Working with a lawyer to set up a revocable living trust is a smart way to plan both for your own needs as you age and to ensure a smooth and timely distribution of your assets to loved ones when you die. Once the trust documents are signed, you need to complete the process by actually transferring designated assets into the trust.
Do the Leg Work
Until assets are actually transferred into a trust, it has no value. There’s not one “magic wand” that can just wave a diversity of assets into the account, so patience and diligence are needed. Essentially, the specific documents associated with each separate asset to be transferred into the trust will need to be completed. Kiplinger explains:
Many people assume that once they sign the trust documents at their attorney’s office, they are ready to roll. Setting up a trust, however, is only half of the solution. For a revocable living trust to take effect, it should be funded by transferring certain assets into the trust. Often people fund a living trust with real estate, financial accounts, life insurance, annuity certificates, personal property, business interests and other assets.
Funding your trust with bank and brokerage accounts generally requires new account paperwork in the name of the trust as well as signed authorization to retitle or transfer the asset. Likewise, physical bond and stock certificates require a change of ownership to be completed with the stock transfer agent or bond issuer. You may also wish to fund the trust with a checking or saving account, though it is important to carefully consider any implications if these accounts require regular withdrawals or activity. Additionally, while you may fund the trust with an annuity, these instruments already enjoy a preferential tax treatment, and transferring them may forfeit this benefit. With existing certificates of deposit, they are usually transferred to a trust by opening a new CD. When doing so, it is a good idea to see if your issuer will waive any penalties. Finally, safe deposit boxes may be issued to the trust, or ownership may be transferred for an existing box.
In many families, real estate, such as the home is the most precious and valuable asset that can be passed on to loved ones. Given that, experts say that it can be very helpful to transfer the family home to a trust. Doing so can be relatively straightforward, especially if the there is no mortgage to refinance into the name of the trust.
Share Your Intentions with Your Trustee
When you work with a lawyer to create the trust, you’ll appoint a trustee to manage and distribute the assets. You can include specific details about how you wish for this to be done, and other expectations for the trustee in the trust agreement. Given the fiduciary responsibilities undertaken by trustees, the trust agreement may require procurement of a trustee bond. A trustee bond is a type of fiduciary bond that helps to protect the interests of the trust and beneficiaries by guaranteeing the faithful performance of a trustee in accordance with the law. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain a trustee bond. Just get a quote online, fill out the information, and enter a payment method. The bond can be printed or e-filed from anywhere.
Good To Know: Making Changes?
Changes can be made to the terms of your revocable living trust as your life or assets change. Periodically revisiting the trust document with your lawyer is a good idea. So too is keeping your trustee up to date on your intentions. As Wilson Law Group sums up: A revocable living trust contains money and property that you transfer into it, and you choose a person (the trustee) to manage it for your benefit while you are still alive. You can set up a living trust in such a way that it can be changed or revoked except when you do not have the mental ability to do so or have passed away. A living trust can also specify the distribution of the money and property when you die.
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