Putting Your Assets into a Trust [video]

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Hello, I'm Stephanie Burnham. I'm an estate planning and probate attorney licensed in New Hampshire and Massachusetts. Today I was hoping to talk to you about putting assets into your trust or a limited liability company. Because, after all, now that you've gone to all the trouble to have a trust and create a trust of your own or create a limited liability company, what's next?

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It wasn't necessarily always just enough to actually create the document. Now it's time for you to make that document do its job. Now, a trust and a limited liability company are vessels. They're like empty vessels. They are paper that created this legal entity, trust or LLC that has the right to own things, but it needs to own things in order for it to be able to control those things.

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So many times if you create a limited liability company for your business, in order to make sure that your limited liability company has control over the assets of your business, you need to actually transfer those assets into the LLC. You need to do that with the paperwork that talks about ownership. So, for example, if you wanted to get a company car and you wanted to make sure that company car was owned by your limited liability company and was considered a part of the limited liability company, then you would need to actually change the title on the car so it no longer read your individual name, but instead had your limited liability company name as the

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registered owner on the title. So it's an added step you need to take after you signed and formed your limited liability company. In order for that to be the case, you also have to do that with your business banking accounts. If you were doing business as a trade name and you had your account set up in the name of the trade name, you would want to make sure that at the bank, they now know that your company is a limited liability company, and you would want to make sure that they update the bank paperwork to show that, so that the bank paperwork or the people that would need to deal with these assets understand that

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it's now owned by that limited liability company and therefore controlled by the appropriate member or manager of that limited liability company. It's the same with a trust when you form a trust. The trust itself talks about where your assets are going to go if you pass away. It talks about how assets are going to get there, how long they might take, who's going to be in charge of it.

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But a trust only is effective for the assets that are owned by the trust. And you might sign a document many times we do that says that you're transferring your personal property into the name of your trust. Things like your couches and your tables, TVs and silverware. And the idea is this one document says, I hereby transfer all of my personal property so you don't have to go and inventory your stuff.

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Please don't do that. We don't want to know how many spoons you have, but that's not enough for the assets that have titles or ownership documents. That little piece of paper doesn't take the place of updating your card title, so that your card title now says that your trust is the owner. It's not enough to cover your bank accounts, because the bank has paperwork that says you own those bank accounts.

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And so you'll need to take your trust down to your bank and ask them to change the owner of your account from you to your trust. Many times when you say that you want to change the owner, they'll actually be able to do that without having to update your account number, which will certainly make things a lot easier, because then you don't have to worry about changing all of your automatic bill payers and other things that you already have set up, but you still have to take that step.

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You still have to take the trust down to the bank and ask them to change the owner. Now, the assets that should be in your trust are not just your bank accounts. Assets that you want to have in your trust include real estate, because any real estate you have a title or a deed must be signed for it to be transferred.

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Those checking and savings accounts at the bank, the CDS, your investments that you might have with your investment advisor or your financial advisor. Those are things you're going to want to make sure you transfer over your safety deposit box. Ownership. A lot of times people forget because they think that it's kind of like a safe, but you need to make sure that your safety deposit box is owned by your trust so that your family can access that box in the event you pass away.

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You don't want to forget your stocks and your US savings bonds. Those get overlooked. Sometimes you might have 1500 shares of Disney Land that be fun. you might have shares of MetLife or shares of, Eversource or other different small stock options. Those are the type of assets that should definitely be in your trust. And if you're not sure, look and see whether or not you're getting quarterly dividends.

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If you're getting quarterly dividend checks, you may have stock that was issued to you in your own name that might need to be updated so that your trust owns it. Now, retirement accounts and life insurance accounts don't get transferred into the ownership of your trust. Now, there are some limited circumstances in which we move the ownership of life insurance to very special trusts.

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But in general, retirement accounts and life insurance are controlled by beneficiary designations. And you can either leave the beneficiaries who you already have. If those are the people you want, or you can update the beneficiaries of your retirement accounts in your life insurance to be your trust. And you may want to consider doing that, because a lot of times when you sit down with an estate planning attorney and we're talking about how you want to divide up your assets, we're talking about all the assets you have.

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We're talking about your house and your car and your life insurance values and everything that you have. And when we say that we want certain percentages to go to certain people, or we want the assets to be split, you know, equally between our children, oftentimes we're thinking about those retirement accounts, and we're thinking about those life insurance. When we're thinking about the net worth of what we're worth.

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The problem is, if you have beneficiary designations, it may not match what you decided you wanted your percentages to be in your trust document, which can make a little bit of a mess out of the evenness or what your plan is for your estate. So oftentimes we suggest you make your your trust the beneficiary of the retirement account.

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And the life insurance, as well as owning your real estate and your cars and your bank accounts so that it all gets distributed the way you have planned through your trust. And what's really great about that is down the road, if you change your mind about what percentages people are going to get and who's going to get what.

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You only have one document to change and update, just the trust, and it'll cover all of the assets that you have titled into or left the trust as the beneficiary of all at once. So it can certainly make things a lot simpler when it comes to making sure what you want happens, but it can make it much simpler when it comes to changing what you want, and it can make it easier for the people involved because they're gathering all the assets into one place before they're making that final distribution.

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Something I've also seen a lot of is a lot of people ask me about the idea of putting their cars into their trust, and they say, well, shouldn't I keep my car out of my trust? Because that way if I'm in a car accident, it'll keep it separate from my house and my bank accounts. No. When we talk about trusts, most often people have what's called a revocable trust, which means that their trust is something that they have control over and is changeable at any time.

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The assets in that trust are considered theirs. So when you leave a car out of your trust and you're in a car accident, they're suing you and you are still the owner of the assets in your trust. So it doesn't add any liability protection to leave your car out of your trust. In fact, it creates more aggravation because even though it doesn't add any protection, it certainly doesn't take any away.

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But if your car is not in your trust and you pass away, your car is now going through probate court before it gets to the family, and it's certainly pretty frustrating for the family to come see a probate attorney and say the only asset that that person had outside of their trust was their car, and we want to donate their car, or we want to give their car to this nephew who needs it because it doesn't have a lot of value.

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And then I have to give them the bad news that says, well, it's going to cost you a couple thousand dollars to take it through the probate court process just to donate it. So don't leave out that car. That's why you have car insurance. The car insurance is supposed to protect your home and your other assets. When you're in a car accident, do not use a trust to try and do that kind of asset protection, and make sure you get all of your stuff titled appropriately into your LLC or into your trust to make sure that those documents do what you want them to do.

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Thank you so much for joining me today. This should not serve as legal advice. You should seek your own attorney about your particular circumstances to ensure you get the best advice for you. But again, thank you for joining me and have a great day.