Funding Your Trust
It’s summer. Clients often contact me to make sure that all their estate planning documents are in order before a vacation. There is nothing like a trip to make you wonder if you have prepared for all eventualities (which as we all know, is impossible, but we do our best).
Clients may also take the time before a trip to finish funding their trust. Typically I prepare the trust transfer deeds to transfer any real property to the client’s trust. However, the client is responsible for transferring other personal property assets-such as bank and brokerage accounts-to their trust AND changing beneficiary designations. Proper funding (retitling assets in the name of the trust) is crucial to post-death trust administration.
How are bank/brokerage accounts retitled in the name of the trust? The answer is that it varies from institution to institution. Some require you-as settlor of the trust and trustee- to complete the institution’s forms and present title and signature pages of the trust. Others request a certificate of trust and the same few trust pages. For most institutions, either of these options is sufficient. Plan to spend about half an hour at the bank working with a clerk to process the paperwork. Once completed, the new title should be reflected on the account that day or the next.
If these assets ARE NOT retitled in the name of the trust your successor trustee has a couple options:
1) If the asset is listed in enough detail on the trust schedule of assets, it is possible to file a “Heggstad” petition in the probate court to transfer the asset to the trust without a probate;
2) If the asset IS NOT listed particularly on the trust schedule, it may be transferred to the trust through the pour over will-this requires a probate; or
3) If the asset is not listed on the schedule of trust assets and there is no will the asset will pass under the intestacy statutes and a probate may be required depending on the value of the asset.
In general, I recommend a review of your estate planning documents every couple years, more if you have had a significant life change (marriage, divorce, death of a loved one named in your documents). This is also a good time to update the schedules of trust assets and discuss any funding issues. I offer existing clients a complimentary meeting every two years to make sure that their trust still meets their needs and to review any funding issues.
Next month: A look at some of the most common issues to consider when updating your trust.