Setting up a revocable living trust pursuant to an estate plan is beneficial, however, the revocable living trust must be funded in order for assets to effectively bypass probate. Many people believe that simply creating and signing a trust is enough. This is the farthest from the truth. Each type of asset has a separate funding process. The following is a summary of the most common types of assets and how they can be funded into a revocable living trust.
Real Property: Any real property, which is intended to be titled in a revocable living trust for estate planning purposes, is transferred via a property deed which should be recorded in the property recording office in the county the property is located. Alternatively, for Asset Protection purposes, real property can be titled to legal entities such as limited liability companies using the same method (via a property deed).
Privately Held Stock: Privately held security instruments (such as the stock of a small family business) require proper assignment documents executed from the individual owner(s) to the revocable living trust in order to properly fund the business entity into the revocable living trust. Be mindful that the revocable living trust must account for the distribution of such business assets (if they are deeded into the trust), which can result in a more complex drafting process.
Publicly Held Stock: Publicly held stocks or bonds require working with a stockbroker or through the institution from which the assets were purchased in order to transfer their ownership to a trust. An estate planning attorney can also assist with this process, along with filling out the requisite forms.
Business Interests: Business interests require an assignment of business interest into the revocable living trust in order to avoid probate. The revocable trust should specifically account for the business interests within the trust document and dictate the proper distribution after death.
Financial Products: Financial products, such as life insurance, typically have the revocable living trust named as a primary beneficiary. In order to effectuate this, beneficiary change forms must be filed with the provider serving the financial product. Using the revocable living trust as the beneficiary should be assessed on a case-by-case basis.
If you would like to review whether your revocable living trust has been funded properly or for more information on Asset protection, Estate planning, Business Law and/or Probate please contact the attorneys of The Presser Law Firm, P.A.