You just executed your new Revocable Living Trust and you are ready to fund it and are wondering how to do so. In our article last week, we discussed funding your trust with your bank accounts https://grissomlawfirm.com/fund-trust-bank-accounts. Another aspect of funding your trust is the retitling of investment accounts. If you hold publicly traded stocks and bonds that are already in brokerage or investment accounts, contact your brokers and direct them to change the title of the accounts to the name of your Trust. The procedure for doing so will probably require you to present a copy of your Affidavit or Certification of Trust to provide the complete name of the Trust and information about the trustees. Title to the accounts should be in the Trust’s name.
Some Investment Firms require new accounts when changing the name from an individual (or individuals) to a trust. This is likely not an issue because there may not be direct deposits or automatic withdrawals coming from your investment account that would need to be changed. The process to create this new account is usually a matter of signing a few documents.
If you possess original stock or bond certificates, there are two ways to transfer the certificates to your Trust:
- Open a brokerage or investment account in the name of your Trust and deposit your original certificates in the account. (You may later have your broker deliver the certificates to you made out in the name of the trust if you wish.) Your future account statements, titled in the name of your Trust, will prove your ownership of the transferred stock or bonds.
- Work directly with the transfer agent for the stock or bond and direct the agent to reissue your stock with your Trust named as the new owner.
While we generally suggest placing your stocks and investment accounts directly into your Trust during your lifetime, you can also name your Trust as the primary beneficiary on any investment accounts.
Funding your trust can also include the designation of beneficiaries on retirement accounts. You should never transfer the ownership of a qualified retirement, pension plan, or individual retirement account (i.e.- a 401(k), 403 (b), Roth IRA, IRA, SEP, or other profit-sharing plans) to your Trust. Instead, if you have pre-retirement death benefits under such a plan, our general recommendation is that name your Trust as the beneficiary of any such account. Be aware, your Trust needs to have a provision allowing for the creation of conduit trusts to take advantage of the stretch-out provisions allowed under Internal Revenue Code 401(a)(9). If your Trust does not have a such a provision, your beneficiaries could face negative tax consequences. See our article on Stretch-Out IRAs for more information on tax benefits and consequences.
Be aware that your spouse will likely need to sign the beneficiary designation form for your 401(k) and the form will need to be notarized when you name your Trust as the primary beneficiary. Under the Employee Retirement Income Security Act, a surviving spouse is automatic beneficiary of an employee-based retirement plan unless they waive that right by signing a form in front of a notary.
Funding your trust can be confusing, but at Grissom Law we are here to help our clients through every step of creating your estate plan. From speaking directly to a personal banker or financial advisor, to providing letters and paperwork to fund your Trust properly, we make sure to stay with you through the whole process. Call us to make an appointment and we will assist you in creating and funding your revocable living trust.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.