Drafting and signing your living trust does not conclude the estate planning process. It is important that you continue to adequately fund the trust to accomplish your goals. Funding a trust simply means transferring property to the trust. Any assets that are not properly transferred to the trust is not legally owned by the trust and will be subject to probate and possibly other unintended consequences. How to fund a trust varies depending upon the nature of the property to be included in the trust.
Step 1:
Transfer real property to a trust using a recorded deed. If the property is subject to a mortgage you may need to obtain permission from the lender. Also keep in mind that a real property transfer often results in a transfer tax or other fees. Your estate planning attorney can help you determine any exemptions that may apply and help to minimize these taxes and fees.
Step 2:
Transfer titled personal property such as motor vehicles, boats, RVs and airplanes. You will have to obtain a new title showing the living trust as the owner of the personal property. Again, if the personal property is subject to a lien you may need to get the approval of the lender. And you will also want to update your insurance provider.
Step 3:
Add untitled personal property to the trust using an assignment of ownership document which must be signed and dated. This document will list out all personal property owned by the trust. It is important to adequately describe the property to avoid any confusion.
Step 4:
Transfer bank accounts and brokerage accounts. Your bank may require you to close the original account and open a new account in the name of the trust. You may need to wait for CDs to mature and then open a new CD with those funds in the name of the trust to avoid penalties. Your financial broker can help you retitle your brokerage account and get stock and bond certificates reissued. Some accounts such as retirement accounts and medical savings accounts may require a different approach. Your estate planning attorney can determine whether it would be best to change the beneficiary designation to the trust rather than transfer the assets into the trust prior to death.
Step 5:
Have your estate planning attorney assist you with more complicated transfers such as transferring any business interests, royalties, copyrights, patents or trademarks; or any gas, oil and mineral rights. Your estate planning attorney can also help you determine whether to change any life insurance beneficiaries. Your trust can be the owner and/or the beneficiary of a life insurance policy.
By ensuring that your assets are properly transferred into your living trust, you are bringing them under the legal umbrella and the protection of this beneficial estate planning tool. For more information on funding a living trust, contact the knowledgeable estate planning attorneys at Stouffer Legal in the Greater Baltimore area.
