Estate Planning 101 – Part 3
You have created your Trust documents, and now you have three essential steps to consider. First, you need to sign and execute any and all Trust documents. Then, you will want to fund your Trust with your most valuable assets. Finally, you will want to perform periodic checks to ensure your Trust is up to date.
Signing and Executing Your Trust
After your Revocable Living Trust has been completed, it is time to sign and execute it! This part is as easy and straightforward as it sounds. To fully implement your Trust, you will need to have your documents signed and notarized. Once all documents are signed and notarized, be sure to keep your executed records in a safe place so that you will have access to them when you need them most.
Then, it’s time to turn your focus to funding your Trust.
Funding Your Revocable Living Trust
What does it mean to fund a trust?
To fund a trust, you must transfer assets from you to your Trust. This means that you are changing your assets’ titles from your name to the name of the Trust.
Why should you prioritize funding your Trust?
The answer to this question is simple. Your Trust is only able to control the funds in it. You may have diligently worked towards setting up a great trust, but it does not control anything until you fund your revocable living trust. If your goal in having a revocable living trust is to avoid probate when you die, including court intervention at incapacity, then you must strive to fund it now while you are still able to do that.
What will happen to my Trust if I forget to transfer an asset?
This is when it is critical to turn to your attorney. When you create your Trust, your attorney will prepare a “pour over will” that acts like a safety net. When you die, the Will is able to catch any assets that you may have forgotten to send to your Trust. The investment will most likely have to go through probate first, but then your forgotten assets will be distributed according to the instructions in your Trust.
What assets should I put in my Revocable Living Trust?
Generally speaking, the assets you want in your Trust should include real estate, bank, and savings accounts, investments, business interests, and notes that are payable to you. You will also want to change the most beneficiary or contingent beneficiary designations to your Trust so those assets will flow into your Trust.
What should you do with your IRA and other tax-deferred plans?
Before you do anything, please stop and hear this. Do not change the ownership of your IRA and other tax-deferred plans to your Revocable Living Trust without knowing all of your options. Some of our clients choose to add their Trust as a beneficiary, but we want to make sure that you are aware of all of your options, such as a spouse, children, grandchildren, a Trust, charity, etc. You can choose one beneficiary or several. Just know, whoever you choose to name as a beneficiary will work to determine the amount of tax-deferred growth that can continue on your money after you die.
Married couples more of than not name their spouse as beneficiary because the money will be available to provide for the spouse and the spousal rollover from your tax-deferred account into their own IRA, allowing them to name a beneficiary, such as their children. Though you can elect a non-spouse beneficiary who can inherit a tax-deferred plan and roll it into an IRA to continue tax-deferred growth, only a spouse has the ability to name additional beneficiaries on a tax-deferred basis.
No matter who you choose as a beneficiary, we want you to be aware that you lose control. After you die, the beneficiary of your Trust is able to do whatever he or she wants with his money, including cashing it all out and destroying all plans that you made for long-term, tax-deferred growth. Your assets could then be available to creditors, spouses, and ex-spouses, and there is a risk of court interference at the incapacity of your chosen beneficiary.
When you choose to name a Trust as a beneficiary, you can maintain maximum control because the distributions will be paid not just to an individual but into the Trust. And if you recall from our previous article, you trust directions contain your instructions for allocation, such as who will receive the money after you die and when they can receive the money. After you die, distributions will be based on the life expectancy of the oldest beneficiary of the Trust. You can also set up separate trusts for each beneficiary to use each one’s life expectancy.
As you can see, there are so many options. Because a lot of money is at risk, we suggest you get expert advice to ensure you are making the best choice for your assets and chosen beneficiaries.
How should you handle your Real Estate assets?
In the United States, the easiest way to transfer property into your Trust is to have a deed prepared. Once you have the deed, you should file it with your county.
The quickest way to transfer real estate to your Revocable Living Trust is to contact a local title company. Then request that they create either a quitclaim or warranty deed that allows you to transfer your property from you to the guarantor of your Revocable Living Trust.
You can be prepared for your meeting with the title company by coming with a copy of your Trust in hand. Should you want to transfer the property yourself, know that your state will have its own set of rules and procedures that must be followed to record a new deed.
This may sound overwhelming, but remember, our trust team is able to streamline this process for you. After all, we are here to help.
What about transferring other assets?
Other types of assets may need to be updated and transferred into your Revocable Living Trust. The table below showcases the assets that may be added to your Trust. Each one has its steps to do so. Our professionals are ready to guide you through the instructions for a wide array of assets, so please do not hesitate to reach out for help.
| Aircraft | Annuity | Automobiles |
| Boat | Brokerage Accounts | Burial Plot |
| Certificate of Deposit | Checking Account | Closely Held Stock (Sub-S or Inc) |
| Copyright | Employee Benefits | General Partnership Interest |
| Government Securities in Your Personal | Possession | Individual Retirement Account (IRA) |
| Judgement | Life Insurance Policy | Limited Liability Company (LLC) |
| Limited Partnership Interest | Livestock Brand | Mineral Rights |
| Mobile Home | Motor Home | Mutual Fund Accounts |
| Patent or Trademark | Pension and Profit Sharing Plan | Personal Property |
| Professional Corporation | Promissory Note – Secured by a Deed of Trust | Promissory Note – Unsecured |
| Recreational Vehicle | Royalties | Safe Deposit Box |
| Savings Account | Sole Proprietorship | Stock Certificates in Your Personal Possession |
| Timeshare | Uniform Transfers to Minors Account (UTMA) | Uniform Gift to Minors Account (UGMA) |
| 401(k) Retirement Plan | 403(b) Retirement Plan | 457 Retirement Plan |
Periodic Revocable Living Trust Check-Ups
Just like going to the dentist for routine cleanings is essential, so are the regular check-ups you should have for your Estate Plan. After all, life changes constantly, and significant changes can affect your Trust.
Major changes include:
- Marriage
- Divorce
- Birth or Adoption of a Child
- Death of a Beneficiary
- Change or Addition of a Beneficiary
- Change of a Trustee or Successor Trustee
- Change the way the Property is Distributed
- Change the way your Property is Part of the Trust
- Change of Your Name
- Acquisition of New Property
- Change of Residence to Another State where Inheritance Laws are Different
Are you look for help with a Trust?
At Trust Company of Oklahoma, we are here to help. Since becoming state chartered in 1981, we have become Oklahoma’s largest and oldest independent trust company. We will help you build and protect your assets now, and in the future. Contact us today to get started!
