Once a living trust is created, a testator must engage in the process of transferring personal assets into the trust. Once successfully transferred, the assets no longer belong to the testator. Instead, they belong to the trust. This is referred to as the funding phase of estate planning.
Property is transferred into the trust during funding. If the asset is not transferred to the trust, it is owned by the testator. Therefore, it is subject to probate. Funding a trust depends on numerous variables; therefore, individuals should consult with an estate planning lawyer in San Diego.
Real Estate and Living Trusts
One of the most common assets moved into a trust is real estate. To do this, the individual must be in possession of their deed, and the deed must be executed in the same state as the property’s location. If the home is still under a mortgage, then the lender must approve the transfer into a trust.
Titled Personal Property Transfers
Personal property with titles, such as cars, motorcycles, ATVs, and boats must have a new title that shows the trust as the owner. An estate planning lawyer in San Diego can assist with this type of transfer.
If there is a lien on the vehicle for payments, then lender approval may be necessary before the asset is transferred into the trust. Individuals may have a change in insurance premiums too; therefore, it is in their best interest to discuss it with their insurer.
Some assets of the testator may not have a title, but carry significant value to the estate. This may include books, furniture, tools, jewelry, family heirlooms, and collectibles. An estate planning lawyer in San Diego can draft an assignment of ownership. This simple document will transfer untitled property into the living trust.
When creating assignments, it is important that a detailed description of the furniture or untitled property is included. Doing so ensures there is no confusion about the identity of the item.
Bank Account Funding
Checking accounts, savings accounts, and money markets are transferrable to living trusts. To fund the trust with them, the testator must title the account to the trust. If the title is not transferrable, then the individual must close out their accounts and reopen them in the trust’s name. Consulting a banking professional can identify which accounts may need to be closed out and reopened.
Certificate of Deposit accounts are transferrable, but doing so may be considered an early withdrawal. Therefore, the owner may want to wait for their expiration or speak to a banking representative about any potential penalties for transfers.
Security accounts and stocks or bond certificates may be retitled to the living trust. If they are non-transferrable, they must be reissued. Reissues often require the assistance of a broker or attorney, because they are highly complex processes.
If a brokerage account is qualified as a retirement account, testator’s must be cautious about funding them in a trust. The transfer may be considered an early withdrawal.
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