• The Trust Process Includes:
• Draft the Trust Documents
• Draft a “Pour Over” Will
• Fund the Trust
• Rest Easy

Trust Set Up Process

You’ve decided you want a trust, done all the research (or worked with an attorney), and know what kind of trust you want to set up. How does the trust process go from here?

1. Draft the Trust Documents.

Usually there will be a few different documents relating to the trust. The trust agreement, which establishes the trust and dictates the trust’s terms, is the primary document.

You may also create a certification of trust. The certification is authorized by CA law and contains only some of the information about the trust. You use the certification to prove to financial institutions or organizations the existence of the trust and who has authority to act as trustee without revealing all of your private details.

In addition, you may want a declaration of trust or assignment that references the Estate of Heggstad case and outlines the assets that are intended to be part of the trust. If you forget (or fail) to properly “fund” your trust, this document provides your beneficiaries with a safety net to use to ask a court to move assets outside of the trust into the trust after your death. 

Finally, in order to declare personal property, such as jewelry or furniture, as part of the trust, you may create an assignment of personal property.

2. Draft a “Pour Over” Will

A pour over will is a very simple will, which is inexpensive to draft and usually comes included in any trust package. All it does is put any assets that are subject to probate into the trust. It is important because sometimes people fail to properly “fund” the trust (see below regarding funding). If that happens, the pour over will is used to move the assets into the trust after death. This ensures you benefit with everything still being controlled by the trust terms, preserves privacy, and simplifies court involvement and costs.  

3. Fund the Trust

After you create the trust, it is empty except for your personal property if you executed an assignment transferring the personal property. You need to move your assets into the trust so they are controlled by the trust terms.

For a house, you will record a deed transferring your ownership of the house to yourself as trustee of the trust. In California, you will be able to maintain your homestead advantages (including the homeowner exemption for property tax) and the transfer does not trigger a reassessment or documentary transfer tax. The county will charge a recording fee to record the deed. Also, you should immediately have the trust added to your homeowner’s insurance as an “additional insured.”

For your bank and investment accounts (but not IRA or other tax-deferred accounts), you will need to contact the bank or brokerage and have the title of the account updated. Many financial institutions have their own form that you will fill out.

For your IRA or other tax deferred accounts, if you choose to have those funds go into the trust you will need to designate the trust as the beneficiary on the beneficiary designation. You also need to make sure that the designation form is compliant with California’s spousal consent rules.

There are other assets that may need to be transferred as well. These most commonly include: boats and yachts, savings bonds, marketable securities, shares of corporation(s), annuities, and storage units. Contact the company who holds the items (or where your boat/yacht is registered) and ask to retitle those assets.

If you work with a financial professional or wealth management team, they should be able to assist you in retitling assets and can typically handle the process for you for any assets under their management.

4. Rest Easy

Now that your estate plan is up and running, it is time to enjoy the satisfaction of a job well done! (Of course, this assumes you already have a power of attorney, health care directives, and other supplementary documents completed!)

You can sleep well knowing that your beneficiaries will be taken care of, your estate and your person are protected, and your loved ones will benefit from a clear plan, alleviating anxiety and stress.

Do you need assistance in setting up your trust? Contact us today for a free consultation.