A living trust is a valuable tool for managing your assets and ensuring they’re distributed according to your wishes. But creating the trust is only the first step—funding it is what makes it effective. Without transferring ownership of your assets to the trust, those assets could still end up going through probate. By properly funding your trust, you gain peace of mind knowing that your property, bank accounts, and other valuables are securely managed and ready to pass to your chosen beneficiaries without unnecessary delays or complications.
Why Funding Your Trust Matters
Funding your living trust is critical in ensuring it works the way you intend. Without funding, your trust is just an empty document; any assets left out of it could still go through probate. This means your beneficiaries could face delays, additional legal fees, and public court proceedings. By transferring ownership of your assets into the trust, you keep control over how and when your property is distributed. Properly funding the trust helps avoid probate and ensures your loved ones can access what you leave behind without unnecessary complications. It also provides continuity if you become incapacitated.
Adding Your Home to the Trust
Transferring your home to your living trust protects one of your most valuable assets. To begin, you’ll need to create a new deed that transfers ownership from your name to the name of your trust. This involves recording the new deed with your local county recorder’s office, a straightforward process that ensures your home is now part of the trust. Once the home is in the trust, it will bypass probate and be distributed according to the terms you set.
It’s also important to update your homeowner’s insurance to reflect the trust as the new owner. This ensures continued coverage in case of any damage or liability issues. If you have a mortgage, notify your lender of the transfer.
Transferring Bank Accounts
Transferring your bank accounts into your trust is a simple but important step to ensure these assets avoid probate. Start by visiting your bank or financial institution to change the ownership of each account, such as checking, savings, and money market accounts, into the name of your trust. The bank will likely require you to complete some paperwork and provide a copy of your trust documents.
Adding Investment Accounts
Adding your investment accounts into your trust helps guarantee that these assets are managed according to your wishes. Here’s how to manage different types of investment accounts:
- Brokerage Accounts: To transfer a brokerage account to your trust, contact your brokerage firm. They will provide you with the necessary forms to update the ownership of the account.
- Retirement Accounts: For tax reasons, you usually can’t transfer retirement accounts, such as IRAs or 401(k)s, directly into a trust. However, you can name the trust as a beneficiary, ensuring the funds are directed according to your wishes. It’s a good idea to consult with a financial advisor before doing this to avoid unintended tax consequences.
- Stocks and Bonds: If you hold individual stocks or bonds, you can re-title them in the name of the trust by contacting your broker or financial institution for specific instructions.
Transferring Vehicles to the Trust
Transferring your vehicles, such as cars, boats, or RVs, into your trust can be a simple process but is often overlooked. To do this, visit your local Department of Motor Vehicles (DMV) and request a title transfer form to change the ownership from your name to the name of your trust. If your vehicle is financed, you’ll need approval from your lender before transferring the title. Keep in mind that some people choose not to transfer vehicles, as they can often pass outside of probate with minimal issues.
Miscellaneous Assets
Miscellaneous assets can be easily added to your trust to ensure they are handled according to your wishes. Here are some common types:
- Personal Property: Items like jewelry, furniture, and artwork can be included in the trust through a personal property memorandum that specifies which assets are covered.
- Business Interests: If you own a business, transferring ownership or shares to the trust ensures continuity and protects your business for the future.
- Collectibles: Valuables such as coin collections or antiques can be re-titled in the trust’s name or listed in a memorandum to avoid probate and streamline distribution.
Contact Our Experienced Orange County Living Trust Attorneys
Funding your living trust is key to ensuring your assets are protected and distributed according to your wishes. At OC Wills & Trust Attorneys, we can guide you through the process. Contact us today to learn how we can help you with your estate planning needs.
