Estate Planning Basics: Asset Titles And Funding Trusts

Estate planning is not always straightforward, and understanding concepts like asset titles, funding trusts, and pour-over wills can get confusing. If you are struggling to understand some of the pieces involved in the estate planning puzzle, this article is for you! Keep reading to learn:

• How the way your assets are titled can impact how they are distributed.
• What joint tenancy titles mean, and how they are transferred after one tenant passes.
• How you can fund your trust – and what document you need in case you have not yet funded your trust.

Does The Way My Assets Are Titled Impact How They Are Distributed?

Yes, the way your assets are titled can impact their distribution. If your asset is titled in the name of a trust, then the successor trustee distributes it. If it is titled in your name, it will need to go through the probate court. In this case, the personal representative or executor would transfer the title based on your will, the court orders, or the laws of the state.

How Are Assets Held In Joint Tenancy Distributed?

If an asset is held in joint tenancy, it has the right of survivorship. This means that when one of the joint tenants passes away, the title is instantly transferred in the name of the other joint tenant or tenants. Typically, this would be a husband or wife, but it could be a parent, child, or anyone else.

How Does The Titling Of My Financial Accounts Impact My Estate Plan?

Like other types of assets, if your financial assets are titled in the name of your trust, then the successor trustee would be able to transfer those assets after your death. If they are titled in your name, however, then they must go through the probate process and be distributed and approved by the court.

How Do I Fund My Trust?

The way you fund a trust is by transferring assets to the trust. For instance, if you want a bank account to be part of your trust, you would either re-register the account, or have it changed to be titled in the name of the trust. If you want securities or stocks and bonds to be part of your trust, you would also need to have the registration changed.

For some accounts, you may be able to simply add the word “trustee” or “in the name of the trust” to the registration documents. Other times, you may have to close out your individual account, open a new account, and transfer the funds to the new trust account. For a revocable or living trust, you can use the social security number of the grantor (the person creating the trust) for tax reporting.

What Happens If I Do Not Fund My Trust?

If you have a living trust or a testamentary trust and you do not fund it, you should have a pour-over will as part of your last will and testament. Your pour-over will leaves everything to the trust, so your trust becomes the dispositive document.

Even if you had several million dollars in assets and none of them were titled in the name of the trust, the pour-over will would typically leave all of those assets to the trust. From there, the trustee or successor trustee of the trust would have the job of transferring the assets as the trust directs. For more information on Funding A Trust In A Colorado Estate Plan, an initial consultation is your next best step.