transferring assets

Transferring Assets to Yourself as a Trustee

When thinking about estate planning, many people think of a trust—and rightfully so. A trust is an excellent way to avoid probate and ensure your assets go to the people you want to have them. But many people unfortunately forget about transferring assets to the trust. Even if you are the trustee, you still need to move those assets. Why? Because if the titles to certain assets remain in your name, and not within the trust, your estate will likely end up in probate court.

A formal transfer of title to a trustee—even if the trustee is you—is needed to avoid the inconvenience of probate. Here are some things to consider:

Your Primary Place of Residence/Vacation Homes/Other Real Property

If you plan to hold your primary residence in trust, you should transfer the title to the trustee, whether that is you, you and your spouse, a child, or a trusted friend. The same thing applies to vacation homes or other real property. For each piece of property, you must create a new deed transferring assets and ownership to the trustee, even if that’s yourself.

Checking Accounts

Changing your checking account can be very inconvenient, and most people don’t keep large amounts of cash in these types of accounts. Therefore, there is no need to transfer the account to a trustee. Most states permit the transfer of funds (under a certain amount) without formal probate.

Savings Accounts

Banking or savings and loan association savings accounts should be held by the trustee of a revocable trust. Financial institutions will work with you to complete the necessary paperwork for transferring assets to the trust.

Securities/Marketable Securities

A broker will help you prepare a new account agreement for transferring assets and securities into a trust. To transfer a stock certificate, you must submit the certificate, along with an executed assignment, with your signature guaranteed by stockbroker or bank, to the transfer agent with instructions to reissue the certificate to the name of the trust.

Life Insurance/Retirement Plans/Annuities

You are not required to transfer ownership of certain assets such as life insurance, retirement plans, and accounts or annuities to a trustee since the beneficiary designation form filed with the respective organization will designate who receives the proceeds. To change a beneficiary, simply reach out to the agent or company and ask for a beneficiary designation change form.

Be sure to review your beneficiaries regularly so you don’t end up leaving assets to an ex-spouse or someone who has predeceased you.

Seek Professional Advice

It can be a hassle to manage transferring assets to a trust. However, if you want your estate to pass on with the least amount of issues, it’s an imperative. Instead of going it alone, trust and experienced estate planning attorney to help you establish a trust and work through all the necessary documentation. Poulos Law Firm has been working with clients and their estate plans for 30+ years, and we are happy to answer all your questions. Contact us to get started.

what is a trust protector

What Is a Trust Protector?

A trust is a way to help you control who will receive distributions of your wealth—on your terms. A well-crafted trust can preserve your legacy after you die, as well as help your family avoid the hassle of probate court. While you now understand this important legal document, the next question is: what is a trust protector?

What Is a Trust Protector?

Generally, when you create a trust, you name a trustee, or trustees, to help enforce the terms of the document. It’s always a good idea to have extra protection to ensure your wishes are carried out. In addition to a trustee, you can also name a trust protector. What is a trust protector? It is an independent third party or institution who provides oversight of the trustees and funds.

Sadly, where money is concerned, trustees are not always trustworthy. Often, the more money, the more likely a trustee is to abuse his or her responsibilities.

When you name a protector, it has to be someone other than a trustee. In fact, a trust protector can never be named a trustee. This is a good way to prevent the protector from becoming greedy.

The Job of a Trust Protector

The third-party trust protector can be granted limited or expansive duties. At a bare minimum, the protector should have the power to remove and replace existing trustees. Failure to do so means that if a trustee dies and no replacement has been designated, the court will step in and pick one. And as you’re likely well aware, when the courts get involved, they don’t always choose the person or people you might have designated.

In addition, the trust protector can be given the power to settle disputes among co-trustees, or between trustees and beneficiaries, and even to alter trust provisions due to unanticipated circumstances (for instance, changes in the economy or tax laws), and even dissolve the trust.

The Importance of a Well-constructed Trust

If you are setting up a trust that will continue for decades, designating a protector can be critical. If given broad powers, the trust protector (most likely an institution) will be able to adapt the terms of the trust through the generations. In addition, in some states, including Arizona, the trust protector may exercise these powers without the need for court approval.

Beyond Designating Your Protector

A trust protector is entitled to be compensated for the service he/she/it provides on behalf of the trustees and beneficiaries. Therefore, it is your responsibility to determine how that will occur and to clearly document the process in the trust. That means you’ll need to designate the funds for this role.

If you have already created a trust and it does not have a protector, the trust can be reformed. The consent of all parties is required to do so, but it certainly is possible.

As you are creating (or amending) your trust, you will be best served by utilizing the services of an experienced estate attorney. At Poulos Law Firm, we understand all aspects of creating a trust to ensure your heirs are protected and your estate goes where you want it to go. Contact us to schedule an appointment to learn more about trusts as well as in-depth information on what is a trust protector.

Build a Fortress for Your Beneficiaries

The question of how to leave your assets to your beneficiaries deserves considerable thought. For instance, outright distribution to a child with special needs can interfere with government benefits your child may be receiving. What about a child you know is not financially responsible … should you give them the assets outright, stagger the distribution method or set up a lifetime fortress or dynasty trust.

Let’s take a look at all three methods…

Outright Distribution
This method is pretty straightforward … upon your death and after payment of expenses and debts, your beneficiaries receive their full share of the assets immediately. The advantages are that the assets can be folded into their own estate plans. The disadvantages may include some rather serious tax consequences depending on the size of the estate, and of course, that irresponsible child may blow through your assets with the speed of light.

The biggest issue for most families is that the kids (or their partners or spouses) will blow the inheritance in no time.

Staggered Distribution
In this scenario, you provide your child with a percentage of their inheritance at certain ages, dates or when certain events happen. For instance, when your child turns 21, they receive 1/3 of the inheritance, another 1/3 when they marry, and the final 1/3 when they reach age 40. You can also build in distributions of principal and income for things like a home down payments, educational expenses or even a monthly stipend for living expenses.

You may have seen the movie with James Garner’s move The Ultimate Gift. In this film, a deceased billionaire leaves his spoiled adult grandson a series of tasks to perform to receive his inheritance. You can structure an “incentive-based trust” along the same lines as the movie. For instance, your child will receive ½ the inheritance when he or she graduates from college and the other half when he or she retains a full-time job for at least two years.

This structure allows you to prevent a beneficiary from having too much control of inherited assets until he or she is more capable of managing them. In addition, this is a good way to protect your child and your assets if he or she is having creditor issues or is going through a divorce.

While very popular, it is not always appropriate especially when you have young children. How much do you know about who your kids will be in the future when they are very young? You don’t, so how can you make a decision about the “right age” to give a distribution?

Lifetime Fortress or Dynasty Trust
A third method of leaving assets to your beneficiaries is through a lifetime fortress or dynasty trust. In this scenario, your assets remain in trust for the beneficiary’s entire lifetime. For instance, your child could receive distributions from your trustee for health, education and living expenses. Or for more protection, you require that all activity in the trust be done in the name of the trust so that the funds never leave it. This does mean more administrative expenses, but it does provide solid asset protection. Such a plan is not for every family, but every family should at least consider it.

Special Needs Trusts
If you have a special needs beneficiary or do not plan for the possibility that special needs might arise in the future, you put public benefits for that beneficiary at substantial risk with an outright distribution. With provisions for a special or supplemental needs trust you have a particularly useful tool. You can support their needs and yet not interfere with government benefits he or she may be receiving.

Whatever method you choose you should start by discussing all options with an experienced estate planning attorney. Each method has pros and cons that should be carefully weighed to meet your goals for your family, and also meet the needs of your beneficiaries.