|March 10, 2014|
Previously published on March 2014
In case you were wondering, this year the first day of spring will be March 20, 2014. Of course spring ushers in the whole notion of spring cleaning which means this is a great time to do a spring cleaning of your estate plan. If you already have an estate plan, this month’s newsletter will give you a “how-to” guide to make sure your plan was properly funded. If you don’t yet have your estate plan documents in place, then this is a great time to meet with your attorney to evaluate what estate plan documents are needed for you and your family.
Revocable trusts are powerful tools to avoid probate and transfer assets upon death. However, they only work if they are properly funded. Funding a trust means changing title on your assets so they are now owned in the name of your trust. Here are some tips to help you do a “spring cleaning” of your estate plan and make sure your trust is properly funded.
The best way to see if you have changed your financial accounts to be owned by your trust is to look at your monthly statements. Are the statements addressed to you as trustee? If so, then the account is owned by your trust. If not, the statements will be sent to you in your individual name. If you need to fund financial accounts into your trust, you will need to provide a copy of your “Trust Certificate” to your financial institution and complete any paperwork they require.
You can determine if your real estate is owned by your trust again by looking at your county tax statements. Are the statements addressed to you as trustee? If so, then the real property is owned by your trust. If the property is not owned in trust, you will need to consult an attorney to prepare a deed to move the property into trust.
Cars can be tricky assets to plan for because people change vehicles fairly often. If you own a special car that you intend to own until the day you die, it likely makes sense to re-title it in the name of your trust. If you change cars often, then you have two options. The DMV does have a beneficiary form you can complete to name someone to receive your car in the event of your death. You complete this form at the DMV office. Alternatively, many people leave their cars in their names - outside of the trust. If the value of the car is under $20,000, then we can get title to the car transferred via affidavit. If the value is over $20,000, then a probate may be required.
Personal property means all of your household furnishings, jewelry, art, collectibles, boats, cars, and so forth. Did you execute a “Personal Property Assignment” when you executed your estate planning documents? If so, then your personal property is likely owned by your trust. If not, you should talk to your attorney about this assignment.
You should take caution when transferring business interests - such as corporations or LLCs - as these types of assets sometimes have transfer restrictions in place. You would need to review your articles of incorporation or bylaws to determine if there are any applicable restrictions. If not, these assets can generally be transferred by assignment. Check your company records to see how your interest in the company is owned - either in your name or more preferably by your trust.
Life Insurance or Retirement Plans
Certain types of assets are what we call “non-probate” assets because when you set them up, you nominate beneficiaries to receive the assets upon your death. Life insurance, annuities and retirement plans are the most common. Since you are doing a spring cleaning of your estate plan, it’s a good time to review who you have named as beneficiary on these types of assets. In some cases it may make sense to nominate your trust as the beneficiary. For example, if you have young children who would inherit the asset it is generally preferable to have them receive it via a trust.
Keep in mind it’s a good idea to have an attorney review your estate plan any time a major life event occurs such as a birth, death, marriage, divorce, move to a different state or significant change in wealth. If it’s been a number of years since you created your estate plan, it might be a good idea to dust off your documents and evaluate if they still meet your needs. Additionally, you may want to make some updates to your plan if it was created when your children were toddlers and now your grown children have toddlers of their own. As always, please contact me with any questions.