Titling Assets To Your Trust
Many of our clients who come in to prepare or update their Will ultimately decide to include a Revocable Living Trust (RLT) in their estate plan after learning about the benefits it can provide. These benefits include privacy, avoiding or reducing probate fees and delays, and aiding in the management of their assets during periods of incapacity.
If you decide to implement an RLT, you’ll want to fund it by moving assets to it after it’s in place. For an RLT, which is the type of trust that operates as kind of a “Super Will,” you should be adding other assets within the days and weeks after you establish it. This is true because assets titled in your trust name are going to have some real advantages over assets titled in your individual name. For one, if you become incapacitated, your successor or backup trustee will be in a great position to go ahead and take action for that asset. In addition, unlike assets such as stocks, bonds or mutual funds that are titled in your name, assets titled to your trust do not have to go through probate. Avoiding this court process can save time, money and protect your family’s privacy.
RLTs are easy to handle for income tax reporting purposes. The Employer Identification Number (EIN) associated with the trust account will remain your social security number, at least so long as you are the sole trustee of your trust, which is usually the case during your lifetime.
So what’s involved with moving assets to your trust? In general, you simply need to change the name of the asset owner to your RLT. Most often this is accomplished with the assistance of your bank or other financial institution. Some assets, like closely-held business interests, for example, will have ownership agreements that need to be consulted before any title changes are made.
Here are some other general recommendations regarding assets to title and not to title to your new revocable trust:
Assets you should re-title to your new RLT:
- Savings accounts
- Money Market accounts
- Mutual funds
- Certificates of Deposit (consider delaying the transfer to maturity if the institution considers the transfer a technical termination that could reset your interest rate)
- Publicly-traded stocks
- Bonds
Assets you should not re-title to your new RLT because they are instead handled by beneficiary designation updates:
- Any retirement account (IRA, 401(k), 403(b), etc.)
- Any annuity
- Any life insurance policy
Assets you should contact competent legal counsel before transferring to your new RLT:
- Stock in a closely-held corporation
- LLC ownership interests however denominated (e.g., Units, Shares, etc.)
- Any other assets not listed in “should re-title” above
In summary, titling assets to your new Revocable Living Trust will help you get the full benefits of this valuable and versatile tool. What’s more, in most cases you’ll find the process relatively quick and painless. If you have any questions regarding the benefits of a Revocable Living Trust and whether this technique may be right for your situation, please contact us to speak with one of our attorneys.
*Intended as general guidance only and not as legal advice.