17 Oct You Have Created a Revocable Trust, What’s Next?
The first step in Estate Planning is the creation of documents. A revocable living trust is a document that is created by you to manage your assets during your lifetime and distribute the remaining assets in accordance with your wishes after you pass. A trust has three main parties. First is the Grantor, or the person who creates and transfers assets into the trust. Second are the beneficiaries, or the individuals who will eventually receive some or all of the assets in the trust. The last party is the Trustee, which is the individual or company that managers and administers the trust assets. The main purpose of a trust is to transfer assets from one person to another upon your passing.
Many people who have established their Revocable Living Trust fail to realize that a trust is only beneficial if the assets are transferred into the trust. Thus, step two, funding the trust is just as important, if not more important, than step one. The transfer of assets should mainly occur during your lifetime; however, some transfers occur after your passing. Trusts can hold all different types of assets, such as cash, stocks, bonds, real estate, tangible property, etc. It is imperative that you make sure each asset is either transferred into the Revocable Trust during your lifetime or the trust is designated as a beneficiary, so the assets transfer into the Revocable Trust at death.
Each asset has its own process for being transferred or funded into the Revocable Trust. Bank, brokerage, and investment accounts can be re-titled directly into the name of a Trust. Retirement accounts, life insurance, annuities and other types of assets that have beneficiary designation are generally transferred at death by naming the Revocable Trust as the Beneficiary on any such policies. Both of these transfers are generally simple processes and can be completed by providing the financial institution a copy of the Trust Agreement and they will complete the proper paperwork.
Real property, which is usually transferred during your lifetime, requires a deed transferring real property into the Trust. It is also important to transfer your businesses to your Trust during your lifetime. This can be done with an Assignment, which is a legal document transfer the ownership to the Trust. Failure to fund a Revocable Trust can lead to monumental problems for both beneficiaries and Trustees as the asset may be subject to Probate or Court Approval to facilitate such transfers after death.
For transfers during your lifetime, it is best to do them at the same time your Trust is executed. Contact Asset and Estate Law, PLLC. for a complimentary consultation to learn more about Estate Planning and Asset Protection.