Funding your living trust is the process of transferring your assets to the name of your living trust. If you miss this important step, your estate could end up in probate court, which is exactly what you were trying to avoid with a living trust! To make sure this doesn’t happen to you, let’s go over some of the most common assets people have and what to do with them now that your living trust is signed. Once you finish your estate plan with LivingTrustify, we provide this and more detailed information on a personalized checklist for you.
The deed to your real estate, such as your home, should list your living trust as the owner. If your living trust is not the listed owner, then you need to sign a new deed listing your living trust as the owner and send it to your county recorder’s office. The county recorder’s office is where real estate ownership documents are stored for all of the real estate in your county.
In the checklist you receive once your estate plan is generated, we list some websites we recommend that can prepare your deed for you. Sometimes, you can also find fill in the blank deeds on your county recorder’s website to use. Sign in to see your checklist.
Like real property, the title to your bank accounts should have your living trust as the owner on record. To transfer ownership to your living trust, contact your local branch to see what needs to be done. Every bank has a slightly different process, but it is almost always very straightforward. The bank will need to see a copy of your living trust and sometimes they will have you fill out some paperwork asking basic questions about your trust.
Your retirement accounts (IRA, 401k, 403b, etc…) do not go into your living trust, they stay in your name. Your living trust does not control how your retirement account is distributed upon your passing, rather, the beneficiary designation form on file does. If you’re not sure who you have listed, you can find out by going online or by contacting the bank where you have your account. If it is a 401k, you can ask your human resources department for a copy of your beneficiary designation form.
It is usually best to list individuals by name as beneficiaries rather than your living trust since listing your living trust could result in greater taxes for your heirs. However, if you have minor beneficiaries, then you should consider naming your living trust since doing so will ensure your minor beneficiaries do not have control of the retirement proceeds until the age you specified in your living trust.
Like retirement accounts, Life Insurance does not have to be transferred to your living trust, but you should ensure beneficiaries are named because it can cause a probate if you have nobody named as a beneficiary. If you have minor beneficiaries, then you should name your living trust as beneficiary. Unlike your retirement accounts, there are usually no tax issues with naming your living trust as a beneficiary of your life insurance.
Funding your living trust can be a little difficult and time consuming, but it is an essential step in making sure your estate avoids probate. You’ve already spent the time and money to set up your living trust, so make sure it actually works to avoid probate! Our team at LivingTrustify is here to help you every step of the way.