Generally Speaking: Funding Revocable Living Trust

Your estate plan may include a revocable living trust, which is a “will substitute.” That means that the trust document will determine who will receive your property after you die. If you have this type of trust, you will need to “fund” it by transferring your property into the trust.

If one of your goals in establishing your living trust is to avoid probate and the resulting delays and expenses, you must properly transfer title to all of your assets to your trust before your death.

 Unintended tax and other legal consequences may also result if your trust assets are not properly titled.

You very likely have property that will NOT be included in your trust at your death unless you properly transfer title to your trust or properly designate your trust or your estate as beneficiary. These things must be done prior to your death.

If you have a revocable living trust, you will also have a “pour-over will” that directs that assets in your name alone (not assets held in joint tenancy) will be subject to the terms of your trust, however, you should determine which assets you want in your trust and make those transfers during your lifetime. Remember, there are advantages and disadvantages to transferring such property, depending on the type of asset. For more information on transferring different types of assets, read our post with all the details of funding a revocable living trust.

Generally speaking, the trust name and the date the trust was executed should always appear in the title of assets you transfer into your trust. We recommend not including the trustee’s name in the title. If you do include the trustee’s name, you may need to retitle the asset again if the trustee changes. If the name of the trustee is not required to be included in the title, the basic title recommended for use in holding assets of the trust is:

“The YOUR NAME Revocable Living Trust dated date.”

However, sometimes an institution will require the name of the trustee be included in the title. If so, the title recommended for use in holding assets of the trust is:

“The YOUR NAME Revocable Living Trust dated date, Trustee’s Name, as Trustee.”

We can help you in change the titles of your assets to the name of the trust. If you change the titles yourself, and as you acquire new assets, it will be your responsibility to see that they are properly titled. Different types of assets may need to be handled in different ways. Please see the extended post on revocable living trusts for more suggestions and information that should help you retitle your assets, as well as a discussion about the importance of naming beneficiaries of life insurance policies, retirement plans, individual retirement accounts, and other similar arrangements.

As always, if you have questions, give us a call. We would love to work with you to ensure that you have the trust and other estate plans in place that properly reflect your intentions for your estate. Contact Andersen Law PC at beth@andersenlawpc.com or 720-922-3880.

The above post is based on a selection from Form 1210 – Trust Funding Memorandum from the “Orange Book Forms: Colorado Estate Planning Forms” book published by Continuing Legal Education in Colorado Inc. It was re-written and modified for blog purposes by Julie Nichols, JD/MSW