TRUST ATTORNEY LAS VEGAS | FUNDING THE TRUST
TRUST ATTORNEY LAS VEGAS | FUNDING THE TRUST
Hello, you’re listening to trusted the podcast out. We discuss all things that involve trusting Trust Attorney Las Vegas others, especially attorneys. My name is Blake Johnson and I am an estate planning attorney in golf fanatic. And I am your host today. Uh, this podcast we will be discussing the most overlooked and most important part of a state planning. And that is funding your trust. So Blake, why is this so important? Well, let’s do the typical situation. I actually more than the typical situation cause the typical situation is nobody who did, a person who did no planning. But let’s say you’ve been proactive. You met with a qualified estate planning attorney, you have all of your trust documents drafted and signed, and then you get them. And what do you do? That’s what most people do as they take them home. They put them in their safe and they don’t look at them again.
Now, if this is the case, uh, all of that plan that you just did is all for not, not worth anything because your assets are still going to go through probate. Because what’s going to happen is the judge, or when you go to the bank, if you passed away and when your kids go to the bank to get the money out, they’re going to say, well, it’s in just in your dad’s name or your mom’s name. And, um, we need a court order to release those funds. And so we have to go to probate court to get those funds released to the right people. And like I said, we just negated the whole point of doing that planning. So in order for the trust, in order for your estate plan to work, you have to fund the trust. That means you have to transfer all of your assets into the trust.
So I want to go through, um, you know, all the different types of assets and what those look like and how you can actually fund your trust hike. You can transfer him to the trust. So let’s say let’s start with your biggest, most people’s biggest asset and that is their primary residence. Um, so real property, this one has to be done by deed. So you need a new deed executed to transfer it from you individually or you and your spouse as husband and wife into the, or. You transfer it to both of you as trustees of the trust. And that’s how we get it into the trust name. Now, uh, what that does is when you pass away the person who you left in charges your successor trustee, they sign an affidavit of successor trustee saying, I accept my role. And then they filed that with the recorder and now they can sell the house or they can keep it or whatever they need to do because it’s in the trust.
We don’t have to go through court. Now deeds are some things that is something that should be done by a professional. Each state and county has different requirements for it. So sometimes it can be difficult to get it recorded. The other thing is you want to make sure you record the right type of deed. So in Utah, a quick claim deed would be sufficient to transfer it into the trust. But in Nevada, a quit claim deed doesn’t transfer all the rights and titles and they won’t issue title insurance on a quick claim deed. So it won’t, we would have to go through court probate court to get it fully set aside into the trust. Um, so we want to do a grant bargain sale deed in that, in that situation. So really emphasize you should have a professional, whether it’s an attorney or a title company, um, you know, help you with this, uh, to make sure that deed is done properly.
That goes from any land and houses that you own, any commercial properties, industrial, whatever it is, if it’s real property and then you need a deed done to transfer it. Uh, the next most common asset is your bank accounts, checkings and savings. So there’s two ways you can do this. The primary one in the preferred one is to change the name on your account to the name of the trust. What you do is you go into the bank, take a copy of your certificate of trust, or take the original and have, make them pay for the copy. And then, um, you say, I want to change my truck, my account into a trust account. They get the paperwork. You might spend 30 minutes there, you sign it. And unless you’re, you bank with chase, it should not change your account numbers chases the only one that I’ve encountered that actually makes people change their account numbers.
So it’s kind of a pain, but you should do it. Now the other way is you could have it pay on death payable on death to the trust and at least did it gets the money out of the trust. But then you, uh, the success of trustees have to set up the new account at that point in the name of the trust. So it’s a workaround. Like I said, the preferred method is they actually changed the title of your accounts into the name of the trust that goes, checking, savings, any type of bank accounts. Now, retirement accounts, this one, this one can be tricky. Retirement accounts cannot be transferred into the trust while you’re living because a retirement account, the whole definition of it is its own. It’s an individual retirement account. That’s what an IRA is or if it’s a 401k has to stay at the company under your individual name.
So those cannot be transferred to the trust unless you completely liquidate it and at which point all the taxes would be due. So what we do here is you, depending on what your plan is, if you’re married and you want everything to go to your spouse name, your spouse is the primary beneficiary that when we don’t want to do the trust, because there’s a lot of tax advantages that go with naming your spouse outright as the beneficiary of your retirement accounts, then you could put the backup as the trust depending on what your, your trust is trying to do. In some situations that may make sense to name your kids individually on their, uh, but I guess that’s going to depend on your plan in that when you want to talk to your attorney about what the right way to have that beneficiary listed is.
So that goes for any type of retirement account. Now if you have a general investment or brokerage account, so this is after tax money that you invest in. The stock market, um, you can change the name on that account to the trust. And once again, that’s the ideal way to do it. Uh, the backup version is to make the beneficiary of that account the trust. But either way, you need to have at least one of those done so that it does not have to go through probate. A life insurance, uh, is interesting. So you can either change the ownership of the policy to the trust. Um, but more importantly, you want to name the beneficiary of that policy as the trust. But here’s the thing, if it’s owned by, let’s see, husband, um, on wife’s life, it’s a policy that he owns, but it’s on the life of his, his wife, if she, if he dies, that policy is still in effect because it only pays out if wife dies.
But the ownership of it now would have to go through probate. So you need to look at that and say, okay, which, what do I need to do? I need it. Ideally what you’d have is wife would own the policy on herself and then that would take care of that problem. Or husband owns a policy on himself, but in the rare case that you have that scenario, transfer ownership to the trust and also name the trust as the beneficiary of that life insurance policy. So talk with your agent, have them talk with your attorney, make sure everybody’s on the same page and that it will avoid probate complete no matter what the turnout is. Um, vehicles is the next one. Vehicles, um, are interesting. Um, most people don’t, I don’t worry as much about vehicles. Cars in most states you have that, uh, we call that a probate limit before you eat the minimum you have to have before, uh, you go through probate and you touch 100,000.
In Nevada it’s a lot less, it’s only 25,000. So if you don’t do it that those vehicles, that’s okay cause I know nobody wants to go stand in line at the DMV. And unfortunately that’s the only way to make it happen. Now learn from my mistake. I spent all day at the DMV ready to transfer my vehicles into the trust. And then I get there and they say, oh, we can’t issue the title in the name of the trust because your insurance doesn’t match what you want on title. We have to have the insurance match what the title is going to be. And so they had to put it in my individual name. So before you go call your car insurance person, say, Hey, I’m going to put this, I want to put this vehicle in the trust. How do I do that? Um, to make the insurance or the trust of benefit or a named Trust Attorney Las Vegas insured probably make it an additional insured on the policy and they can help walk you through how to do that.
So, um, that’s how you do vehicles. And like I said, most of the time we don’t worry about it. Just the next time you buy a vehicle, then you can buy it in the name of trust. And you only need to do this if you actually own the vehicle outright. If you still have, um, you know, if it’s Elise, you’re never going to own it. Or if you have a loan, you know, the, the company who has the loan that you pay the loan too, they have the title. And so until you pay it off, you won’t get that title anyway. So that’s why vehicles aren’t, we don’t worry about too much. Um, all right, businesses, how do we transfer business ownership into the trust? Well, if you’re starting a new business and you already have the trust created, when you form it, you show that the owner is your trust.
But if you’ve already had an established business, uh, if it’s a corporation, you have to issue a new stock certificate in the name of the trust. So it’ll just say, you know, the, the Johnson family trust is the owner of 2,500 shares of this company or whatever it is. Now, if you have an LLC, the limited liability company or a partnership, then, um, or even, you know, a sole proprietorship, what you can do is you can assign your interest in that company to the trust. You know, ours is a two page document and just says, you know, I have the desire to gift my interest in this LLC to my trust. Um, and that’s how you can do there. Now, ideally you would also amend the operating agreement if you have an LLC or the bylaws, if you have a corporation to show in the actual contract that um, that it’s been approved, that the trust is the owner of that company.
But the assignment or the stock certificate would be sufficient. Um, Kay personal property. So this is your furniture, the art you have in the house. Um, jewelry, guns, those kinds of things. What we do as a, it was part of our trust package. We create a general blanket assignment that just says all the personal property I assign into the trust name that takes care of it really simple, really easy. And you don’t have to go in individually say, I want all this to be part of the trust. Um, last one is a notes. So this is you. You lent money to someone and they owe it to you so you have a note or, or a deed of trust on a property. Um, you know, basically you paid for their mortgage, they’re paying you back. What you need to do is you need to get a new note issued saying that, assign it to the trust and then get the new no issued.
And if it’s a, if it’s related to real property, so a house, you need to get that recorded in substitute, um, the trustee on that so that, um, it can be the owner, uh, of that note. So I believe that’s pretty much every type of asset that you could have. Um, you know, if you have a mineral rights that’s kind of like a deed, you know, those have to be recorded. Um, but pretty much they all kind of fall under those nine categories. So make sure you fund the trust. It’s really important to get documents done and plant it right. But if there’s no assets in that trust, it really is known. Void in your plan is worth nothing. So I always recommend to my clients at least once a year, take a look at your trust. Take a look at the assets that you have.
Did you acquire anything and did you actually put it in the trust? And then what you want to do is you want to make sure it’s titled in the name of the trust and the make sure it’s written down in the list of assets in the trust as well. So that way whoever your successor trustee is can go and say, okay, Oh, here’s the assets that they have. I’m going to go, you know, get those in and get my name on the account. Now that is as the trustee, um, because it’s, it’s not good for them, for the asset to be in the trust, but for the successor trustee not know that you have that asset or that account. So two things, you know, make sure it’s listed there. Make sure the title of the account or the property is actually in the name of the trust. So that’s enough for Trust Attorney Las Vegas today. Uh, sorry, we went a little long, but, uh, funding the trust is very important. And hope you guys can get it taken care of. Thanks, and we’ll talk to you later.