You just met with your lawyer and signed your living trust. Good job! But your work is not done yet. Unlike a Will which, after it is signed, can be stored away until needed, there are several important steps you need to take next with your trust. Think of signing the trust like buying a safe. The safe is empty and doesn’t serve its purpose unless and until you put your valuables inside it. Likewise, with your trust, you paid for it, but it will not serve its essential purpose (which is avoiding probate) unless and until you put your assets in it.
Step 1: Move Your Things into the Trust
This is crucial. A trust only becomes an effective means of avoiding probate for the assets that are placed into it. This step is called “funding” your trust. You need to change ownership of your things. Instead of you owning your assets (which might lead to your family having to probate them at your death), your trust will own them (which will avoid probate of the assets).
Your House. If you own a house, the deed needs to be changed. The deed is the paper that shows who owns your house. You will need to contact your lawyer in order to have a new deed executed and recorded that says your trust owns the house, not you.
Your Bank and Investment Accounts. Go to your bank and investment advisor and tell them about your trust. They may need to see a copy of your trust instrument, but if you have also executed a Certificate of Trust with your lawyer, then they may accept that Certificate in lieu of the entire trust instrument. Then they can change your accounts so the trust owns them. They may request of you “the Tax Identification Number” for your trust. As long as you are one of the trustees of the trust, you can tell them it is your social security number.
Your Car. You may want to put your car in the trust too. You will need to go to the DMV (Department of Motor Vehicles) to change the title.
Other Things You Own. Think about other valuable things you have. This might include:
- Stocks and bonds
- Life insurance (you can make your trust the beneficiary instead of minor or disabled children, for example)
- Valuable collections
- Business interests
Step 2: Keep Good Records
Make copies of all statements and titles showing your trust as owner of your assets and keep those statements and titles with your trust instrument. Put them in a binder to keep them together and store the binder in a safe place. Tell your family where to find these papers. You should also give copies to:
- Your lawyer
- Your successor trustee (the person who you named to take over when you can no longer do the job)
Step 3: Tell Important People
Let key people know about your trust:
- Your financial advisor
- Your accountant
- Your insurance agent
- Close family members
You don’t have to share all the details. Just let them know you have a trust and where the trust papers are stored.
Step 4: Update Other Documents
Check these documents and update them if needed:
- Your will (it should work with your trust, not against it)
- Beneficiary forms for retirement accounts
- Life insurance beneficiary forms
- Power of attorney documents for financial matters and health care
Step 5: Review Your Trust with your Attorney every Three to Five Years
Your life will change over time. You might:
- Get married or divorced
- Have children or grandchildren
- Buy or sell property
- Move to a different state
When big changes happen, talk to your lawyer. You might need to update your trust.
Three Common Mistakes
- Forgetting to Fund Your Trust Many people sign a trust but never move their things into it. This strips your trust of it essential purpose (avoiding probate). It’s like having an empty safe.
- Putting Everything in Your Trust Some things should not be titled in your trust:
- Retirement accounts (like 401k or IRA)
- Everyday checking accounts you use for bills
- Cars you still owe money on
- “Setting It and Forgetting It” After you have created your trust, don’t put it away and forget about it. Review it every few years or when your life changes.
When to Get Help
Talk to us if:
- You’re not sure how to move something into your trust
- You want to make changes to your trust
- You have questions about taxes
- Your life situation changes in a big way
The Bottom Line
A revocable living trust is a great tool to help your family when you’re gone. But it only works well if you take care of it. Move your things into the trust, keep good records, and review it regularly.
Your family will thank you for taking these extra steps. By doing so, you will be making their lives easier during a difficult time.
Founded by a nurse attorney and with offices in Acton, Andover, and Sudbury, Massachusetts, Generations Law Group helps families navigate the complex areas of estate planning and elder law to inform and protect loved ones of every generation.
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