Without any assets in your Trust, your Trust is useless. The main reason to have a Trust is to be able to manage your assets, whether to provide for you during your lifetime or to give them away after your death. If those assets are managed properly, your Trust may help you reduce the amount your estate owes in taxes; it may allow your loved ones to avoid probate after your death; it may help you provide for young beneficiaries; or to give money to your favorite charities. But you and your loved ones will not receive any of these benefits unless your assets are transferred into your Trust.
Because a Trust is not a legal entity that can own property, assets are transferred to the Trustee of the Trust. This does not mean that you are giving these assets as a personal gift to the Trustee. Instead you are giving these assets to the Trustee as the Trustee of your Trust, meaning that the Trustee has a fiduciary obligation to manage and distribute the assets according to the terms of your Trust.
The way you transfer assets into your Trust depends on the type of asset we are talking about.
Real property is land that either has a structure (house or building) on it or is undeveloped raw land. Real property is transferred by Deed. Most of the time, each parcel of land has a separate Deed. So even if you own two parcels side-by-side, most likely each parcel has its own Deed.
In California the two most common types of Deeds are Grant Deeds and Quitclaim Deeds. The difference between the two types of Deeds is outside the scope of this blog post. California Trusts Online offers customers a Grant Deed that transfers your California-based real property into your Trust.
In order to prepare a new Grant Deed for you, California Trusts Online needs a copy of your current Deed, which is the document that was recorded with your local County Recorder when the property became yours, such as when you purchased your real property or when you inherited it. Your current Deed may not be called a Grant Deed. It may be called a Quitclaim Deed, Interspousal Deed, Warranty Deed, or Trust Transfer Deed. A Trust Deed is not a Deed transferring your real property to you—it is a record of the mortgage on your real property.
California Trusts Online cannot obtain a copy of your Deed for you. If you do not have a copy, you can get one through your local County Recorder for a small fee. Depending on which county your property is located in, you may be able to obtain a copy of your Deed online or you may need to go to your local County Recorder’s office to purchase a copy.
If you have purchased a new Deed from California Trusts Online, you will be asked for the location’s address and the location’s Assessor’s Parcel Number. Then you will be asked to upload a copy of your current Deed. You will need to download all of the pages of the Deed, including all Exhibits. After we have prepared your new deed, take it to a notary public for signing and then to your local County Recorder for recording.
Checking, Savings, and Investment Accounts
Checking, savings, investment accounts, certificates of deposit, money market, and brokerage accounts can all be transferred into your Trust by obtaining the forms from your bank or other financial institution. California Trusts Online cannot help transfer these accounts into your Trust. You will have to contact your bank or other financial institution to ask them to transfer the account into your Trust.
Retirement Accounts, Life Insurance and Annuities
Retirement accounts, such as Individual Retirement Accounts (IRA accounts, including traditional IRA’s, SEP IRA’s, ROTH IRA’s, SIMPLE IRA’s and inherited or rollover IRA’s), 401(k) and 403(b) accounts, STIRS and PERS benefits, and Employee Stock Ownership Plans (ESOP’s) cannot be transferred into your Trust. Each of these retirement accounts can be transferred on your death with a beneficiary designation arranged with the retirement plan administrator. If your retirement plan administrator allows it, you can designate your Trust to be a beneficiary of your retirement account, but it may be simpler for you to name your loved ones or chosen charities as beneficiaries of these accounts. If you choose to name your Trust as the beneficiary of your retirement account, contact the retirement plan administrator for the proper forms.
Life insurance can only be transferred through a beneficiary designation with the financial institution that manages the life insurance policy. As with retirement accounts, you can name your Trust as a beneficiary of your life insurance policy, but it may be easier to name your loved ones and chosen charities as the beneficiaries instead. If you choose to name your Trust as the beneficiary of your life insurance policy, contact the financial institution that manages the life insurance policy for the proper forms.
If your annuity has a death benefit, you can name your Trust as a beneficiary of your annuity, but it may be easier to name your loved ones and chosen charities as the beneficiaries instead. If you choose to name your Trust as the beneficiary of your annuity, contact the financial institution that manages the annuity for the proper forms.
California Trusts Online cannot help transfer retirement accounts, life insurance or annuities into your Trust. You will have to contact your bank or other financial institution to ask them for the proper form to transfer them into your Trust.
How you transfer business interests into a Trust depends on the legal form of the business entity. If your business interest is in a FBN (fictitious business name), a DBA (doing business as), an LLC (limited liability company), an LLP (limited liability partnership) or traditional partnership, you can transfer your interest in the business entity to your Trust by an assignment of interest as long as the governing document of the business entity does not prohibit you from doing so.
If your business interest is in a corporation (including “C” corporations and “S” corporations), you may need to pass a corporate resolution. If this applies to you, California Trusts Online encourages you to follow the procedures outlined in the corporate bylaws and to contact the attorney who set up your corporation for further guidance.
As a practical matter and as a responsible business person, you may want to notify your co-owners of your intent to transfer your business interest into your Trust if your business is small enough to warrant it.
Tangible Personal Property
Tangible personal property is your stuff, such as your furniture, clothes, books, vehicles, collectibles, jewelry, and other personal items. If any of these items have a title and if the value of the item is large enough to warrant the effort, you can transfer the title into the Trust just like you would with your checking, savings and investment accounts. However, it may be easier for less valuable tangible personal property to transfer your tangible personal property with an assignment of interest. California Trusts Online includes an assignment of interest in our all of our Trusts that includes your tangible personal property so that you do not need a separate stand-alone document to make this assignment.
A promissory note, also called a note payable, is a written agreement to pay someone else a specific amount of money at a specific time. If you hold a promissory note, meaning that someone else has signed a promissory note saying that they will pay you, you can transfer your interest in this promissory note to your Trust with an assignment. California Trusts Online includes an assignment of interest in our all of our Trusts that includes promissory notes so that you do not need a separate stand-alone document to make this assignment.
Your Trust governs only those assets that you transfer into it, so if you want an asset to be distributed according to the distribution plan you put into your Trust, you need to properly transfer that asset into your Trust. Otherwise the work you have done to set up your Trust (and the money you have paid for your Trust) will be wasted because you will not have achieved your goals.
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