Fitzgerald & McGroarty PA
800-465-1307 609-365-0036

A revocable living trust is just paper until it's funded

After going through all of the steps to create your revocable living trust, you want to make sure that it works for you in the best way possible. A trust is designed to hold your property for you, but it can't do it alone. You have to "fund" the trust for it to do its job.

Funding means transferring your assets into it. If you don't, they remain in your estate and subject to probate upon your death. In addition, if you become incapacitated, your trustee will not have the ability to step in and take care of your assets if they aren't part of your trust.

You can put these assets in your trust

How you transfer and/or retitle certain types of property into your trust also makes a difference, so you could benefit from some guidance when undertaking this task. Otherwise, you could trigger unintended penalties and tax consequences. As you go through the list below of items you can put in a trust, this may become clear:

  • Real estate, which requires a new deed
  • Checking, savings and money market accounts
  • Certificates of deposit, which may require waiting until maturity
  • Oil, mineral and gas rights, which may require an assignment or new deed
  • Non-retirement brokerage and investment accounts
  • Copyrights, royalties, patents and trademarks, which involves contacting U.S. Patent and Trademark Office or U.S. Copyright Office
  • Nonqualified annuities, which involves transferring title and making trust a beneficiary
  • Monies owed to you
  • Bond and stock certificates
  • Life insurance, which may require extra steps and considerations
  • Tangible personal property
  • Business interests, which are subject to company agreements

When it comes to qualified retirements account such as a 401(k) or an IRA, if you simply transfer the account into the trust, you could incur significant tax penalties and experience other issues. Instead, change the beneficiary designation to the name of the trust, which will receive the funds after your death.

You may want to begin this process as quickly as possible after you execute your revocable living trust since you never know what could happen tomorrow, let alone in the future. Once your trust is funded, it then goes from being just a document to providing you with the protections you wanted from it in the first place. Transferring assets into a trust can be tricky, so taking advantage of local legal resources here in Linwood may also serve your best interests. 

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Fitzgerald & McGroarty PA
747 Shore Road
Linwood, NJ 08221

Toll Free: 800-465-1307
Phone: 609-365-0036
Fax: 609-926-3104
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