When a Revocable Living Trust (Trust) is created, the Grantor/Settlor, i.e. the person creating the Trust, declares that certain property is going to be held by the Trust and managed by the Trustee . In most cases, the person creating the Trust is both the Settlor and Trustee. The process of putting property into the Trust is called “Funding” the Trust. The purpose of Funding the Trust is to allow property management by a Trustee other than the Settlor i.e. after the Settlor dies. The Trustee after the Settlor is called the Successor Trustee.
If the Trust is not funded, the Successor Trustee may be unable to manage the Trust without obtaining a court decree declaring the trust property belongs to the Trust. This can be a complicated process and the outcome uncertain. In addition, if the Trust is not properly Funded, there may be disputes over ownership of assets. Therefore, if you have Trust, now is the time to make sure your Trust is Funded.
There are two parts to “Funding” the Trust. First, the Trust needs to list the trust property and have language satisfying the requirement for a declaration that the property listed is to become Trust property as soon as the documents are executed.
The second part is making sure your Trust has legal title to your assets. For bank accounts, this means you need to notify the Bank or Brokerage that you have a Trust and put the account in the name of the Trust. For real property, the Settlor must execute a Grant Deed/Trust Transfer Deed showing the real property transferred to the Trustee of the Trust. After it is executed and notarized, it must be recorded at the county recorder’s office in the county where the real property is located. It is particularly important to check your documents if you have sold or refinanced any real property because the lender may have required the real property to have been deeded back to you from the Trust prior to a sale or refinance. If that was the case, you need to make sure the real property is again put in the Trust. If you have personal property of substantial value which is not titled already i.e. a car or boat, you may want to consider doing an Assignment of Tangible Personal Property to the Trust.
In conclusion, if you have a Trust, now is the time to review it. Make sure that all of the assets you want in the Trust have been listed in the Trust. Make sure that there is language declaring the assets are in the Trust. Finally and most importantly, make sure there is recorded Grant Deed/Trust Transfer Deed for real property, Assignment of Personal Property for personal property and confirmation of bank/brokerage accounts are in the name of the Trust. If you do not know whether your Trust is properly Funded, I see people for a free 30 minute consultation in my Walnut Creek and Brentwood offices.
*THIS INFORMATION IS NOT PROVIDED AS LEGAL ADVICE AND SHOULD NOT BE RELIED UPON IN MAKING ANY DECISION REGARDING ESTATE PLANNING. THIS INFORMATION IS NOT A SUBSTITUTE FOR OBTAINING TAX & LEGAL ADVICE REGARDING AN INDIVIDUAL SITUATION. (925) 939-1680.
© 2014 Joan Grimes