II. TRANSFERRING ASSETS
You need to consider the following when retitling your assets
either in your name, or in the name of your Revocable Trust:
III. Real Estate
Due to the numerous legal issues involved, you will need
to prepare deeds and the necessary documents for you to
transfer your real estate interests into your Revocable
Trust.
IV. Identification of Your Real Estate Assets
First of all, if you own more than one parcel of real estate
and are unsure about the completeness of your personal records,
I recommend a registry search in each county where you have
real estate in order to make sure that we in fact transfer
all of your real estate into your Trust. You also need to
tell me whether you have inherited any real estate, because
real estate may be transferred by will as well as deed.
I would need to check the probate records of the person
from whom you inherited real estate in order to confirm
the source of your title to such property. There will be
additional expense to you for such registry searches, so
you may choose to rely on your records to provide us your
deeds or probate references for all real estate that you
now own. If any property is overlooked, however, probate
of your Will will be necessary to transfer the property
to your Revocable Trust by the terms of your Will.
V. Title Insurance
Secondly, I would like you to consider the title insurance
coverage of your property. If you have owned your property
for many years, you may have purchased it before title insurance
was widely available in New Hampshire. If you do not have
such coverage, I recommend that you consider its purchase
now. If you buy an owner’s title insurance policy
now as trustee of your Revocable Trust, you will assure
that your successor Trustee will be covered if a title defect
is discovered or alleged at the time the property is sold
after your death or at the time of a subsequent conveyance.
If you have an existing owner’s title insurance
policy on your property, you may take advantage of that
policy. Some title insurance companies will allow us to
issue an endorsement to add the Trust as an additional
beneficiary with only a preparation fee for the endorsement.
Other title insurance companies have required the issuance
of a new policy to cover the Trust with a new premium
charge. In such cases if you do not choose to buy a new
policy, we can help you to take limited advantage of your
existing policy by conveying the property with "Warranty
Covenants" to yourself as Trustee. This will give
you or your Successor Trustee a claim against you individually
on your Warranty Covenants that will require the title
insurance company to defend you under your existing policy.
However, the problem with reliance on your old title insurance
is that a defect of title may not be discovered until
after your death when the property is sold or at the time
of a subsequent conveyance. After your death, a claim
against your estate to take advantage of your title insurance
policy will be barred by the statute of limitations unless
it is filed within six (6) months of your death. Therefore,
if you want more complete coverage, I recommend that you
purchase a new owner’s title insurance policy insuring
yourself as trustee of your Trust under this new deed
unless you have an existing policy that the title insurance
company will allow to be endorsed to add the Trust.
If you do not have title insurance now, a full title
search will be required as a first step to obtain title
insurance. This could result in the discovery of a defect
in the title that would have to be cleared up before title
insurance could be purchased. The advantage of discovering
such bad news now rather than waiting is that most defects
are found by prospective buyers and buyers are not always
willing to wait while a defect is remedied.
We can facilitate the issuance of this title insurance
for you or, alternatively, we work with several title
insurance companies and could provide you with several
references if you are interested in pursuing this matter
further.
VI. Homeowner's Insurance
Fourthly, you will need to talk to your insurance agent
about adding your trust as a named insured to your homeowner’s
policy and any personal umbrella policy that you have. You
will want those policies to continue to insure you individually
as well. I have attached a sample notification letter that
you may utilize for this purpose.
VII. Out-of-State Real Estate
If you need assistance in transferring real estate which
is located in a state outside of New Hampshire, then I may
need to work with legal counsel in that state in order to
review and prepare the necessary documents for the transfer.
VIII. Bank Accounts and Certificates of Deposit
In order to register your bank accounts to your Revocable
Trust, the name should be restated in the name of your Revocable
Trust as described above. If you presently have a joint
account and both of you want to access the account, then
the registration for such an account should include the
names of both of your Revocable Trusts separated with the
word "or." I recommend that you do this the next
time you visit your bank.
With regard to Certificates of Deposit ("CD"),
some banks will allow you to retitle a CD into your individual
name, or in the name of your Revocable Trust before maturity,
without penalty. You may, however, find it easier to retitle
CDs upon maturity.
Again, the tax identification number of your Revocable
Trust will be your social security number.
IX. Stocks and Securities
You should contact your stock broker in order to transfer
your securities and bonds into your Revocable Trust. You
will find they are familiar with this process and will prepare
the necessary paper work for you. For your convenience,
I have attached a sample letter that you may use to communicate
with your broker.
Any original stock certificates which are not held in
a stock brokerage account should also be transferred to
your Revocable Trust. If you hold the original certificate,
a stock assignment power will need to be prepared.
X. Tangible Personal Property
As to your tangible personal property and household effects,
you have already executed a "Bill of Sale" which
effectively transfers these items to your Revocable Trust.
Vehicles and all other tangible personal property which
have a certificate of title are not included in this transfer
and will need to be transferred separately.
XI. Motor Vehicles
The Title to all of your motor vehicles should also be transferred
to your Revocable Trust. The ownership of motor vehicles
not requiring registration with the Department of Motor
Vehicles (e.g., tractors, combines, ATVs, etc.) have already
been transferred to you as trustees of your Revocable Trust
by way of the Bill of Sale discussed above.
XII. Insured Property
You should contact your insurance carriers if insured property
is transferred into your Revocable Trust. You want to be
certain that any individuals who "use" the property
owned by the Revocable Trust are named as an "insured"
on the property's insurance policy with the Revocable Trust
named as an additional insured. Specifically, keep in mind
automobiles. Once again, I have attached a sample letter
that you may use to notify your insurance carrier.
XIII. Life Insurance Policies
You should also obtain change of beneficiary forms for any
insurance policies and annuities from your insurance agent
or directly from the insurance company. The owner's Revocable
Trust normally is designated as the primary beneficiary
with the owner's spouse as the contingent beneficiary. You
should work with your life insurance agent and direct him
or her to change the beneficiary of your policies.
XIV. IRAs, 401(k)s and Other Qualified Plans
Consultation with your financial advisor is strongly urged
before designating your Revocable Trust as the beneficiary
of your tax-qualified retirement plans (e.g., a 401(k) plan)
or IRAs. There are many tax and financial implications associated
with designating the beneficiary of your qualified retirement
plan that you should consider, including both estate tax
and income tax issues.
Upon the death of the participant or account owner,
the tax law allows a surviving spouse to "roll over"
a tax-qualified retirement plan account or IRA account
into an IRA, thereby deferring income tax on that asset
until the surviving spouse withdraws or is required to
withdraw the benefits. If no distributions have been made
from the plan or IRA account, the tax law requires that
a retirement plan or IRA account that is not rollover
over to a surviving spouse be distributed within five
years after the death of the participant, or begin with
one year of the death of the participant and continue
over the lifetime of the "designated beneficiary."
If distributions have already commenced and certain rules
are met, the tax law allows distributions to continue
to the surviving spouse for a period of time. If no individual
is the designated beneficiary, or if the beneficiary designation
is improper, the death benefit must be paid out within
five years after the death of the participant or account
owner. In certain instances, a shorter payout may be required,
in the absence of a designated beneficiary.
It may be possible to name your Revocable Trust as the
designated beneficiary of your qualified retirement plan
and IRA benefits, and to allow the trustee to administer
these benefits as part of the trust estate. This requires
the completion of a proper beneficiary designation form,
that is available from your retirement plan administrator.
The IRS regulations allow you to name the beneficiaries
of your Revocable Trust as the designated beneficiaries,
preserving the right to pay the benefits from the IRA
or qualified plan over the lifetimes of the Revocable
Trust beneficiaries. In order to do this, you must, by
your "required beginning date" (usually, but
not always, retirement or, if earlier, April 1 after reaching
age 70½), either provide the retirement plan administrator
with a copy of the trust (and all amendments), or a list
of all trust beneficiaries (including contingent beneficiaries),
together with a description of the portion to which each
beneficiary is entitled and any conditions imposed on
the beneficial interest. You must certify that the list
is accurate and must provide certified statements regarding
any subsequent amendments to the retirement plan administrator.
Again, this is a very complex topic that requires serious
consideration and consultation with your financial advisors.
I will, of course, also be available to answer any questions.
XV. Closely Held Businesses
Your interest in any closely held business will also need
to be transferred. This will require the preparation of
additional legal corporate documents. Please call me to
discuss how you would like to handle these transfers.
XVI. New Assets
With respect to new assets acquired after the Revocable
Trust has been executed and initially funded, the same process
is used to convey new assets as was used for similar assets
when the Revocable Trust was initially funded. If you are
depositing additional monies into a bank account (credit
union account or any other account into which you make regular
deposits and withdrawals), no new documentation is required.
Likewise, the same rule applies when you acquire new securities
in a street name account; if the account itself is already
registered in your name as trustee of your Revocable Trust,
the individual securities in the account do not have to
be registered in your name as trustee of your Revocable
Trust. Only if you are opening a new account (bank account,
credit union account, street name account, and so forth)
that is not already registered in your name as trustee of
your Revocable Trust do you need to effect documentation
registering the account in your name as trustee.
XVII. MOVING FORWARD
Again, due to the nature of this process, it is best that
you take on as much responsibility as possible for funding
your Revocable Trust. As I explained, we can facilitate
the transfer of your real estate on a flat-fee basis per
property to be conveyed, if you do not request additional
title services, including registry searches to locate your
properties or new title insurance. All other legal work
provided in connection with the funding of your Revocable
Trust will be performed on an hourly-rate basis.
