The primary purpose of having your assets in a living trust is to avoid the expense and delay of the probate process. Keep in mind that anything that you own which is not jointly held or in a revocable living trust at the time of your death will go through probate . Therefore, if you have created a revocable living trust by executing a trust agreement, the objective is to transfer the ownership of suitable assets into the name of the trustee of your living trust, so that these assets will not be involved in the probate process.
Your living trust can’t have any beneficial effects, if it is unfunded (empty). The trust can’t deal with property that it does not own. So, it is an essential step in making your trust effective to transfer ownership (title) of property to the trust’s name.
Most of your assets should go into your living trust. Any assets which are solely in your name, outside of your trust will be subject to the probate process. Transferring assets into your trust is usually very simple. Basically, there are two types of property that are transferred into a trust – property with ownership (title) documents and those without such title documents. Each type of property is treated differently when it comes to transferring it to your trust.
1. Property Without Ownership (Title) Documents
Many types of property don’t have title documents, including all kinds of household possessions and furnishings, clothing, jewelry, furs, tools, farm equipment, antiques, electronic and computer equipment, art works, bearer bonds, cash, precious metals, and collectibles. Some estate planners suggest that you can transfer these items to the trust simply by listing them on a trust schedule and that no other action is needed. However, we recommend that such items be listed on a schedule attached to a transfer document such as a Bill Of Sale, which simply and legally formalizes the transfer. Enclosed is a Bill of Sale for you to sign when you come in to sign the deed to your house.
2. Property With Ownership (Title) Documents
After your trust agreement has been signed, witnessed, and notarized, it is essential that you formally re-register the ownership of all items of property, that you want to transfer into your trust, which have ownership documents (title papers). Here is a list of some of the types of property which must have the title documents re-registered, if you want such property transferred into your trust:
(i) Bank Accounts
(ii) Business Interests
(iii) Motor Vehicles
(iv) Real Estate (Real Property)
(v) Stocks, Bonds, & Mutual Funds
Your trust won’t be effective for any property with an ownership document which is not re-registered in the trust’s name. The new document of title must show that the trustee – not you, the grantor – is the legal owner of the property. If the trustee isn’t the legal owner of the property, the trustee (and successor trustee) has no legal authority to deal with the property for the benefit of the beneficiaries and no authority to transfer that property to the beneficiaries as your trust directs.
If the title to property listed on the trust schedule remains in your name (you fail to re-register it to your trust), that property will pass under the terms of your will. Since it’s not usually specifically listed in your will, it will go to the residuary beneficiary, who, of course, may not be the person who you intended to receive it. Even if your residuary beneficiary in your will is your trust, that property will have to pass through the probate process. If you have no will, any property not transferred to your trust will be left under the terms of the state’s intestate succession law. In either case, it will be subject to all the expense and delay of the probate process – the very things you are trying to avoid.
Our firm can discuss how a living trust will help you make distribution of your assets after your death without going through probate, and can discuss how to fund the trust to make it effective. Contact us and arrange an appointment to discuss this important subject.
When working with the family of the recently deceased, the most common complaint we hear is that they are overwhelmed by paperwork after the decedent’s death. We recommend that you consider spending some time getting your “legal affairs” in order. This will make life easier in the long run for your heirs.
Our specific recommendation is that you write a letter to your potential Personal Representative (what Florida calls your Executor) explaining to your Personal Representative all aspects of your affairs and providing to your Personal Representative all of the information which you think he or she needs to know. In many cases, you are the only one with the “big picture”, and are best prepared to organize the information which your Personal Representative will need at your death. This will greatly simplify and streamline the transfer of your assets.
We suggest that you keep the originals of your important papers in a safe deposit box. This should include your original Will, Durable Power of Attorney, Living Will, Medical Surrogate Appointment, stock certificates, bonds, insurance policies, marriage and death certificates, and other similar papers, and almost as important in this internet age, of a list of websites you frequently access with updated passwords. Copies of those papers should be in separate files in a file cabinet which has a key and which is located in your home. The information which will be extremely helpful to your future personal representative includes the following:
1. Safe Deposit Box location and key.
2. A copy of your current Last Will and Testament and the location of the original.
3. Original Living Will with another original to be held in your safe deposit box.
4. Burial instructions and arrangements made, including prepayments and rights to which you are due.
5. A copy of any Trust Agreements which you have established or for which you are the beneficiary. The originals should be in your safe deposit box.
6. Social Security records for you and your spouse.
7. Copy of your Marriage Certificate with the original being held in your safe deposit box.
8. Copy of Pre-Nuptial or Post-Nuptial Agreements with location of originals noted.
9. Divorce/Separation Agreement.
10. Passports for you and your spouse.
11. Real Estate Information. For each property owned by address:
(a) Copy of most recent tax bill for each parcel owned.
(b) Where your file is containing your Deed, Title Insurance Policy, Mortgage information, and other information regarding the property.
(c) Copy of your Mortgage Payment Coupon indicating the name, address and telephone number of the Lender and the Mortgage Loan Number.
12. Automobile Title or Lease Agreement, and Boat Title, and location of each.
13. List of all credit cards held including names of creditors, addresses, telephone numbers and account numbers. A copy of a statement regarding each credit card held would be helpful.
14. Banking information, including name and location of each bank in which you have an account, and account numbers.
15. Recent Brokerage and Mutual Fund Statements – copy of one statement for each account.
16. Retirement Asset Statements, IRA, Keogh, Company Pension Plan Asset Statements.
17. Partnership Agreements, Leases or other contracts to which you are bound.
18. Copies of last year’s Federal and State Income Tax Returns.
19. Notes Receivable, Notes Payable and other loan agreements.
20. Life Insurance Policies (with master list of each policy).
21. List of the name, address and telephone number of your lawyer, accountant, financial planner, stockbroker, insurance agent, including fax numbers of those individuals.
Putting all this information together may seem like a lot of trouble to you, but at least you know where everything is. Think of how much trouble it will be for someone who follows you who has no idea where these things are or even if they exist. By so doing, you will enable your Personal Representative and family members to carry out your wishes quickly, efficiently and with as little burden as possible.
Please call our office for an appointment to discuss and have prepared the documents you will need during your life (Powers of appointment, Medical Surrogate appointments, etc.) and after (Last Will and Testament, Revocable Trusts) to make handling your affairs straight forward and as uncomplicated as possible.
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