So, you went to your lawyer and had her draft you a shiny new trust. What now? Now you need to put your assets into the trust. This is also known as funding the trust. So, how do you do that? Well, the answer, similar to any other answer you’ll get from a lawyer, is: it depends.
The manner in which you out a particular asset into a trust depends on the nature of that asset. Below are some of the more common assets along with a description of how they are placed in trust.
Every piece of real property has some sort of deed associated with it. The type of deed depends upon how the property is owned. Most people own property outright. In that case, you would simply convey the property to the trust by executing a deed from you to the trust (in the name of the trust). If you do not own the property outright, you may deed whatever interest you hold to the trust; however, if you want to place all ownership interest in trust, you will need the signature of the other owners.
To convey the property to the trust, you can use a simple quitclaim deed. A general warranty deed is a deed that conveys property with a promise that there are no blemishes on the title of the property. These deeds are typically used in the sale of real property. Conversely, a quitclaim deed is a deed that conveys property with no guarantee as to the state of the property’s title. Since you already own the property and are using it to fund a trust, whether revocable or irrevocable, it is not necessary to use a general warranty deed.
One consideration that must be made when conveying property to a trust is whether it is encumbered by a mortgage. Most mortgages have a “due on sale” clause. This is a provision whereby if the property is transferred, the full amount of the loan will become immediately due and payable. However, not all transfers trigger the due on sale clause. One such transfer is a conveyance to a trust where the borrower is and remains a beneficiary. It is important to note that the borrower does not need to be the only beneficiary.
If you have stocks and bonds, then you have a transfer agent. This is the person who keeps track of the securities that you own. You need to request the permission of the transfer agent to transfer your securities into a trust. This can be done by filling out a securities assignment form. Note that if the securities are publicly traded, the stockholder’s signature will need to be guaranteed by a commercial bank—similar to a notarization.
Tangible Personal Property
Tangible personal property is personal property of a physical nature. E.g. vehicles, art, jewelry etc.
Pieces of personal property such as art and jewelry can be easily put into trust. You simply must draft an “assignment of personal property” document to the trust. Such document must name the trust and must specifically describe the item you wish to transfer. It must also be notarized.
Anything that has a title associated with it can also be easily transferred into the trust. For example, cars, tractors, RVs, and mobile homes (that have not been transferred to real property) all have titles. To put these items in trust you simple re-titled the property in the name of the trust.
There are very few things that cannot be put into trust. If you have questions about trust funding, the attorney at McIntyre Elder Law are happy to assist you.
Brenton S. Begley
Elder Law Attorney
McIntyre Elder Law
“We help seniors maintain their lifestyle and preserve their legacies.”
PO Box 165
Shelby, NC 28151-0165