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Harborscape
Professional Building
1524 Alaskan Way, Suite 200
Seattle, WA 98101-1514 |
Phone:
206 | 583.0155
Fax: 206 | 343.5759
www.faolaw.com
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Living Trusts
How To Fund Your Living Trust: A Checklist
Estate Planner Mar-Apr 1998
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Two of the main reasons to create a "living trust" are
1) to administer assets during life in the event of disability,
and 2) to avoid probate. To accomplish these objectives, the trust
must own the assets. It is essential to fund the living trust by
transferring all assets to the trust.
Yet, attaching a schedule of your assets to your trust agreement
does not by itself make the trust the owner of the assets. Also,
a general assignment or bill of sale to the trust of "Everything
I Own" may not be effective for all your assets, especially
if a challenge to ownership or authority is raised.
Generally, when assets are retitled in the name of a living trust,
the name should read: "(Name of Trustee), as trustee of the
(Name of Trust) u/a/d (Month, Day, Year)."
The federal tax number to be used is your (the grantor's) Social
Security number if you are trustee or cotrustee. A separate federal
income tax return will not be necessary. All items of income, gain
and loss attributable to the trust are picked up directly on the
your personal income tax return.
When transferring assets to a living trust, banks or brokerage
firms will often ask to see a copy of the trust agreement. The dispositive
provisions of your living trust are private, and privacy is one
reason for using a living trust. The bank or brokerage firm should
only require a certification of trustee powers indicating the name
of the grantor, the name of the trustee and successors, and a copy
of the powers which permit the trustee to establish the particular
account. The following checklist is designed to explain the transfer
process and assist in administering the trust. We would be happy
to assist in any way we can.
| Asset |
Action
To Be Taken |
Date
Completed |
| 1. Stock certificates, registered
bonds and other securities |
Re-register securities to name
of trust. Contact stock transfer agent directly or use brokerage
firm. Surrender certificates and sign an other securities assignment
or stock power. |
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| 2. Brokerage firm investment accounts |
Transfer and assign title and interest
in the account and assets held in the account to name of trust.
Send a letter of direction to firm. |
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| 3. Registered federal securities
(U.S. Treasury Notes and Bonds) |
Transfer and assign to name of
trust. Contact Federal Reserve Bank for forms and procedures.
Notes and Bonds) |
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| 4. Federal obligations (bills,
notes, etc) held in treasury account |
Complete Form PD5178. Contact Federal
Reserve Bank for forms and procedures. |
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| 5. Series E, EE, H Bonds |
Complete Form PD1851. Contact Federal
Reserve Bank for forms and procedures. |
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| 6. Bearer securities |
Prepare, sign and attach general
assignment to name of trust of all securities and attach to
the securities. |
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| 7. Checking accounts |
Transfer existing accounts to name
of trust. Send letter of direction to bank. It's possible to
keep an account in individual name if balances are modest. |
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| 8. Savings and money market accounts |
Transfer existing accounts to name
of trust. Send letter of direction to bank. |
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| 9. Certificates of deposit |
Transfer to name of trust. Send
letter of direction to bank. Make sure the transfer does not
trigger maturity or penalty. Bank may require waiting until
maturity to effect the transfer. |
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| 10. Real Estate |
a) Prepare and record deed transferring
property to trust name. Consider whether a quit claim or warranty
deed is required. |
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b) Check mortgage documents and
ensure no acceleration of mortgage due to transfer. |
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c) Check title insurance policy
to ensure coverage still exists. Obtain new policy or policy
rider where necessary. |
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d) Check property and casualty
insurance policies to ensure that coverage exists. Obtain new
policy or policy rider where necessary. |
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e) Notify lessees to pay rent to
trust. |
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f) If dealing with
corporate trustee and out-of-state real estate, you may need
appointment of local trustee to handle conveyance of real estate. |
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| 11. Partnership interests |
a) Review each partnership
agreement to determine ability of and requirements for transfer.
Determine who must consent to transfer. |
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b) Prepare assignments,
consents; obtain requisite signatures. |
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c) Determine if amendment
to assumed name or fictitious name certificates or limited partnership
certificates are required. |
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d) Consider holding
individually where little or no value and transfer is difficult
due to extensive requirements. |
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| 12. Proprietorships |
Determine if trust
can own the proprietorship. If not, consider forming a partnership
with spouse as 1% or greater partner and transferring partnership
interest to the trust. |
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| 13. Tangible personal
property |
a) Titled (e.g., vehicles)
i) Obtain necessary document to assign interest
to name of trust. For example, contact Secretary of State
to obtain proper form to assign automobiles to trust.
ii) Verify insurance coverage.
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b) Untitled
i) Prepare general assignment of tangible
personal property.
Ii) Consider attaching ownership notation to back of works
of art.
iii) Verify insurance coverage.
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| 14. Life insurance |
If payable to named
beneficiary, will not require probate, thus no change of beneficiary
may be necessary. If payable to estate, name trust as beneficiary.
Obtain forms from agent. Review life insurance separately. |
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| 15. Retirement plan |
If payable to named
beneficiary, will not require probate, accounts thus no change
of beneficiary may be necessary. Payment on retirement plan
accounts requires special consideration and should be reviewed
separately. |
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| 16. Deferred compensation |
Payment of deferred
compensation requires special consideration and should be reviewed
separately. |
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