Retitling Your Assets

You have created a revocable living trust. Great! Now what do you do with it? Setting up your trust by creating a trust document is only the first step in establishing a trust based estate plan. Your trust is simply an empty box until you fill it up with your assets. This doesn’t happen automatically, though.
Funding a trust means transferring legal ownership or title from your name to that of your trust. Assets not effectively retitled to your trust will not be distributed under the terms of the trust and will possibly open your estate to probate.

What should be retitled to your trust?

Bank Accounts (checking, saving, money market, certificates of deposit): Depending on the value and purpose for the account, it is generally a good idea to retitle these accounts to your trust. Retitling of bank accounts is done by delivering a letter of instruction along with a copy of your trust document to your financial institution directing the change in ownership.

Investments (stocks, bonds, mutual funds): Retitling of these types of assets is most often done by filing out transfer paperwork with the custodian of the account. Every custodian is different and uses their own forms so you will need to contact all at which you have accounts.

Vehicle titles: Some states do not allow vehicles to be owned by a trust and others charge high fees to retitle vehicles, so unless your vehicle is valuable, it may not be worth paying to retitle an existing vehicle. However, when purchasing a new vehicle consider titling it to your trust upon purchase

Personal property (furniture, clothing, art, heirlooms, etc.): Unless these things are very valuable, they typically do not need to be individually retitled and can be generally assigned to your trust. You may want to list any item of high value specifically, though.

Life Insurance: Life insurance policies can be owned by your trust. Transferring ownership may make managing them easier if you become incapacitated. You may also consider making your trust the beneficiary of life insurance particularly if that is how you are funding gifts through the trust. If you are married, however, the rule of thumb if usually to name your spouse as the primary beneficiary and your trust as the contingent.

Business interests: Interests in a closely held corporation or an LLC can be transferred to your trust if allowed by the bylaws and/or operating agreement. Often the transfer of business interests are handled through the specific succession planning of the business and individual owners and should be coordinated through your attorney.

Real Estate: Transfer of real estate is accomplished by executing a deed and depends on your individual circumstances. Preparation and recording of deeds should always be handled by your attorney

What should not be titled to your trust?

Tax-deferred retirement accounts cannot be owned by trusts by definition. However, trusts can be named as the beneficiary of these types of accounts. It is more advantageous tax-wise to name your spouse or other individual before naming your trust, though.

Who should do the retitling?

Much of this retitling can be handled on your own, but you still need to take into consideration the time it will take, the types of assets to be retitled and your comfort level in doing the retitling. Most attorneys will include retitling in their estate planning fees, but some will charge separately for funding. Many will at least provide you with an outline of things to consider. Real estate and business interests should always be handled by your attorney.

Retitling your assets to fund your trust is part of the bigger picture of your estate planning. Every estate plan is unique to the individual so your legal advisor should always be consulted when making funding decisions.

Questions? Contact Melissa at 563.388.2580.