So you finally finished your estate planning and signed your revocable living trust. Phew!! Now you are done. Or are you? Finalizing your trust is a major accomplishment to be applauded for sure. However, your trust is only effective as to assets “in the trust.” You will not avoid probate unless and until the trust obtains legal title to your property. The procedure of transferring title of your assets to your trust is called “funding” the trust and is a vitally important step in implementing your estate plan.
For an asset to be subject to the terms of your trust, you must transfer title to yourselves as trustees. In general, title on all trust assets should be held: “John Doe and Jane Doe, trustees of the John and Jane Doe Trust, dated _ _[date]_ _.”
Transferring title varies depending on the type of asset, but all transfers will require some documentation or “documents of title” be signed. The following is general guidance about common funding transfers, but there are nuances and variations so you should consult with your advisors to be sure the transfers are completed correctly:
1. Real property. To transfer your residence and other real property to the trust, you must execute a grant deed to the trustee(s) of the trust and then record the deed at the county recorder’s office (along with a Preliminary Change of Ownership Report). Again, the “grantee” on the deed will be in the form of “John Doe and Jane Doe, trustees of the John and Jane Doe Trust, dated _ _[date]_ _.”
Exception: If you purchase a home under the Cal-Vet program you should consult with the Department of Veterans Affairs for the proper method of transferring your contract.
2. Financial institution accounts. These accounts are normally transferred by changing the name of the account owner on the signature card or other “contract” between you and the bank, broker, etc., to the trustee of the trust. Financial institutions should be accustomed to making these transfers and generally have their own set of forms or documents to complete. Often, the institution will want a “certification of trust” and may ask that you complete their version. If not, your attorney can assist you with preparing one. It is highly recommended to visit the institution in person with a copy of your trust agreement than trying to do it over the telephone or on-line.
3. Stocks and bonds. If you hold your shares through a brokerage firm, you need change the title on the brokerage accounts. Your stockbroker may request a copy of the signed trust instrument for examination by his or her firm’s legal department. Again, this can be satisfied by a Certification of Trust which your attorney can help prepare for you as needed.
If you have physical stock/share certificates in your name, those certificates will have to be transferred which normally requires surrendering the certificates and having new certificates issued in the name of the trust. This process can be complicated and may involve working through a “transfer agent” so you should ask your advisors to assist you.
4. Automobiles. Generally, it is not necessary to transfer automobiles to the trust provided that you have given someone a durable power of attorney, which will enable them to sell the vehicle and transfer the proceeds to the trust if you become incapacitated or if you hold title with your intended beneficiaries as joint tenants. Also note that California law provides a procedure for an heir or other successor to the decedent’s property to transfer vehicle titles if the decedent has no other probate property and no probate proceeding is being conducted. The DMV has a form for certifying entitlement to transfers, titled “Affidavit for Transfer Without Probate; Titled Vehicle or Vessels Only.”
5. Other personal property. Since you generally do not have “title” documents for items such as your furniture, clothing, jewelry, etc, it is advisable to sign a general assignment to clearly indicate that you intend the trust to also hold all your tangible personal property.
6. Interests in businesses, including partnerships and small corporations. Transfers of interests in businesses will require an attorney’s assistance. Businesses generally require a variety of permits and licenses, and it is necessary that they be reviewed in detail before making the transfer. In addition, most business are held through an entity which may have owner agreements or other governing documents that need to be considered and complied with.
In addition to your current assets, moving forward you should take title to assets in your trust’s name as you acquire them. If you take title to an asset in your own name, that asset will not be a trust asset, undermining your planning.
If you have questions or need assistance with funding your trust, you should consult with experienced estate planning professional such as the Estate Planning Group at Wilke Fleury.
