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Palm Springs Law Blog

Monday, July 31, 2023

Funding Your Living Trust: Transferring Assets for Proper Trust Administration

A living trust is a popular estate planning option for individuals with considerable assets looking to provide for multiple generations, as well as for those seeking to avoid paying estate taxes. No matter why you choose to create a living trust, the trust will only work if it has assets.

A living trust is an entity that can acquire, hold, and dispose of assets in its name to fulfill the purposes of the trust. However, for a trust to achieve its objectives and provide the benefits you are looking for, it must have assets.

Here is how you can ensure proper administration of your trust by transferring assets into it.

Funding Your Trust in California

It’s important to fund your trust with assets you want to be managed by the trust as soon as you can. This includes the following types of assets and property:

Real Property

If you have a home, land, or other real property, these can be placed in the name of the trust using a quitclaim deed or other type of deed.

Such transfers can be more complicated than they first appear, however. If you have a title insurance policy, you will need to check with this company to see if you must purchase a new policy before transferring the property to your trust.

You may also need to update tax records and identify the trust as the beneficiary of your homeowners insurance policy.

Vehicles

Your living trust can also receive vehicles. If you and your attorney decide that such a transfer makes sense, the California Department of Motor Vehicles has a form available to effectuate these transfers.

Financial Accounts and Insurance Policies

Except for individual retirement accounts (IRAs), many bank accounts can be transferred into the name of the trust by completing a form provided by the bank.

Similarly, while the trust may not be able to own insurance policies, you can designate the trust as a beneficiary of your life insurance policy, homeowner’s insurance policy, and other insurance policies by completing a form provided by the company.

Personal Property Items

Transferring items like artwork, heirlooms, and jewelry to your trust involves creating a schedule as part of your trust documents. This schedule should identify what items you intend to transfer to the trust with specificity so that they can be properly identified.

Remember to identify the trust as the beneficiary of any insurance policy you have for any of these items.

The Ongoing Need to Transfer Property to the Trust

Keep in mind that transferring property to your trust is rarely a one-time event. As you acquire additional property in your name, you may wish for this property to become part of your trust, too. You will need to transfer these items to your trust as you acquire them.

However, if you are concerned that you will not be able to transfer every item accordingly, you can add an extra layer of protection with a will.

Creating a Pour-Over Will

One way to safeguard against any items of property that may not be included in your trust is to create a pour-over will. This document directs that all property you own outright that is not part of your trust is transferred to your trust upon your death.

A Skilled Attorney Can Guide You on Funding Your Trust

Navigating the process of funding a trust can be complicated and overwhelming. Simplify the process by turning to an experienced wills and trusts lawyer in Palm Springs, CA, from Heritage Legal, PC. Our dedicated team can advise you on how best to fund your trust and address any special issues as they arise.

Schedule a consultation with us to learn more today.


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