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Trust Funding: Top 5 Overlooked Assets


The cornerstone of the vast majority of estate plans that I create for our clients is the revocable living trust. They help clients achieve a wide array of estate planning goals by providing a comprehensive set of instructions for managing, investing and distributing property for the trust’s named beneficiaries.

But these instructions only control property that is made subject to the instructions. In other words, they only apply to property that is actually held by the trust. This is why trust funding is so important.

The most common assets funded into trust are major assets such as:

  • Personal residence
  • Bank accounts
  • Stocks and brokerage accounts

I’ve found over the years though that certain less common assets are often overlooked in the trust funding process. In that light, here are my top 5 most overlooked assets that should usually be funded into a revocable living trust:

1. Savings bonds.  Remember those savings bonds that you or your parents stashed away 10 or 20 years ago? Yes, these can be re-registered into your trust. Paper bonds should generally be moved into a Treasury Direct account titled in the trust.

2. Loans and promissory notes.  Promissory notes, loans, mortgages and similar devices can be held by or assigned to a trust. In this way, your successor trustee can step into your shoes, as needed, and continue collection of the loan.

3. Timeshares, vacation & rental properties.  Interests in real estate held out-of-state are frequently overlooked, but are one of the most important types of properties to address when funding a trust. Deeded timeshares are considered real property and can be held by a trust.

4. Closely-held business interests.  Closely-held stock, LLC membership and partnership interests may usually be held by or assigned to a trust. Certain types of business interests may be inappropriate, so these should be addressed on a case-by-case basis.

5. Oil, gas and mineral interests. If these interests are connected to real estate, it is important to transfer both the underlying real estate and the contract rights with the appropriate company. Succession of these interests can be much easier to manage through an entity like a trust, rather than among many heirs over time.

We provide all of our clients with a mini-guide addressing trust funding and titling issues for a range of different types of assets. For any past clients that do not have this guide, please feel free to e-mail or call us for a copy. A little attention to detail now goes a long way toward having an estate plan that works for a long time.

Image courtesy of Flickr via Michael(tm) Smith