A lot of people create a basic estate plan. They have a will, trust, power of attorney for finance, medical directive, general transfer, certified extract and in some cases other documents too. In some cases they take great care to plan their trust out. They think about who should be the trustees. They think about what ages money should be distributed to their kids or maybe even held in trust. They ask questions about their spendthrift clause, the S-corporation clause and the no-contest clause. They sign it with the notary and feel good about themselves. They feel they can check it off the list. However, they CAN NOT check it off the list. The trust funding has not been done yet and that is critical. That is, GETTING THE ASSETS INTO THE TRUST.
Most good attorneys, and even some others, will do the quitclaim or grant deed of the house, or other real estate, to the trust. This will include the preliminary change in ownership (or “PCOR”). Of course don’t forget your timeshare, vacant lot in Palmdale or 1/4 interest in the family home in Ohio. Get ALL your real estate into the trust.
Beyond that though you need to contact every bank, stock brokerage, mutual fund, financial institution, credit union and others to get those accounts transferred into the trust. It’s crucial to avoid unnecessary paperwork and attorney fees after death.
Then do a change of beneficiary on your life insurance to flow it into the trust.
Lastly, is retirement accounts. Trust funding with retirement accounts is a little different than the above. It’s a bit more of a loaded question. Each client is unique and many types of retirement accounts have different rules. However, as a GENERAL RULE here are some guidelines to consider for funding your IRA, 401k, 403b, pension, and any other retirement type asset or “qualified” money. We typically recommend the spouse as the primary beneficiary as that will be easiest in most cases and provide the best options for the surviving spouse. If your children (or other chosen beneficiaries) are minors, or not as responsible adults as you would like, then name the trust as the contingent beneficiary. If your children are adults and responsible then it might be best to name them as the contingent beneficiaries. However, these are just general rules. There are so many variables to think about.
The key is working with a qualified California trust lawyer to get your trust set up AND funded properly.
Let’s talk about your trust funding! -John