You created a trust to avoid probate and yet you didn’t – why?
In fact, one of your assets went to a beneficiary outside of the trust and defeated the fairness you had set up with your plan. How did that happen? You forgot to change the title from joint tenancy to the trust. Keeping an asset in joint tenancy also makes that asset vulnerable to the creditors of your joint tenant – ouch!
Let’s discuss a few of your most important assets:
Real Property: I almost always prepare the deeds transferring my client’s property into their trust and I also take responsibility for ensuring the document is recorded. This is usually the client’s most valuable asset and the cause of the greatest part of a probate fee.
Brokerage Accounts: One of the documents prepared for you is the Certification of Trust which is a quick summary of your trust (without the distribution details), names the Trustees and their financial powers and trust title. This is the document that you should provide to your broker, bank or other financial institution to change the title of your accounts to the trust.
Large or Valuable Toys (i.e. planes, RVs and boats): These assets are usually registered with DMV or other government entities that have their own instructions for changing title. If the asset is not very valuable, you may choose to not place it into your trust, but remember that in California the threshold for probating assets in your name alone is $100,000.00. This is an aggregate number, meaning if your RV and boat are each valued under the $100K figure, but together they exceed $100K, they would be subject to probate.
My clients should all have a funding letter (10 pages) in the front of their binder explaining the process of retitling for almost any asset. I am also always available to assist in this process or answer any questions that you may have. After all a CD will only earn the interest if you put money into it and a trust, likewise, must be funded to be effective.
Whether you are a client or not, you are welcome to submit questions to me and I will do my best to send a speedy reply or if the question is repeated enough, look for a future article addressing the issue.