Knowing how to fund your trust is essential to advance long-term estate planning. It’s generally a simple task, but some assets can be very complicated.
One of the most common reasons to use a trust is so an asset can bypass probate. An asset cannot do this unless its ownership has been transferred to a trust.
The Importance of Consulting an Estate Planning Attorney When Funding a Trust
Disclaimer: This blog should be used for introductory purposes only.
Trust funding can be complicated, especially when it comes to withdrawal penalties, income taxes, and potential ownership confusion. We urge you to contact a Florida estate planning attorney when funding your trust, to ensure you follow the law but also to optimize your estate plan. You never know what options are available to you, until you speak to a professional.
Here’s how to fund your trust with different types of assets:
1. Transfer Real Estate into a Trust
You will need a deed to transfer real estate to fund a trust. The deed must be executed as required by Florida state law. That includes:
- Getting an updated property deed: The new deed must be updated with the trust as the new property owner.
- Have the deed authenticated: It must be signed in front of a notary public and properly witnessed. A notary public in Florida is a public officer appointed by the governor of the state to authorize the signing of documents.
- Record the Deed: You must then record the deed with the county clerk’s office, which holds local property records in your local area.
- Lender and association permission: You may need to gain permission from the lender and a homeowners association if your property is subject to a mortgage, or a homeowners association.
- You should ask your estate planning lawyer for assistance.
Read Related: How to Put Your Home in a Trust in Florida
2. Transferring Titled Assets, Like Cars
Assets with title documents (such as vehicles) will require you to obtain a new title that displays the trust as the owner. You may be able to designate your trust as a beneficiary on the title, which allows you to remain the owner until your death.
3. Transfer Untitled Personal Property
Personal property that doesn’t have a title document can fund your trust with an ‘assignment of ownership document’. This is a relatively simple task, but must be signed and dated, while detailing the property so there is no opportunity for misunderstandings.
Personal property examples include:
- Family heirlooms
4. Transfer Bank Accounts
One way to significantly fund your trust is to title savings, checking and money market accounts, and certificates of deposit (CDs) to your trust. This may require the closing of the account, or opening a new account under the trust’s name.
This is a complicated task, as you won’t want to face early withdrawal or penalties. We highly advise you to work with our Florida trust attorneys.
5. Use Securities
Brokerage accounts, stocks and bonds may be retitled to fund the trust. Nonqualified annuities can also be used, by retitling or naming the trust as the beneficiary.
This is a complex task, so hire an experienced estate planning lawyer to guide you through the process.
6. Transferring Business Interests
Business interests are great for funding trusts, as they often have large value and can allow for greater control over distribution in the future.
Partnerships, LLCs, and corporation shares can be retitled to the trust. But always check the business agreement documents first to see if there are any restrictions or procedures to follow.
7. Life Insurance Beneficiaries
You can also fund your trust with a life insurance policy, by naming the trust as the owner or beneficiary of the policy.
Doing this allows the trustee to manage the policy if you become incapacitated. Policy proceeds may also be able to pass directly to the trust after your death directly if the trust is named as a beneficiary.
8. Transfer Intellectual Property
Your interest in royalties, copyrights, patents and trademarks can be transferred to the trust.
This is done by consulting:
- The United States Copyright Office (for copyrights)
- The United States Patent and Trademark Office (for patents and trademarks)
9. Accounts Receivable
An assignment of rights is a legal document that changes who has the right to a debt.
By transferring this to the trust, you can make the trust the recipient of payments owed to you such as unsecured personal loans or mortgage-secured loans.
10. Make the Trust a Beneficiary
Some assets don’t allow for the direct transfer to a trust. One way of getting around this problem is to name the trust as the beneficiary. When you pass away, the assets will automatically pass to the trust:
- Retirement Accounts (IRAs, 401(k)s, 403(b)s): We urge you to be careful with retirement accounts. Retitling them will be considered a withdrawal of funds, and incur a penalty and income tax. But by listing the trust as a beneficiary, you should be able to avoid this.
- Medical Savings Accounts (MSAs) or Health Savings Accounts (HSAs): Typically, you should designate your trust as the primary or contingent beneficiary.
Hire an Estate Planning Attorney for Trusts in Pinellas County and Hillsborough County, FL
If you want to fund your trust, either immediately or upon your death, then please contact our Florida estate planning attorneys. We can help assess your situation and draft the relevant documents.
Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With award-winning experienced estate planning attorneys, they can help you create a will or trust.