This step is crucial to a living trust. Without transferring specific assets, those assets may be subject to provide or worse, your estate may not function as planned.
Refer to the instructions that come with your estate plan and make sure the preparer of your documents helps you understand what needs to be addressed. Consult your legal, financial and insurance professionals before taking any steps taken from this website.
Many estate planners will prepare a new deed for property in your state. Ask your estate planner if they are preparing the deed. If not, you need to contact a title company to get the deed created. Otherwise, that property will likely go through probate. After signing and notarization the deed should be sent to the property's county recorder.
If you have property out-of-state, it is often cheaper to call a title company in that state to prepare the deed. The downside of this route is you may forget to research and transfer the property, potentially leading to probate.
Does transfer of a property into a living trust make a mortgage due? No.
Once your living trust is signed and notarized, take all estate planning documents to the bank. They will search for information they need to copy. The process rarely takes more than 15-20 minutes.
Most federal banks and credit unions let you keep the same account numbers. Direct deposits and automatic withdrawals aren't interrupted. When you order your next set of checks, you should be given the option of having your name or your trust's name on your checks. Consult with your bank.
Vehicles, Boats and Mobile Homes
Check with your estate planning professional, state bar or motor vehicle department regarding transferring vehicles into a living trust. Some states require a vehicle to be owned outright free-and-clear before transferring the vehicle into the trust. A trip to the Motor Vehicle Department is typically necessary and be prepared to spend $10-$20 per vehicle for each title transfer.
Small personal items
You don't have itemize every item in your home. Most trusts include an "assignment of personal property" that covers assets in your home that don't have a title:
- Salt and pepper shakers
The assignment covers present and future property. A simple rule to remember: if you buy it from Target or Best Buy, this assignment page transfers the asset into the living trust.
You likely will have a page to handwrite specific items you wish to designate to any beneficiary you choose.
By requesting or downloading a "Change of Beneficiary" form from your insurer, you can list your living trust as a beneficiary so the policy payout is distributed according to the same rules as other assets of your estate. Having a trust control life insurance payouts is a primary reason young families opt to include a living trust in their estate plan.
Be aware that life insurance payouts to the trust will be used to pay off the estate's debts before being distributed to beneficiaries.
If the life insurance lists people instead of a trust as the beneficiary, the payouts to the beneficiary do not need to be turned over to creditors. Talk to an attorney if you need legal advice in this situation. This option is normally used when beneficiaries are old enough to receive distributions without restrictions.
Retirement accounts: 401(k)s, IRAs, etc
Transferring these accounts from your name to your living trust's name is akin to cashing out your retirement funds. That's a huge taxation. So don't transfer the retirement accounts in your living trust. Since you likely already have beneficiaries listed when you started the account, it'll avoid probate.
New IRS "stretch" laws allow beneficiaries to keep the money intact for the continued tax-deferred growth. Naming a living trust as the beneficiary often eliminates the "stretch" opportunity. Now is a great time to ensure your retirement asset beneficiaries are listed correctly.
Consult your financial advisor and/or attorney before transferring retirement assets to a living trust.