Re-Titling Assets Into Trust A Must

2:27 pm Uncategorized

Most of our clients choose to set up a Revocable Living Trust (“RLT”) as part of their basic estate plan.  The RLT avoids the costs and time delays of probate, affords opportunities for estate tax savings and still gives the Trustors control over their assets.

However, setting up the RLT is not enough. In order for the Living Trust to be effective and carry out the instructions of the Trustors, it is important that the Trustor’s assets be re-titled into the name of the Trust.  This means you need to change titles from your name into the name of the Trust on real estate (by Deed recorded with the County Recorder’s Office) and other titled assets such as stocks, bank accounts, business interest and other investments.  No one should have a Trust prepared without having their assets properly re-titled into the name of the Trust.

You need to also change most beneficiary designations to your Trustee.  Re-titling assets into a Trust is commonly known as “funding” a Trust.

In most instances, the same person or couple who make the Trust as Trustors also serve as Trustees.  Therefore, the Trustors in their capacity as Trustees continue to control the assets in the Trust.

The reason why you need to properly fund the Trust is that if your assets are not held in the name of the Trust, you will not avoid probate in spite of the fact that you have set up the Trust.

Think of the Trust as a basket.  You need to place your assets inside the basket so that upon death the assets in the basket can be distributed according to the instructions of the Trust.  Since the assets will be inside the basket, they do not have to be probated and your heirs will know what assets you own because they will be set forth on a schedule attached to the Trust.  Almost all of your assets except your personal property like clothes, furniture and automobiles should be put inside your Trust.

Contact us today for individualized planning strategies to meet your unique needs.

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