Once a living trust is established, then specific steps are taken to fund the trust. You can also use beneficiary designations so property will pass outside of probate. Some misunderstand that everything you own should transferred or retitled to the trust. An attorney will properly guide you through the funding process. You will learn that one does not blindly toss all the assets they own under the name of the trust. An estate planning attorney will educate you how beneficiary designations can be used. They are used in conjunction with your trust. This allows you to achieve your objectives for distributing your estate without probate.
This article outlines steps to ensure that a living trust California functions as intended. In some instances, these steps should not be taken, as we have specified below. Since this is merely a guide. An estate planning attorney can assist you proper analysis of the funding of a irrevocable living trust. Some common assets which attorneys confront when addressing funding issues appear below.
Adverse tax consequences could result from transfering certain assets into a trust. This includes IRA’s and retirement plans. It is recommended that retirement funds never be transferred into the trust. or retitled in the name of the trust.
One recommendation is for the spouse to be named as the primary beneficiary. With second marriages, sometimes you will provide for children of a prior marriage. In this case, list the children as the primary beneficiary. If you are single, you may designate either your trust or your children as beneficiary.
It will help if you exercise caution in filling out the change of beneficiary form. Some institutions include a change of ownership section on the same form. A change in ownership of a retirement account is the last thing you want to do. Nor are you transferring or retitling the retirement account(s) in the name of the trust. You are merely effecting a change of the beneficiary for the retirement account.
As to life insurance policies, anyone can be named as beneficiary. This will avoid probate of the life insurance proceeds even in the absence of a living trust. A living trust allows much greater flexibility and management over life insurance proceeds. It can be prudent for a revocable living trust to be named as the beneficiary of a life insurance policy. The trust affords extensive protections to any asset that passes through it. This includes life insurance. As with any asset, there are always potential tax issues. An experienced estate planning attorney would be an excellent resource.
If you have any Certificates of Deposit, ask someone at the bank if there would be a penalty for retitling any CDs. Some banks treat the matter as a transfer and impose a stiff penalty. In this case you should leave the CDs as is until they mature. At the time of maturity, if you cash them out, place the proceeds into an account that bears the name of your trust. If at maturity you decide to put the funds into another CD, inform the bank to title the new CD in the name of your trust.
Stock and bonds can be handled in a couple of different ways. One option is to request a “Transfer in the Event of Death” form. This way, you can name specific individuals whom you wish to receive the asset upon your death. This will function to allow the asset to pass outside of probate upon your death. Another option is to have the stock registered in the name of the trust. Your investment manager or stockbroker can help you use one of these alternatives.
Usually, the owner’s spouse is designated as the beneficiary on tax-deferred annuity. The children are named as secondary beneficiaries. If unmarried people owns annuities, have natural persons named as beneficiaries. The trust should never be the owner of an annuity contract. The rule is for only natural persons to be named as beneficiaries under an annuity contract. Otherwise, drastic tax consequences could result and favorable distribution options. This includes the use of a life expectancy to stretch the deferral period for taxes. A knowledgeable estate planning attorney would be an excellent resource for advice. They can help to best handle annuities with living trusts and estate planning.
AYou can ask banks to retitle any accounts into the name of the trust. This includes money in checking, savings, money market, or other bank accounts. The bank handles many of these requests weekly, and it is straightforward to do.
Almost all estate planning law firms will prepare and record any trust transfer deed(s). This includes your home and other real property which you own in any state within the United States. A California living trust can hold title to any real property. Call your insurance agent who handles your homeowner’s insurance. Ask if they need to have your policy reflect that the home is now in your revocable living trust. It would also be prudent to notify your title company that your property is now in a living trust.
As for vehicles, boats, and trailers, California law is favorable to you in this regard. There is no need to go to the DMV and retitle any such assets. There is an exception in the rare case of an expensive car collection. You can leave the title in your name for any cars, boats, and trailers. Any future vehicle purchases should be in your name.
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