Living Trust vs Will

Transferring Assets to a Living Trust

This step is crucial to a living trust. Without transferring specific assets, those assets may be subject to provide or worse, your estate may not function as planned.

Real estate

Many estate planners will prepare a new deed for property in your state
Ask your estate planner if they are preparing the deed. If not, you need to contact a title company to get the deed created. Otherwise, that property will likely go through probate. After signing and notarization the deed should be sent to the property's county recorder.

If you have property out-of-state, it is often cheaper to call a title company in that state to prepare the deed. The downside of this route is you may forget to research and transfer the property, potentially leading to probate.

Does transfer make my mortgage due? No.

Bank accounts

Small legwork
Once your living trust is signed and notarized, take all the documents to the bank. Let them choose documents they need for information/copies. You'll sign a papers and the process rarely takes more than 15-20 minutes.

Do account numbers change? Very rarely. Most federal banks and credit unions let you keep the same account numbers. Direct deposits and automatic withdrawals aren't interrupted.

Small personal items

You don't have to list every item
Most trusts include an "assignment of personal property" that covers assets in your home that don't have a title:

Clothing
Electronics
Furniture
Jewerly
Salt and pepper shakers

The assignment covers present and future property. A simple rule to remember: if you buy it from Target or Best Buy, this page likely covers it.

You'll likely have a page to handwrite specific items you wish to designate to any beneficiary you choose. A short sample of assets includes but is not limited to:

Life insurance

Option: List the trust a beneficiary
By requesting or downloading a "Change of Beneficiary" form from your insurer, you can list your living trust as a beneficiary so the policy payout is distributed according to the same rules as other assets of your estate.

Retirement accounts: 401(k)s, IRAs, etc

Typically left outside trusts
Transferring these accounts from your name to your living trust's name is akin to cashing out your retirement funds. That's a huge taxation. So don't transfer the retirement accounts in your living trust. Since you likely already have beneficiaries listed when you started the account, it'll avoid probate.

New IRS "stretch" laws allow beneficiaries to keep the money intact for the continued tax-deferred growth. Naming a living trust as the beneficiary often eliminates the "stretch" opportunity. Now is a great time to ensure your retirement asset beneficiaries are listed correctly.