Funding a revocable living trust (RLT) is an essential step in making sure that the trustor's assets are managed according to the terms of the trust agreement. To fund an RLT, the ownership of the assets must be transferred from the individual creator of the trust to the trustee of the trust. This process can be done by changing the titles of jointly owned assets to either a joint trust or individual trusts, in either equal or unequal shares. When it comes to naming a revocable living trust as the beneficiary of a policy, there are some important points to consider.
It is not enough for the trustee to simply sign the trust agreement and expect it to work properly. The policy beneficiary's designation, not their will or revocable living trust, controls the disposition of the policy's benefits. If your company is a limited liability company, you will need to draft assignment documents to transfer your interest to your revocable living trust. If your company is a public limited company, you must cancel the shares held in your name and reissue them in your name as the trustee of your active revocable trust. If you are the beneficiary of an estate, you can transfer your share of the estate or lawsuit to your revocable living trust if you become incapacitated or die before receiving distributions or payments. Your future statements, titled in the name of your active revocable trust, will show that you are the owner of the shares or bonds transferred.
As long as you are acting as trustee for your revocable living trust, you will not need to obtain a different tax identification number for your trust or file a separate trust tax return. If you decide to use a revocable living trust as part of your estate plan, it is important to remember that certain assets cannot be owned by your trust for as long as you live. Retirement plans such as individual retirement accounts (IRAs) cannot be owned by your trust. Your ORBA advisor can help you develop a strategy that uses a revocable trust and other tools to minimize probate legalization, reduce taxes, and achieve other goals. It is also important to remember that any asset that is not transferred to the trust is not owned by the trust and will be subject to probate (unless you have used another technique to avoid probate). Additionally, if personal property has title (cars, trucks, motorcycles, recreational vehicles, ATVs, boats, planes), it will be necessary to obtain a new title showing that the trust is the owner. The FDIC rules for revocable trust accounts are complex, especially when a trust has more than five beneficiaries.
To satisfy them and maintain the confidentiality of your trust agreement, your lawyer will prepare what is often referred to as a certificate of trust. Funding a revocable living trust is an important part of ensuring that all assets are managed according to its terms. It involves transferring ownership from an individual creator of the trust to its trustee. This can be done by changing titles on jointly owned assets into either joint trusts or individual trusts with equal or unequal shares. When naming an RLT as beneficiary on a policy, it is essential for its trustee to sign its agreement and understand that its designation controls how benefits are distributed. For limited liability companies, assignment documents must be drafted while public limited companies must cancel and reissue shares in their name as trustee.
Beneficiaries of estates can transfer their share if they become incapacitated or die before receiving distributions or payments. Future statements should be titled in their name as trustee and they won't need a different tax identification number or file separate returns. It's important to remember that certain assets cannot be owned by an RLT while its creator is alive such as IRAs. An ORBA advisor can help develop strategies using an RLT and other tools for minimizing probate legalization and taxes. Any asset not transferred won't be owned by it and will be subject to probate unless another technique is used.
Personal property with title must also obtain new titles showing that it owns them. The FDIC rules for revocable trusts with more than five beneficiaries are complex so lawyers may prepare certificates of trusts for maintaining confidentiality. Funding an RLT is essential for managing assets according to its terms and understanding how benefits are distributed.
