How to Fund Your Revocable Living Trust
Posted Monday, March 11, 2013 by Lisa Benedetti
A revocable living trust is a popular estate planning tool for someone looking to avoid the probate of their assets. When done correctly, an RLT will effectively govern all of the testator’s assets upon death, allowing the assets to be passed onto the beneficiaries without court action. However, if done improperly, probate will need to be commenced.
One of the most common mistakes testators make in setting up an RLT is failing to fund it. An RLT can only govern assets held in the RLT or conveyed to it. That means that assets held in the testator’s own name at death will not be governed by the RLT and will instead be governed by the testator’s Last Will and Testament. If the testator has no will, assets will be governed by the Washington state intestacy statutes. Therefore, ensuring proper funding is an essential step in setting up an RLT.
Although the process of funding an RLT is not typically difficult, it must be done correctly or else the asset may end up in probate. Below is a general summary of how several of the most common assets may be transferred to an RLT.
Bank and Brokerage Accounts: You may transfer checking, savings, and brokerage accounts into the RLT by either requesting the name of the account to be changed to the name of the trust, or opening a new account in the name of the trust and transferring assets to the new account.
Certificates of Deposit: You may transfer CDs into a trust by re-registering the CDs in the name of the RLT. You may want to inquire with the bank as to whether re-registering the CD will incur a premature withdrawal penalty.
Securities: You may transfer securities such as stocks, bonds, and mutual funds into the RLT by re-registering each stock, bond, or mutual fund in the name of the trust.Business Interests: You may convey your interests in partnerships or an LLC by assigning your interest to the RLT.
Real Estate: You may transfer your family home or vacation residence to the RLT by signing a deed transferring the property from you as an individual to you as a trustee for the RLT.
For more information on revocable living trusts, contact Pivotal Law Group, PLLC, at (206) 805-1493.