If you have a living trust, you probably think that you will avoid probate. Well, that may be true, but having a stack of documents you call a trust is not enough to do the job, you have to now put assets in your trust. Imagine your living trust is a bucket. Once you sign your trust, you have an empty bucket, but you can now start filling it with your stuff.
How do you fill your bucket? Let’s go over three types of assets people usually have. If you have other assets not on this list, I can walk you through how to put those assets into your trust.
Real Property
For real property, the title or deed should list your trust as the owner. This is usually done with a deed that is recorded with the county recorder’s office. A word of caution – if you refinance, the bank may take your real property out of your trust and sometimes they will put it back. If you’re not sure whether your real property is in your trust, just give me a call and I’ll be happy to check for you.
Bank Accounts
Like real property, the title to your accounts should have your trust as the owner on record with the bank or financial institution. If it is not, take a trip to your bank, or call them if they have no brick and mortar locations, and tell them that you want your accounts in your trust. They will usually know how to help you. Pro tip – you don’t need to give them a full copy of the trust, you probably have what is called a certification of trust which is a 1-2 page document that summarizes what the bank needs to know to do the transfer.
Retirement Accounts
Your retirement accounts (IRA, 401k, 403b, etc…) DO NOT go into your trust, they stay in your name. Note that your trust does not control where your retirement account goes when you die, that beneficiary designation form you probably filled out when you opened your account controls. You could list your living trust as beneficiary of your retirement account, but that is not a good idea since it will result in big taxes being paid by your heirs. You either want to list your heirs down individually or list a trust specifically designed for retirement accounts as the beneficiary. A trust specifically design for retirement accounts, or IRA Legacy Trust, is a fantastic tool to protect the retirement accounts for the next generation from lawsuits, divorce and creditors. That is another topic for another day, but if you want to know more now, just give me a call.
So, remember that you need to fill your trust for it to work as intended. A big part of my job as an estate planning attorney is inviting my clients back in every few years to make sure their trust has their assets in it and that everything is up to date.
If you or a client of yours has a trust and would like it reviewed, please call to schedule a free consultation.
