If you have a Revocable Living Trust (a.k.a. Living Trust) you have to “fund ” it or you’ll have what’s called a “dry trust” and your heirs will have to probate your property anyway! (NOTE: This is not legal advice! This is for educational purposes only.)
So here’s how to fund your Living Trust:
- Transfer all real estate into the Trust, unless you need to hold it in Joint Tenancy for some reason. (Even if you do keep your home or other real estate in Joint Tenancy with your spouse, after the first of you dies or if you both die together, then that real estate will be a probate asset, necessitating probate after last to die.) The easy way to do this in Utah is to go to a reputable title company and ask them to create and record with the county a Quit Claim Deed for you. You’ll be transferring it from you to you, roughly as follows: “From [your names], joint tenants, Grantors, to [your names] as Trustees of the [your trust name, e.g., “The John and Jane Doe Living Trust”] u/a/d [the date your Trust was signed], Grantees.” NOTE: This was not legal advice! You must have an attorney oversee this so you don’t make a mistake. This was for education purposes only.
- Transfer your vehicles (including all recreational vehicles and trailers) into the Trust. You’ll do this at DMV using language similar to the above (except you can leave out any reference to “Grantor,” “Grantee,” or “joint tenants”). Fact is, though, in Utah I’ve heard of people being able to transfer title outside of a trust by showing a death certificate to the DMV clerk to take off the name of a co-owner, but better safe than sorry, right. Officially re-titling your vehicles into your Trust won’t leave someone having to probate your Will on the off chance that the DMV clerk won’t help you without a court order. Once the owner of the vehicle is the current Trustee of the Trust, then no court order is necessary.
- You DON’T need to transfer most financial accounts into your Trust. However, you may wish to make the death beneficiary of such accounts “the current Trustee of the [your trust name], u/a/d [the date your Trust was signed]” if you want the money pooled into the Trust pot. Sometimes, though, you want to just name first your spouse as beneficiary, then your kids as contingent beneficiaries. In general DO NOT transfer “qualified” accounts such as 401s and IRAs into trust, and DO NOT make them payable to the Trustee of the Trust without first consulting an attorney experienced in these topics, as such a transfer could trigger a nasty taxable event. Seriously. Don’t. Just get a competent professional to advise you.
And this is why having a Revocable Trust isn’t for everyone. If you’re a paper-phobe or bureaucrat-o-phobe, the above process will seem too daunting. Fact is, it’s not that bad — just busy. There’s a lot to do, but almost anyone can get the hang of it once they get started. We don’t, however, force everyone into getting a Living Trust for exactly this reason. And while our firm can offer services assisting in this funding process, having a Trust still may not be the best thing for everyone, although for many people it is. One size does NOT fit all when it comes to estate planning.