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Components of a basic living trust package

It’s Your Money

Posted: June 5, 2008 7:53 p.m.
Updated: August 6, 2008 5:03 a.m.

In previous articles, I have discussed the advantages of using living trusts as an estate planning tool. It is extremely important that your estate plan is drafted only after a personal consultation with an attorney so that the plan can be customized according to your specific situation and desires.

There are, however, certain basic documents that should be included in almost all plans in addition to the trust document.

Asset transfer documents
Assets must be transferred to the trust. The trust does NOT provide for the management or distribution of assets that have not been transferred.

 "Pourover" Will: A will can be used to transfer assets into the trust after the death of the owner if the assets were not transferred to the trust during the owner's life. Unfortunately, probate may be required to transfer assets into the trust using the will.

 Comprehensive transfer document: A statement of your intent that all of your assets are owned by the trust. For certain assets, this document can be used in place of the will in order to avoid probate. This document resulted from a 1993 court case. Any estate plans drafted prior to 1993 (and most drafted since then) that have not been updated will not include this important document.

 Schedule of assets: A listing of all assets included in the trust. A properly drafted schedule can include all of your assets without listing them individually. This document can also be used to transfer assets into the trust without probate.

 Bill of sale: Used to transfer personal tangible property into the trust. Generally used to transfer items such as jewelry, furnishings and other household goods.

 Billfold card: A card that contains the correct language to hold assets as part of the trust. When assets are acquired after establishing a trust, having this card can help insure that the assets will be correctly titled in the name of the trust.

 Trust transfer letters: Instruction letters to assist in the transfer of existing assets into the trust.

 Certification of trust: Serves as evidence of the existence of the trust when assets are being transferred.
 Durable power of attorney for financial matters: This document allows an agent to act on your behalf to manage your finances.

 Advance health care directive: Allows you to state your desires regarding end-of-life and other medical decisions and to name an agent to make health care decisions for you if you are unable to make those decisions for yourself.

 Community property agreement: Allows a surviving spouse to receive a full step-up in tax basis for appreciated property upon the death of one spouse. This can result in a substantial tax savings for the surviving spouse upon the sale of certain assets.

If you already have a trust or are considering establishing an estate plan, make sure that all of these documents are included.

Randall D. Armour is an attorney and licensed real estate broker. "It's Your Money" appears Thursdays and rotates between a handful of the valley's financial professionals. His column represents his own views, and not necessarily those of The Signal.


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