Many folks have trusts for the various benefits that they provide, such as delaying or reducing taxes, protecting or managing assets, lifetime care, scheduling distributions among loved ones after death, etc. However, you won’t enjoy these benefits if your trust doesn’t own the property that it should.
If you have a trust, hopefully the attorney that prepared it for you helped you transfer assets into the trust. Unfortunately, some attornies fail to provide this assistance, resulting in unsuspecting clients losing benefits that they expect. Other common causes are people who have chosen do-it-yourself kits or websites to prepare their own trusts or have forgotten assets, such as old paper stock certificates or bonds. The bottom line is that your trust can only control the assets that it owns. So how do you make sure that your trust owns the right assets? Here are some tips for common assets:
Financial Accounts One easy way to determine whether your financial accounts are in your trust is to check account statements as you receive them in the mail. Keeping in mind that many trusts cannot own qualified assets such as IRAs or other retirement accounts without causing unwanted tax consequences, non-qualified assets such as stock, savings and checking accounts should be owned by your trust. If these accounts are owned by your trust, the address portion on your statement will likely show the name of your trust and the name of your trustee. Some financial accounts are better passed by way of beneficiary designations. Speak with your attorney and financial advisor about whether your beneficiary designations are current and proper.
Real Estate Real estate is commonly owned by trusts. An easy way to see whether your real estate is owned by your trust is to review your property tax statements as they arrive in the mail. Many counties have websites where you can search county records for your property and how it is titled. If you have bought, sold or refinanced property since you established your trust, you would be wise to confirm that such properties are titled in the name of your trust.
Business Interests Do you own a business? Your company’s documents, whether it is an LLC or corporation, should allow your trust to own your interest in the company so that the trust may sell or otherwise manage ownership of the company. Many times, your company’s records will reflect whether you have assigned your ownership to your trust. In addition, there are certain circumstances and types of businesses that affect how or if your trust can own your business interest, so you would be well-served to speak with your attorney and accountant on the issue.
If you have a trust, you should also have a last will and testament commonly known as a “pour-over will”. In the event that you do make a mistake and assets are left outside of your trust, your loved ones will be able to use your will to transfer those assets into your trust after your death.
As with most things in life, your estate plan should not be ignored and forgotten. While you can take comfort in knowing that you have a trust, it is important to review it with an estate planning attorney every few years as a sort of legal health checkup to avoid unpleasant surprises. Developing a team of advisors such as your attorney, investment advisor, accountant, banker and insurance agent is another useful way of reducing the likelihood of disaster.
Nick Reister is an estate planning attorney with Smith Haughey Rice & Roegge in Grand Rapids, Michigan. If you have questions about estate planning or other legal matters, please call (616) 774-8000.
The information contained on this site is for general information purposes only and should not be relied upon as legal advice. Please contact legal counsel to discuss your specific needs and circumstances.