As a part of Estate Plans, more and more people are considering Revocable Trusts as tools to avoid Probate Court and control the transfer of their homes, cars and bank accounts at their deaths. For more information about Revocable Trusts, please see our Blog: “What is a Revocable Trust?”.
Creating a Trust, to avoid Probate Court and to simplify the transfer of your assets, is only a part of the process. After your Trust is created, you have additional steps to take to ensure that your assets will not pass through the Probate Court process.
If you do not take steps to transfer your assets into your Trust, and you leave the assets in your name, they will still pass through Probate Court before they are transferred to your Trust or to your Heirs. For more information on how a Trust avoids Probate Court, please see our Blog: “Last Wills & Testaments go to Probate Court, Trusts do not”.
In order to ensure that your Assets are in your Trust and will not be subject to Probate Court, it is essential to transfer the ownership of those assets to your Trust. In a Revocable Trust, the assets are still treated as belonging to you however, the documents that show ownership will need to show your Trust name instead.
For real estate to be considered a part of your Trust, you will need the deed to show that you transferred your home to your Trust and it must be recorded at the Registry of Deeds. You should speak with your Home Owner’s Insurance Agent to make sure that your policy is updated, and if you purchased Title Insurance, that will also need updating. If you have a mortgage, you can still transfer your home to your Trust. If the mortgage company has questions, please make sure you speak with the Assumption Department – they will be able to assist.
For your Bank Accounts, you will need to take your Trust to the Bank and ask them to “change the owner” of your accounts to your Trust. If this is done correctly, you may be able to maintain the same account numbers, checks and atm cards through this process. Most Banks and financial institutions will assist you in making this a seamless process, however, there are some institutions who have not been so accommodating, and as such, it may be necessary to make sure that you update your automatic deposits and bill payments.
You should not forget about your US Savings Bonds or stock certificates. Those items should be re-titled as well. You will need the appropriate forms to update ownership. For US Savings Bonds, you will need a FS Form 1851 which can be found at treasurydirect.gov. If the stock or security is privately held, you will need to complete the “Stock Power” on the reverse side of the certificate, deliver the certificate to the secretary of the corporation and have them reissue a new certificate in the name of your Trust. If the stock or security is publicly held, you will have to contact the transfer agent or broker to arrange for the transfer to your Trust.
If your car is fully paid for, it should be transferred to your Trust. For vehicles with a model year of 1999 or older, a Bill of Sale transferring your car to your Trust can be used. For vehicles that are newer than 1999 you will need to update your Title. To do this, you write in the Trust name on the back of your title on the line of “buyer” and sign the back – in effect selling your car to your trust. You then take the registration and title to City Hall the month in which it is time to register your car and ask them to issue you a new Title. Veterans – If you have Veteran’s License Plates, you must write your name on the title first and then your Trust Name (ex. “Joe Jones The Joe Jones Revocable Trust”), do not use the word “and” or any punctuation between your name and the trust name.
In many cases, you should also consider updating your Beneficiary Designations. This is something you should discuss with your Financial Advisor and Attorney to ensure that your Beneficiary Designations will not have unintended tax consequences, but will also make sure that those assets consider your full Estate Plan. While some accounts, like stock investment portfolios or brokerage accounts can be re-titled into the name of your Trust, qualified retirement accounts should not.
Please consider updating your assets to be a part of your Trust regardless of the value of those assets! It is extremely frustrating for a Trustee to be told that they cannot access a small bank account without going through the Probate process because the Trust was not the owner, especially when the costs of Probate are the same or more than the value of the Bank Account! It becomes money that is needlessly lost in the process.
For more information, or to schedule an appointment to discuss your situation and your options, contact us.