Once you’ve created a revocable living trust, there’s one more crucial step: formally transferring assets to the trust. This is called “funding the trust”—and if you don’t do it, your trust will have no effect on how your property is transferred after your death. The assets you thought would be controlled by the terms of the trust will pass instead under your Will or, if you don’t leave a Will, under state intestate succession law.
It’s very common for people to neglect the funding step altogether, or to leave out valuable assets. Many people assume, if they hired a lawyer to draft the trust document, that the lawyer will also take care of the funding. But that’s not always the case, so be sure to check with your lawyer and be clear about your responsibilities.
If an asset that you want to hold in trust has a document showing who owns it, then you’ll need a new ownership (title) document, showing that the asset is now held in trust. Common examples include:
* Real estate
* Stocks
* Bank and brokerage accounts
* Cars and other vehicles
* Copyrights and patents
So, if you want to hold your house in your living trust, you’ll need to prepare, sign, and record a new deed, showing that the property is held in your trust. If you want to transfer bank or brokerage accounts to your trust, contact the financial institution and ask that ownership be changed in its records. The institution may ask to see a copy of the trust document, as evidence that the trust actually exists.
Lots of assets, including many valuable ones, don’t have official title documents. For example, you might want to hold your jewelry or artwork in your trust, or heirlooms that have significant sentimental value. You can do that by listing the items in the trust document (commonly a list, or schedule, of property is attached to the trust document). If you want to make more of a paper trail, you can create a simple document called an Assignment of Property or "Bill of Sale." It transfers assets from you as an individual to you as trustee of your trust.
If you have questions about how revocable living trusts work and whether they would be a could option for your estate plan, give us a call at 253.858.5434 to set up an appointment today.