in you. Do not transfer title of your IRAs to your trust as that would immediately trigger income taxation as a distribution of assets.

6. Vehicles: Title to your vehicles may be transferred into the name of the trust by visiting your local Department of Motor Vehicles (DMV) office and filling out the required paper work. If you frequently purchase new vehicles, and want to avoid the DMV paper work, you may want to wait until you purchase a new vehicle and transfer title into the name of the trust at that time. However, any vehicle whose title is not in the trust name will not be included as a trust asset. Many people do not transfer their vehicle(s) into the trust as the value is typically not great and there are other means available for making a transfer at your death.

7. Safe-Deposit Boxes: To transfer your safe-deposit box into the trust, go to the bank and have a bank representative rewrite your file card for the safe-deposit box in the name of the trust.

8. Other Tangible Personal Property: It is a good idea to execute an Assignment of Personal Property transferring this property to the trust. The Assignment is often a one page document prepared along with your original trust. Tangible personal property includes such things as clothes, furniture, furnishings, appliances, jewelry, art, various collections, tools and the contents of a safe deposit box.

Stephen represents estate planning, trust, will, probate, trust administration, business formation, stepparent adoption and family law matters. He conducts estate planning and probate seminars throughout San Diego County. He is your source for Trusts, Wills, Probate, Family Law & more. For more information or to schedule a seminar contact Stephen at (619) 795-8524, stephen@stephenrosslaw.com or visit www.stephenrosslaw.com.

Disclaimer: Information contained in this article is believed to be accurate. However, you should seek professional legal advice before relying on the information. Stephen is not licensed to practice law in any state other than California and “The Attorney’s Corner” is not intended as an advertisement.

Visiting Stephen’s website does not create an attorney-client relationship and confidential information is not protected until a written agreement is signed.


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