Establishing a Revocable Living Trust is a two-step process. Step one involves creating the actual trust agreement. This is basically an instruction manual for how you want your trust assets to be managed. Step two involves transferring your assets into the trust. The trust doesn’t become functional until it is funded with your assets—in other words, until you transfer ownership of the assets to the trust.
How exactly you transfer ownership of an asset depends on what type of asset it is. Here’s a brief run down on some of the most common types of assets and how ownership is transferred.
Bank Accounts
Savings, checking, and money market accounts will need to be titled to your trust. This may entail closing your existing accounts and re-opening them in the trust’s name. If you have CDs, you may have to wait for them to mature before making changes so that you don’t incur any early-withdrawal penalties. Work with your bankers. Each institution will have its own process.
Real Estate
Transferring real property into a trust is a bit more complicated. Most typically, a quitclaim deed is used to transfer real property into a trust. But real estate transfers can have tax implications and incur other fees. A property subject to a mortgage or to a homeowner’s association may have additional hurdles to overcome in the form of required approvals for the transfer. Further, real estate transfers are going to be state specific. When it comes to real estate transfers, proceed with caution or with the help of a professional.
Titled Personal Property
Any property that is titled with the state—such as cars, boats, and snow mobiles—will require re-titling in the trust’s name. But first, it is important to find out if transferring ownership will result in significant taxes or fees.
Of note, some states (New York is not one of them) will allow you to designate your trust as a beneficiary on a motor vehicle title. This keeps the car in your name while you’re alive and then transfers title to the trust when you pass away.
Two additional checkpoints when transferring titled personal property: lenders and insurers. Transferring personal property subject to a lien will need the lender’s approval. It’s a good idea to check with your insurer to see if a title transfer will affect your premiums.
Life Insurance Policy
You can name your trust as the owner or as a beneficiary of your life insurance policy. This enables the trustee to manage the policy if you become mentally incapacitated. That said, using a power of attorney to manage your life insurance policy may be a better solution. This is because in some states, the cash value of a policy is protected against creditors but only if the policy is owned by the individual.
Contact a Corning Estate Planning Attorney
A properly funded trust can be an excellent estate planning tool. Every type of asset has its own funding process. Work with an estate planning professional and get the peace of mind you—and your family—deserve. Roth Elder Law, PLLC is here to help. Call us today to schedule an initial meeting at 607-962-6162or complete this intake form and we’ll be in touch.