Funding a revocable trust isn’t necessarily a once-and-done deal. You might want to transfer additional property into the trust as you acquire more assets, and you can do this. You can also remove assets and take them back into your ownership at any time. Some assets are more appropriate for funding into a trust than others. A change of title will result in negative income tax consequences with these types of accounts. They require a change of beneficiary into the name of the trust rather than a change of title. They would remain outside your trust during your lifetime, then be paid to your trust at your death. Consider depositing your certificates into a brokerage account that’s titled in the name of your revocable living trust rather than go through all this. Consult with an attorney about the possibility of creating a pour-over will to have your executor transfer your vehicle and other tangible personal property into your trust at the time of your death. This would still require probate, but the probate process should be a much simpler affair if it involves just a few assets moving into your trust, and the alternative could be more of a headache. For example, a motor vehicle titled in an individual’s name can’t be transferred without probate in some states, so you could run into a problem here. Additionally, it could act as something of a red flag for litigation-hungry individuals should your vehicle be involved in an auto accident. Having your auto title in the name of a living trust signals untold wealth that could potentially be recovered should the other party file a lawsuit, even if that’s far from the actual case. Partnership ownership certificates must usually name your trust. As for closely-held corporations, you can generally just retitle the stock in your trust’s name. Limited liability companies can require the consent of some or all of the other owners. Check any shareholders’ agreements, partnership agreements, or operating agreements for restrictions on transfers, as well as for specific procedures that must be followed to retitle your shares or interests into the name of your revocable living trust. Be careful in states that offer creditor protection for the cash value of life insurance because some states only offer protection for policies owned by “individual” residents of the state. The cash value would become unprotected because the trust isn’t an individual. One alternative, in this case, would be to give power of attorney to your successor trustee instead so they can manage your life insurance if need be. A mortgage or other loan against the property shouldn’t cause a problem because mortgages “follow” the property. For example, federal law provides that if a beneficiary inherits a home with a mortgage against it, the lender cannot call the loan due fully and immediately just because the original account holder is no longer living. The beneficiary inherits the mortgage as well. Your trust would simply take over the mortgage payments if you transfer an encumbered property into it, but it’s always advisable to check with your lender so you’re sure of any additional steps you might have to take.
