For a trust to be valid and enforceable, it must be funded with trust assets. There is no limit as to the type of assets placed in a trust. A trust can be funded with a variety of assets. A trust can be funded with real property, such as residential houses, commercial property, rental property, and unimproved land. It can be funded with tangible personal property such as jewelry, clothing, household furniture, fixtures, chinaware, silver, photos, artwork, books, boats, vehicles, electronic equipment, musical instruments, artifacts relating to my hobbies, and all other tangible articles of personal property owned by the grantor or later acquired. The trust can be funded with intangible property rights, such as copyrights, trademarks, trade secrets, patents, and/or rights of publicity. Additionally, financial assets housed in a bank, credit union, brokerage house, or other financial institution, such as stocks, bonds, CDs, and/or cryptocurrency may also be funded into a trust.
Consider creating an initial inventory of your trust assets. You can always add to you but start the process now. It will make it easier for you and help your attorney when the time comes to prepare an estate plan.
Additional Benefits of a Complete Inventory
Having an inventory of your trust assets helps your loved ones understand their next steps with regard to taking control of your property. They know what to look for and where to find those assets. Certain items and accounts, such as the following, may be distributed according to the unique legal aspects of that type of property:
- Property owned in joint tenancy with right of survivorship (such as real estate or bank accounts) will pass automatically to the surviving joint owner. It avoids probate and the trust administration process.
- Some financial institutions permit the use of pay on death accounts (POD). Here you designate who gets your money outright. The named beneficiary is paid directly.
- If you have completed the proper beneficiary designation forms, your life insurance proceeds typically will not have to go through probate. The designated beneficiary will receive their funds outright, avoiding probate and trust administration.
- Accounts and property titled in the name of a trust can be distributed outside of probate according to the terms of the trust agreement.
- Retirement accounts usually require the listed beneficiaries to file a claim with the account custodian before the account will be paid out. Probate courts and trusts usually have no control over retirement accounts.
- Vehicles will typically need to be transferred through the local department of motor vehicles, which requires an affidavit along with a death certificate and the physical car title.
- Some high-value personal property e.g., jewelry, antiques, furniture, art collections may be subject to probate, unless they are transferred into a trust before death.
What to Do with Your Inventory Once Created
After creating your inventory, make sure to store a copy where your loved ones will be able to easily find it should something happen to you. Consider the following locations:
- an estate planning portfolio or binder
- a file folder that is clearly marked and easily accessible to your loved ones
- your client file with your estate planning attorney
- an electronic document format that can be shared with your trusted loved ones online
- a clearly labeled USB drive in your safety deposit box or safe (as long as you let your loved ones know what to look for, where to find it, and how to access it)
- Your client file with your other professional advisors (so that they can help your loved ones easily identify all of your property if your loved ones call them first after your death)
Once you have created and shared your inventory, you should create a plan for updating it. Over time, accounts get closed or consolidated with other accounts, property is sold or acquired, stocks get converted to cash, and retirement accounts get depleted. If you do not regularly update your inventory, there is a chance that you could create confusion and send your loved ones down rabbit holes as they try to handle your affairs. Avoid leaving them with a mess. Make sure your trust assets are properly labeled and can be easily found.
Some people find it helpful to choose a specific date each year when they will review and update their inventory and estate planning documents. Make a plan, implement it, and stick with whatever will work best for you. If you do, your loved ones will praise your name for years. Please call me if you need assistance or have questions about reviewing your essential documents.
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