One of the major purposes of using a revocable trust as the main instrument in an estate plan is to avoid probate of the trust assets upon death. In order to avoid probate, all assets must be owned by the trustee of the Trust before death. Accordingly, it is imperative to transfer or re-title all assets in the name of the Trust. In other words, the estate plan is not complete upon executing a well-drafted Trust; the Trust must be funded with the settlor’s assets.
Funding a Trust is relatively simple, and the process often begins by making a list of a settlor’s assets and determining the title of those assets. The types of assets that may be transferred to the Trust include stocks; bonds; real property; bank accounts; brokerage accounts; certificates of deposit; savings accounts; life insurance policies; and corporate or partnership interests. In the event any assets are owned jointly, (i.e. the marital home or a joint bank account), all joint owners will need to join in the conveyance to the Trust.
Transferring title of bank accounts or investment accounts is a generally simple process that will involve completing paperwork that will be provided by the bank to effect the transfer. The bank or brokerage firm must change their records to indicate that the trustee of the Trust now holds legal title to the account. A Certificate of Trust document is helpful to provide banks and institutions with the information they need to re-title accounts in a trust, while still retaining the confidentiality of the trust agreement.
All real property to be transferred to the Trust must be conveyed by deed. It is important to determine whether any existing mortgage secured by the real estate will be affected by a transfer to the Trust prior to executing the deed. For example, some transfers of real property may trigger a “due on sale” clause in the mortgage. It is important to carefully comply with the requirements of the law of the state where the property is located.
Tangible Personal Property (Such as Gold, Coins, or Art Collections)
Since there is generally no proof of registration or ownership of these types of assets, transfer to the Trust can be accomplished by a Deed of Sale or an Assignment reflecting the conveyance of the assets to the Trust.