Two of the main reasons to create a “living trust” are:

1. To administer assets during life in the event of disability, and
2. To avoid probate.

To accomplish these objectives, the trust must own the assets. It is essential to fund the living trust by transferring all assets to the trust.

Yet, attaching a schedule of your assets to your trust agreement does not by itself make the trust the owner of the assets. Also, a general assignment or bill of sale to the trust of “Everything I Own” may not be effective for all of your assets, especially if a challenge to ownership or authority is raised.

Generally, when assets are retitled in the name of a living trust, the name should read: “(Name of Trustee), as trustee of the (Name of Trust) u/a/d (Month, Day, Year).”

The federal tax number to be used is your (the grantor’s) Social Security number if you are trustee or cotrustee. A separate federal income tax return is not necessary. All items of income, gain and loss attributable to the trust are picked up directly on your personal income tax return.

When transferring assets to a living trust, banks or brokerage firms will often ask to see a copy of the trust agreement. The dispositive provisions of your living trust are private, and privacy is one reason for using a living trust. The bank or brokerage firm should only require a certification of trustee powers indicating the name of the grantor, the name of the trustee and successors, and a copy of the powers that permit the trustee to establish the particular account.

Available Funds

The following list of assets is designed to explain the transfer process for these assets and assist in administering the trust:

1.      Stock certificates, registered bonds and other securities. Re-register securities to the name of the trust. Contact a stock transfer agent directly or use a
brokerage firm. Surrender the stock
certificates and sign an assignment or stock power.

2.      Brokerage firm investment accounts. Transfer and assign title and interest in the account and assets held in the account to the name of the trust. Send a letter of direction to the brokerage firm.

3.      Registered federal securities (U.S. Treasury Notes and Bonds). Transfer and assign to the name of the trust. Contact the Federal Reserve Bank for forms and procedures.

4.      Federal obligations (bills, notes, etc.) held in treasury account. Complete Form PD5178. Contact the Federal
Reserve Bank for forms and procedures.

5.      Series E, EE and H Bonds. Complete Form PD1851. Contact the Federal
Reserve Bank for forms and procedures.

6.      Bearer securities. Prepare, sign and
attach general assignment to the name of the trust of all securities and attach it to the securities.

7.      Checking accounts. Transfer existing accounts to the name of the trust. Send a letter of direction to the bank. Keeping an account in your individual name is possible if the balance is modest.

8.      Savings and money market accounts. Transfer existing accounts to the name
of the trust. Send a letter of direction to the bank.

9.      Certificates of deposit. Transfer them
to the name of the trust. Send a letter of direction to the bank. Make sure the transfer does not trigger maturity or penalties. The bank may require waiting until maturity to effect the transfer.

10.  Real estate. Prepare and record the deed transferring property to the trust name. Consider whether a quit claim or warranty deed is required. Check the mortgage documents and ensure there is no acceleration of mortgage due to the transfer. Check the title insurance policy to ensure coverage still exists under a living trust. Obtain a new policy or policy rider where necessary. Check property and casualty insurance policies to ensure
that coverage exists under a living trust. Obtain a new policy or policy rider where necessary. Notify lessees to pay rent to the trust. If dealing with a corporate trustee and out-of-state real estate, you may need to appoint a local trustee to handle the conveyance of the real estate.

11.  Partnership interests. Review each partnership agreement to determine the ability of and requirements for transfer. Determine who must consent to the transfer. Prepare any assignments or consents and obtain the requisite signatures. Determine if amendment to assumed name certificates or limited partnership certificates are required. Consider holding the interest individually where the interest has little or no value and the transfer is difficult due to extensive requirements.

12.  Proprietorships. Determine whether the trust can own the proprietorship. If not, consider forming a partnership with your spouse as 1% or greater partner and transferring the partnership interest to the trust.

13.  Tangible personal property.

a. Titled property (e.g., vehicles). Obtain the necessary documents to assign interest to the name of the trust. For example, contact the Department of Motor Vehicles to obtain the proper form to assign automobiles to a trust. Verify insurance coverage.

b. Untitled property. Prepare a general assignment of tangible personal property. Consider attaching an ownership notation to the back of works of art. Verify insurance coverage.

14.  Life insurance. If your life insurance is payable to a named beneficiary, it will not require probate, and no change of beneficiary may be necessary. If it is payable to your estate, name the trust as beneficiary. Obtain forms from your insurance agent. Review your life insurance separately.

15.  Retirement plan accounts. If your
retirement plan accounts are payable to a named beneficiary, they will not require probate, and no change of beneficiary may be necessary. Payment on retirement plan accounts requires special consideration and should be reviewed separately.

16.  Deferred compensation. Payment of deferred compensation requires special consideration and should be reviewed separately.

Avoiding Probate