The Most Important Part of Completing Your Living Trust Is Funding Your Assets Into the Trust. This Website Will Take You Step by Step Through The Completion of That Process

Step One

You have received your Living Trust and no doubt opened it. Congratulations, you have made a major step toward arranging your estate affairs. Don't let all that paperwork intimidate you. This is going to be easier than you think. 

The first step is to open your Trust and flip through it. You don't have to read all that legalese unless you want to. The important thing is to be sure it expresses your wishes correctly. The first few pages state who the parties to the trust are. You are the Trustor (the person who formed the trust), the Trustee (the person who administers the Trust), and the Beneficiary (the person who gets the benefit from the Trust). The Successor Trustee is the person who will settle the trust once both of you (if you are married) are deceased. Be sure the person  you want as Successor Trustee is named in the Trust. Then look at the beneficiaries of your Trust. These are the people you named to receive all of your property and assets when you are both deceased. Be sure they are correctly stated in the trust in section #2 of the Trust Binder.

Once you have accomplished this step; if you have any questions you should call Heritage to get the answers. 888-437-8778.

Remember that your Living Trust is an amendable document. It can be changed whenever you want. If you feel you want to make changes at this step then call Heritage and let us know what you want to change call 888-437-8778, we will be glad to help you with the changes at no charge. We recommend that you seek the advice of your CPA regarding the tax consequences of transferring any investments into your trust.

Step Two

All of the documents in your Trust have no purpose or effect until you execute them. You have to sign, witness, and notarize the documents for them to be in effect. This should be done immediately at your first opportunity. 

There are quite a few signatures and each page that needs either a notary or witness signature is flagged. Locate a traveling notary and arrange to meet with them or have them come to your home. You will also need two witnesses for several of the documents and those witnesses must not be related to you by blood. Anyone else can serve as a witness as long as they witness you signing the trust.

We recommend that you invite some friends over to serve as witnesses at the same time the notary is there and get it all done at the same time.  Notaries charge by the signature and there are quite a few signatures required to execute the Trust. Sometimes your bank will perform that service for you at no charge and it's worth checking into. 

Once your Trust is signed, notarized and witnessed, you now have a valid executed Living Trust. At this stage it will express your wishes and be about the same as a Will. Keep going, there is still important work to do. You must transfer your assets into the trust to complete the trust's intention.

Don't put your Trust away just yet. Keep it out in plain sight where you are constantly reminded to complete the funding process. This is the most important step in completing the implementation of your Trust. You aren't protected from Probate yet. 

Step Three

 Funding or transferring your assets and property into the Trust is the most important step after the Trust is executed. 

In order for an asset to be "funded", the name on its title or registration must be changed into the name of the Trust.

The official vesting on your Trust should look something like this and this vesting is what you use on your assets:

John and Mary Doe Living Trust
Dated: [ie.] January 1, 2013
John and Mary Doe, Trustees

Your assets must be funded into the Trust to keep them out of probate. This is the most time consuming part of the process because you have to change titles on investments, file new deeds for your property, re-register your automobiles, and enter your personal property into the Trust book. Be patient. This is accomplished one step at a time. Remember the old adage, "How do you eat an elephant?" The answer is "one bite at a time". 

Each of your real estate property deeds will have to be redrafted from your personal name into the name of the Living Trust. This can be done by a paralegal service or a deed filing service such as the one we recommend in the sidebar to the right. You will need to provide accurate legible copies of your existing deeds for this transfer.

Detailed instructions on how to fund your personal property and investments will follow in the next section. Be sure you have completed Step One and Two first, then proceed to the next section and complete the funding process.

Let's Get Started Putting Your Assets Into Your Trust

This section will explain in detail how to put each type of asset into your trust. Follow these instructions carefully and before you know it your trust will be completely funded. Let's do the easy steps first then graduate to the more involved steps. Make sure your trust is fully executed before embarking on the funding process. If you feel confused at this point go back to step 2

Banking

Take your executed trust to your bank and ask your banker to change the name on your accounts to the name of the Trust. Living Trusts are common these days and they will know what to do. Your bank accounts need to be changed so that all the money in those accounts will avoid probate when you die. If you neglect this step all of your bank accounts could be thrown into Probate at your death and you don't want that to happen. Once you have made this change at the bank, any money you place in those bank accounts will be protected from Probate. Don't forget to change the name on any CD's, Money Markets, savings accounts, and safe deposit boxes. Everything should go into the Trust. You will still be in full charge of all the accounts as Trustee. Your banker may want a copy of the Trust for their records and an abstract of trust is included with your trust documents for that purpose. This is normal. They only want to protect themselves to be sure that they are dealing with the only authorized people on those accounts which is YOU, the Trustees. From this point forward you will sign your checks as "Trustee" by putting the word ",Trustee" after your signature. You will want to reprint your checks with the name of the Trust and your name as Trustee on the check. Most banks will allow you to use up the checks you have and make the change when you order new checks printed.

IRA's - 401k's - 403b's - Keogh Accounts

These accounts cannot be put into a Living Trust because they are issued by the IRS to your name with your Social Security Number which cannot be changed and a specified beneficiary which can be changed. You can't change the holders name on these type of accounts to the name of the Living Trust because they are attached to your Social Security number. Actually you don't need to because they won't go into Probate anyway...they have a beneficiary...a designated person to whom they will pay at your death. No Probate worries here. Just be sure you have the beneficiary on these accounts designated exactly as you want. Some folks want to share the funds in these accounts among all their children so they make their Living Trust the beneficiary and let the money flow to the Trust and the Living Trust say who will receive a share. it's not a bad idea to have just one set of instructions (your trust) regarding who will receive your assets. By making the Living Trust that one set of instructions you simplify the settlement of your estate. There are many options to settling your estate and if this suggestion doesn't fit your situation we will be glad to discuss the other options with you. Just give us a call at 888-437-8778. If you decide to let the Living Trust be that one set of instructions, all you need to do is change the beneficiary on the respective tax qualified account to the name of the Trust. When you die, the money will be paid to the Trust and the Trust will control the distributions per your wishes.

Real Estate

You fund your home and any real estate (any property with a deed) into the Living Trust by re-deeding it into your Living Trust, usually with a Quit Claim Deed so any existing mortgage will not be effected. We use a Quit Claim Deed because it doesn't disturb your mortgage if you have one. A Quit Claim Deed essentially puts only your equity into the Trust. The portion of your property value that is encumbered by a mortgage loan is never disturbed. Your property will not be reassessed for property taxes and the Trust will not effect your Homestead exemption or trigger a due on sale clause. Heritage will prepare up to 2 Quit Claim Deeds for you as a part of your purchase package. Additional deeds are $25 ea. If you  have not done so already, you should make a copy of your existing deed/s on your property/s and fax, email, or mail them to Heritage. NEVER send original deed documents. We need the property description (legal description) from your existing deed/s so we can prepare new Quit Claim Deeds to transfer your property into your trust. When you receive those new QCD's from Heritage you will need to sign and notarize them then record them at the county recorders office in the county where the property exists. Fax or mail the deeds to Heritage Living Trust, PO Box 66972, Scotts Valley, CA 95067. You may have done this step at the time of your Living Trust purchase...but if not then you should do it as soon as possible. For most people their home is their single largest asset and you want to protect it from Probate ASAP. The QCD's will not be prepared and sent to you until you have executed, notarized and witnessed your Trust and signed and sent the notice included with your Trust to Heritage indicating that this has been done.

If your home has a mortgage you can rest easy because we do not disturb the mortgage in the funding process. However if you ever want to sell your home or refinance your home you may find that mortgage companies don't make loans to Living Trusts. The solution is to simply quit claim the home out of your Trust back into your name. You can then refinance or sell your home. If you refinance you simply deed the home back into the trust after the new mortgage is secured. 

Stocks, Bonds, and other Securities

Like most other assets, this type of asset is moved into the Trust by changing the ownership name of the asset into the name of your Trust. Stocks and Bonds are either held and managed by a broker or in the form of stock certificates or bonds that you hold in your name. If you are dealing with a Brokerage you should contact them and tell them you have formed a Living Trust and you want to place your brokerage account into your Trust. They will initiate that process and probably send you a form to make the transfer. Holding Bonds or stock certificates in your name is a little different. You will need to contact the issuer of the stock or bond and have the bond or stock reissued in the name of your trust. You may be thinking this sounds like a lot of work. This only has to be done once and it is saving your family a lot of financial grief and certainly a lot of Probate time and expense. Its actually pretty simple to accomplish. You should be careful to make sure that a change in title does not trigger a taxable event along with the change. Ask you broker and they will make sure that doesn't happen. This type of change is merely a "transfer into trust" and not a sale. Federal law does protect transfers into a revocable trust from being taxed or reassessed. 

Remember that every asset you DON'T put into your trust WILL go through Probate!

Planes, Trains, and Automobiles

This area covers any type of registered personal property. If its ownership is registered in the public record, such as the Department of Motor Vehicles, FAA, HUD, or any other public administration, you should definitely re-register its ownership into your Living Trust. The purpose for doing this is to take it out of your probateable estate. Everything that you own that has value will be potentially probated if you don't put it into your Living Trust. Each state has its probate law and specific asset limits are set for triggering probate. If all of the assets and property that you leave out of your Living Trust exceed that state probate limit...those things, not funded, will be probated even though you have a Living Trust. Only the assets and personal property that you fund into your Living Trust will avoid probate. My advice...fund everything of any significant value into your Living Trust. 

Personal Property

This area includes everything you own that is not publicly titled or registered. Transferring this type of personal property is done by simply writing a description of those items in the Schedules section of your Trust. This area would include things like your personal jewelry, antiques, furniture, clothing, collections, and so forth. You don't have to itemize your socks and teacups. Those items generally have little asset value...but if you own expensive jewelry or antiques or valuable collections, I would itemize them by writing a description of them into your Trust. The socks and teacups you don't have to bother with. There is a funding statement in your trust that states that you are moving everything you own, including your dog, over into the trust. That doesn't excuse the final step of you hand writing those valuable items into your Trust however. Go to the Schedules section and do an inventory of all your valuables. 

I want to mention the legal precept behind funding your Trust. It is based on "Legal Intent". What is your intention regarding your assets and property? There is case law where people have meticulously written their assets and property into their trust document but forgot to actually change the title on the asset into the name of the trust. The court found that the individuals "intent" was clearly to have those items in the Trust. That is the basis for funding a Trust. I do not recommend that you write your assets in the trust and fail to change titles of ownership. Why do it sloppy when so much is at stake. 

Leftovers

A Living Trust does not protect your assets from lawsuits because it does not separate you legally from the ownership of your assets. All of the assets in your Living Trust are still yours. If someone sues you they can still get at those assets if you lose a lawsuit. Your Living Trust is transparent. It's still you...with your assets being held in a legally different way to avoid probate. Your Living Trust has no tax identity of its own. It doesn't need a tax number until you or your spouse die. You will continue to file your taxes personally on your 1040 as you always have even though your property and investments are held in the Living Trust. 

If you are concerned about personal liability and the protection of your assets against lawsuits. If you own a business with employees or have tenant occupied real estate investments and are concerned about the liabilities you are exposed to... there is a lot you can do to protect yourself. Heritage has been creating Asset Protection strategies for more than two decades. If you want more information on how to protect your assets, click on the "Safe and Secure"  link below.

Deeds

In order to place your home or real estate properties into your Living Trust you will need to locate your current existing deeds and have new deeds drafted and filed in the county where the property exists by deeding them into the name of your Living Trust. There are over 6000 counties in the U.S. and many county recording offices have filing requirements that are unique to their county. It is wise to check with the County Recorder in the county where your property exists and determine what those requirements are. You also have the option of paying a filing service who does deeds and knows all the requirements. We have recommended one in the margin of this webpage.  Once you have filed your deeds, they are in the Trust and protected from Probate. This action does not cause a reassessment of your property for property taxes. Federal law protects you from that. It also does not effect your homestead, and it does not effect any current mortgage you have on the property. You are only deeding over your equity in the property. Due on sale clauses in mortgages are not triggered. Since your home and real estate are probably your largest assets, we strongly recommend that  you have the deeds redone and filed as soon as possible.

You Are Just About Done

When you have completed all the steps above you are just about done with the funding process. Remember that you are in possession of the only executed and funded copy of your Living Trust. Heritage only retains an electronic copy of your trust and if you lose your executed documents you will have to do a restatement of trust that will create a significant cost for you. Heritage provides you with a second bound copy of certain important documents that may be needed by your Power of Attorneys in an emergency. Make sure that those documents are also executed and witnessed and given to the people who are serving as your Power of Attorneys.

Special attention should be given to storing your Trust documents. Your Living Trust is a set of documents that should last for the rest of your life. At your death your Successor Trustee will need the original documents to settle your trust. Always keep your Successor Trustee informed on how and where you have stored your trust documents. It's also a good idea to keep other documents such as deeds with your trust documents because they will be needed to settle your trust.

I recommend that you purchase a small portable fire proof file safe and keep your documents at home. Using a safe deposit box at the bank is not a good idea because at your death the Successor Trustee will not be able to get into the safe deposit box at the bank to get your trust documents...unless they are an approved signatory on the box.

Finally

A significant benefit of your relationship with Heritage is free ongoing consultation, help, and support. We never charge you to call and ask questions or ask for help. One of our recent clients related their story of doing a Living Trust five years ago through a local attorney. They had a special needs child that periodically required modifications to their trust. They paid $995 originally for their trust but over the next three years the attorney charged another $5000 for consultations and modifications to their trust. They showed me that Trust. It was 32 pages stapled in the corner and stuck in a manila envelope. With Heritage you never pay for help and support or amendments to your trust. If you have questions...call us.

Funding your trust does involve some footwork on your part. Please understand that those who hold title or registration to your various assets have their own policies, forms, and procedures that have to be followed in order to change the name on the asset to the name of your trust. It is necessary that you comply with those third party requirements to get your assets into your Living Trust. But persevere until the task is completed. You only have to do this once. Neglecting to follow through and complete the funding process will only bring chaos and difficulty to your family. So stay with it and if  you need us, we are here to help.

This website and its contents is intended solely for the use of our clients as an educational aid and is not intended as legal advice. Heritage' service is limited to the creation of Living Trust documents and does not include asset funding services or responsibilities. Transferring or funding assets into the Heritage Living Trust is solely the responsibility of the client. Heritage accepts no liability for the funding of assets into trust and we recommend the advice of a qualified professional or CPA where tax or legal issues are involved.

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