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Estate Planning Considerations
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INSTRUCTIONS FOR FUNDING A REVOCABLE TRUST
© 2008 Rosepink & Estes, P.L.L.C.
In conjunction with the formation of a revocable trust, following is a summary of the procedures necessary to transfer title to various types of assets into a trust. However, it may or may not be advisable for you to make the transfers during your lifetime. This is a decision which should be made after consulting with your attorney.
1. Taxpayer ID Number. During the lifetime of the grantor of the trust, and while the grantor is serving as trustee of his or her revocable trust, the Grantor’s Social Security number is used as the revocable trust’s taxpayer identification number. Also, while the grantor is alive and acting as his or her own trustee there is no need for the trust to file separate income tax returns. The Internal Revenue Service views any income received by the trust as being received by the grantor[s] individually. Upon the appointment of a third party as trustee or successor trustee, the trust will be required to apply for and use a tax identification number and file its own tax returns.
2. Stocks/Bonds Held in Brokerage Account. For any stocks or bonds that are to be transferred into a trust which are currently held in a brokerage account, a letter to the broker should be prepared requesting that he or she change the name of the account as follows:
A certified abstract of the trust should be included with the letter. The abstract is a snapshot of the important administrative provisions of the trust, without disclosing specific trust beneficiaries or distribution amounts.
3. Stocks/Bonds Not Held in Brokerage Account. For any stocks or bonds not held in a brokerage account, a broker or attorney should be contacted to assist in this type of transfer.
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Estate Planning Considerations
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4. Limited Partnership/Limited Liability Company Interests. In order to transfer title to a limited partnership interest or a limited liability company (LLC), an assignment of your interest to the trust will need to be prepared. Some limited partnerships and LLCs restrict the ability of a limited partner or member to assign his or her interest in the partnership. The terms of the organization’s operating agreement may require the consent of the general partner or other LLC members be obtained prior to the transfer.
Thus, in the case of a partnership, you should advise the general partner in writing that you wish to transfer your interest to your revocable trust. The general partner or your attorney can prepare the required assignment. Please note that the general partner may be required to file an amendment to the Certificate of Partnership reflecting the new ownership and may require you to pay any charges associated with preparing and filing the Certificate.
In the case of a LLC, the other members and or manager should be contacted in writing prior to making a transfer, and your attorney can prepare the required assignment. The LLC may also be required to file an amendment to its articles of organization reflecting the change in membership. You may be required to pay any cost associated with the preparation and filing of an amendment with the Corporation Commission.
5. Real Property. For
any real property to be transferred into the name of the trust, a new deed is
required. This applies not only to a personal residence, but also to any
other real property which might be owned in
6. Tangible Personal Property (i.e., furniture, furnishings, and personal effects). Furniture, furnishings, and personal effects (other than automobiles) can be assigned to the trust. The owner of the property assigns all of his or her right, title, and interest in the property to the trustee of the trust. This can be accomplished by simply listing the items of tangible personal property to be transferred into the trust on a schedule which can be attached to the trust.
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Estate Planning Considerations
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7. Automobiles. In order to transfer an automobile into the name of the trust, the original certificate of title will need to be delivered to the Motor Vehicle Department. The Motor Vehicle Department will also require a completed Title and Registration Application.
8. Oil, Gas, and Mineral Interests. For any oil, gas, or mineral interests to be transferred into a trust, each oil or gas company will need to be notified in writing of the requested title change. The company should then prepare a "division order" transferring title to the interest into the name of the trustee of the trust. It is especially important to title any out-of-state oil, gas, or mineral interests in the name of the trust during your lifetime. Oftentimes, the value of such an asset is much less than the cost of ancillary probate proceedings to transfer title after death.
9. Bank Accounts. In general, it may be advisable to retain title to personal checking and savings accounts either as sole and separate property (if unmarried), or as joint tenancy property (if married) unless the balances are significant. To transfer bank accounts to the trust, you should request each bank to prepare a new signature card changing the name of the account into the name of the trustee of the trust.
10. IRA, Pension, ESOP, SEP, Keogh, and Profit Sharing Plan Accounts. Your attorney or tax advisor should be consulted before naming a beneficiary on any IRA, pension, ESOP, SEP, Keogh, profit sharing plan, or similar account.
11. Life Insurance Policies. For any life insurance policy which will not be owned by an irrevocable life insurance trust, a new beneficiary designation form should be requested from your insurance agent. When completing the form, name the trust as the primary beneficiary.
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Estate Planning Considerations
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