Once you sign your Revocable Living Trust, that’s not the end of it. Generally, avoiding probate and estate tax savings will be the main reasons why you set up a Trust but you still have to move your assets into it – you have to “fund” it. I always provide funding instructions, but here is a general overview.
- Tangible personal property. Your Trust will have a general assignment of all of your tangible personal property, transferring those to your Trust (thereby keeping them out of probate and distributing them in accordance with what your Trust says).
- Real estate. Homes owned by married couples in Michigan should be owned jointly (I explain why here). But if you’re a single individual or a surviving spouse, then your house should be transferred to your Trust. This is done by a new Deed.
- Bank and Brokerage Accounts (Non-Retirement Accounts). Generally, all of these should be put into ownership of your Trust. To transfer ownership, you simply need to change the owner of the account. This is usually very easy to do online. Your funding instructions will spell out who the “owner” is, but it is usually spelled out as: “John and Jane Doe, as Co-Trustees of the Doe Living Trust dated January 1, 2018, as it may be now or hereafter amended.”
- Retirement Accounts. The beneficiary of these accounts will depend on your circumstances, but usually, for tax reasons, your spouse (if you are married) or other individual(s) should be the primary beneficiaries and your Trust as the final contingent beneficiary. Changing or updating the beneficiary of your retirement accounts is done by filling out a Change of Beneficiary form, which can be done online if you have online access to your retirement accounts. As I mentioned above, your funding instructions will spell out who the “beneficiary” is, but as I mentioned above, it is usually spelled out as: “John and Jane Doe, as Co-Trustees of the Doe Living Trust dated January 1, 2018, as it may be now or hereafter amended.”
- Life Insurance. The beneficiary of your life insurance policies should be updated to reflect the full name of the Trust which would be spelled out in your funding instructions (unless an Irrevocable Life Insurance Trust will be more appropriate).
- Vehicles. Automobiles and other motorized vehicles should generally be owned by the member of the family who is the primary driver. Under Michigan law, if the total value of all vehicles owned by you does not exceed $60,000, the title can be simply transferred to your heirs without probate if the vehicles are the only probate assets.
Again, everyone’s circumstances and estate planning objectives will be unique to themselves. Your funding instructions will be customized to reflect that; the above is just a general overview. If you have any questions, please feel free to contact me.