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Fund Your Living Trust

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

A Living Trust is a legal document that is similar to a Will in that it provides for the administration or distribution of property following one’s death.  However, a Living Trust, if properly funded, can also provide for the management of assets during lifetime and avoid probate upon death.  It is revocable so that its terms can be changed during lifetime.  In order to take advantage of all of the benefits of having a Living Trust, it is critical that the Living Trust be properly funded with assets.  In general, all of your assets should be transferred to your Living Trust.  The following are ways that your assets should be transferred:

1. Bank Accounts.  All of your bank accounts (checking, savings, money market, and certificates of deposit) should be held in the name of the Trustee of your Living Trust.  This means that the bank’s internal records must show that the account is held in the name of the Trustee of the Living Trust.  In order to accomplish this, take a copy of your Trust or Certificate of Trust to your bank and request that these accounts be transferred into the name of the Trustee of your Living Trust. 

2. Real Estate.  All real estate should be held in the name of the Trustee of your Trust.  In order to accomplish this transfer, a new deed must be executed transferring your interest in the real estate into the name of the Trustee of your Living Trust.  The deed then should then be recorded in the county where the real estate is located.  You should contact an attorney to accomplish this for you.  After the transfer, please make sure that you contact your property insurance agent to inform the agent of the change of ownership. 

3. Stocks.  If you own stock in a non-publicly traded corporation, your stock certificate must be assigned to the Trustee of your Living Trust.  However, please note that if your corporation has a Close Corporation Agreement, a Buy-Sell Agreement, or a Corporate Redemption Agreement in place which prohibits the transfer, you may need to amend those Agreements.  You should also be aware of various tax consequences of transferring assets into your Living Trust.  Please make sure to contact your tax advisor for advice.  This transfer is normally accomplished by reissuing stock certificates. 

If your securities are held in a brokerage firm’s street name, you should take a copy of your Trust or the Certificate of Trust to your broker and request that they change the account ownership to the Trustee of your Living Trust. 

If you own securities which are held in your own name, you may either have a broker handle the transfer, or you must contact the transfer agent for each security that you own and request the paperwork to transfer the stock certificate into the name of the Trustee of your Trust. 

4. Savings Bonds.  In order to transfer your savings bonds into the name of the Trustee of your Living Trust, you need to go to your local bank and complete a form requesting the transfer and also sign the back of each savings bond.  Next, you need to send the bonds along with a copy of the Trust or Certificate of Trust to the closest Federal Reserve Bank.  New bonds will then be reissued in the name of the Trustee of your Living Trust.  When making this change, you should make sure that your bonds are insured if you handle this transaction yourself, or ask your bank to process the transfer for you. 

5. Motor Vehicles.  In the State of Ohio, up to two vehicles may be transferred to the surviving spouse without passing through probate.  However, you may also change the title of your motor vehicle to the Trustee of your Living Trust.  You can accomplish this  by going to your local motor vehicle title office and bringing your title and a copy of the Trust or Certificate of Trust and requesting that the motor vehicle title be reissued in the name of the Trustee of your Living Trust.   

6. Life Insurance.  Life insurance is not subject to Ohio estate taxes but is subject to federal estate taxes.  In addition, you need to look at your particular family situation to determine who you want to be the beneficiary of these life insurance proceeds upon your death.  In some cases, individuals decide to name the Trustee of their Living Trust as the primary beneficiary, and in other cases individuals decide to name their spouse as the primary beneficiary and the Trustee of their Living Trust as the contingent beneficiary.  Still in other circumstances, if you are not married, it may be best to name your children as the primary beneficiaries of your life insurance policies.  Since life insurance is subject to federal estate taxes, if your estate will be subject to federal estate taxes, it may be best for the life insurance to be owned by an irrevocable trust instead of you individually.  Please contact your estate planning attorney and tax advisor before changing the ownership and/or beneficiary designations on your life insurance.

7. IRAs, 401(k)s, 403(b)s, and Other Retirement Assets.  In most situations, it is best for your spouse to be named as the primary beneficiary of any retirement benefits because various income tax advantages exist by naming your spouse as the primary beneficiary.  However, if you would prefer that your spouse not receive the proceeds, or if you may have a federal estate tax situation, various pros and cons should be weighed before you complete a beneficiary designation for these assets.  In some circumstances, it may be best to name your spouse as the primary beneficiary and the Trustee of your Living Trust as the contingent beneficiary.  If you are not married, it may still be beneficial to name your children as the primary beneficiaries if they are adults because there are various income tax advantages which can be accomplished.  Please contact your estate planning attorney and tax advisor before finalizing a decision on the beneficiary of retirement assets. 
If, after talking with your estate planning attorney, you have decided that it is best for you to have a Living Trust, then you need to make sure that you and the estate planning attorney work through the various titling issues that have been discussed above to make sure that the beneficiary designations are appropriate for your specific family circumstances. 

NOTE:  This general summary of the law should not be used to solve individual problems, as slight changes in the fact situation may require a material variance in the applicable legal advice.

James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663
Phone:  (330) 364-3472
Fax:  (330) 602-3187
Email:  jcontini@kwgd.com

 
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