TRANSFERRING ASSETS TO TRUST
The material outlined in this brochure is to specify the method of
transferring assets to your Revocable Living Trust. The name in which an
asset is to be held has been provided to you previously; and, therefore,
the material included here will relate to the most common types of
assets that are to be held either in the name of the Trust or the Trust
named as the Beneficiary.
All of the information contained in this instructional material may
not apply at the present time or in the future; however, out of an
abundance of caution, you should have the maximum amount of information
available to you regarding the transferring of assets to the Trust or
the naming of the Trust as Beneficiary in appropriate situations.
It is recommended that this instructional material be maintained for
future use. In this way, you will have the information available to you
to ensure that at the time a new asset is acquired, the acquisition can
be made in the name of the Trust and in accordance with this
Above all, be sure to contact the firm of Schofield, Grossman &
Linden, if the transferring of an asset appears to be presently
unresolved in any future acquisitions.
The name of the Trust provided to you in correspondence is the same
wording which should be used in the hold of all real estate. If the
documents have not already been provided to Schofield & Grossman,
then a copy of all existing Deeds on your home and other real estate
should be sent to the firm for the preparation of the appropriate
transfer documents for your signature. It is recommended that the
original Deeds not be mailed. Photocopies are sufficient.
If there is indebtedness on your residence, the transferring of that
asset to the Trust will not create acceleration payments to any lending
institution or private individual. Acceleration on any outstanding
indebtedness by virtue of a transfer to a Revocable Living Trust is
prohibited under Federal Law on your personal residence. Once the
document has been prepared, signed, and notarized, it will then be
recorded in the County where the property is located.
In addition to providing the firm with photocopies of the Deeds,
please also provide a photocopy of the most recent Tax Bills for each
parcel so that the necessary information from the County Assessors
Office may be obtained. Some Counties are now requiring some form of
identification, such as the Assessor's Parcel Number , be included on
the Deeds at the time of recordation. This is simply recording
information and has no relevance as to any adverse taxation to the
You should anticipate that, from the time the original Deed is sent
to the County Recorder for recordation and returned to you, it will take
approximately six to ten weeks.
When real estate, other than a residence, is encumbered by an
indebtedness, such as a Mortgage or Deed of Trust, then the same
procedures for preparing, signing, notarizing, and recording the
transfer document would be followed. In those situations where there is
an existing indebtedness, it will be necessary to contact the existing
financial institution that is the holder of either a Mortgage or Deed of
Trust to obtain permission for the transfer from you as individuals to
you as Co-Trustees. Past experience has indicated that this is not a
practical problem. However, failure to obtain that prior approval may
result in an acceleration of payments.
Therefore, on any parcel of property that you may have, other than
your residence, please also send the lender's name, address, and loan
number with the photocopy of the Deed so that the firm may contact the
lender for approval.
On all real property, as in the case of your residence, please send a
photocopy of the County Tax Bill so that the firm may obtain the
appropriate Assessor's Parcel Number and other pertinent information
required for filing the Deed.
It is recommended that any Savings Accounts in Banks and/or deposits
in a Savings and Loan Association held in the name of the Trust.
You will find that the task of transferring this asset to the Trust
is quite simple. You simply show the individual handling New Accounts
your existing passbook along with the firm's instructional letter
providing the name of the Trust.
Occasionally, Banks or Savings and Loan Associations will request a
photocopy of the Trust Agreement, and, therefore, it is recommended that
the signed original provided to you at the time of execution, be given
to the Bank so that they can make a photocopy of the necessary pages for
their own purpose. Make sure that the signed original is returned to
you. You can be assured that the Bank or Savings and Loan Association
will hold the document in the strictest confidence and that they are
only attempting to assure themselves that the Trust Agreement is, in
fact, in existence. On occasion, they may request a Certification of the
Trust. If this is requested, please contact the firm and a Certification
will be provided to you for delivery to the financial institution.
By virtue of Paragraph W under the Powers of Trustee in your Trust,
it will be possible for either of you to make withdrawals from a Savings
and Loan Account or any other type of bank account which is held in the
name of the Trust. Both signatures will not be required; however, it may
be necessary for you to specifically point out that Paragraph to the
financial institution to make sure that this has been clarified. It is
recommended that you request the institution to mark the signature card
in such a way that all Tellers will know that a single signature will be
sufficient for an withdrawals and/or deposits.
If you have any other investment vehicles at a financial institution,
such as a Certificate of Deposit, it is recommended that these assets
also be held in the name of the Trust. This could be discussed with the
same individual handling the transfer of any other type of financial
institution asset to the Trust. However, you should be careful to
ascertain from the institution that the change from you as individuals
to you as Co-Trustees will in no way adversely affect the interest being
paid on the investment. On occasion, it has been found that such a
change may create some form of a forfeiture. If such is the case, it is
recommended that you wait until the Certificate matures and, at that
time, change it to the name of the Trust to ensure that there is no
When transferring stocks or bonds to your Trust, a different
procedure will be used for privately held stock compared to that used
for publicly traded stock on an exchange.
The transfer of privately held security instruments, such as stocks
and bonds in a privately held Corporation, can be accomplished simply by
having new Stock Certificates prepared in the name of the Trust and
surrendering the prior Stock Certificates. This does not require either
a permit from a state agency nor does it have any type of adverse tax
consequences. In the event that the Corporation has any problems with
this transfer, please have that individual contact the firm.
In transferring publicly held stocks or bonds, it will be necessary
to work through a Stockbroker or through the institution from whom the
asset was purchased. In the case of publicly traded stock, the stock
broker will require you to surrender the Certificates and sign certain
transfer documents which are normal procedures. They may also require a
photocopy of the Trust, but, as in the case of the financial
institutions, such is required only for demonstrating that the Trust is
in existence and will be held in the strictest confidence. The brokerage
firm and/or transfer agent through whom the stock broker must work may
also require a Certification of the Trust. Again, this can be provided
by the firm.
If you desire, my firm can handle this transfer for you. However,
experience has demonstrated that the brokerage firm will be
substantially less expensive and probably more efficient.
If you have purchased an interest in funds, such as a mutual fund, it
is usually only necessary for you to provide a photocopy of the
instructional letter as to how the asset is to be held to satisfy their
You need not be concerned if the institutions issuing stocks and
bonds do not use the exact verbiage recommended in the title. For
example, the firm has found that brokerage firms commonly use the
designation "U/A" representing "under agreement" in
place of "U/D/T" as recommended previously. This is simply a
change in style and has no adverse consequence to you. However, if the
designation that they insist on using does not seem within the general
parameters of what has been recommended, that you contact my office for
The assets that are not recommended to be held in the name of the
Trust are regular checking accounts and automobiles. This recommendation
would not apply if very large funds are held on an ongoing basis in a
checking account nor would it apply if an automobile was not primarily a
transportation vehicle but, in fact, some kind of collectible and one
which has unusual value. If either of these unusual circumstances
suggested applies, the question of how the asset should be held should
be discussed with me so all relevant issues can be thoroughly analyzed.
It is recommended that normal day-to-day checking accounts and
vehicles used on an ongoing basis be held in joint tenancy form. This
can normally be accomplished either by having the document of title read
in both your names with the phrase "as Joint Tenants" included
after your names or, in the alternative, simply by having an
"or" between your names. Either is a generally accepted Joint
In the event that you own a mobile home or some other type of
vehicle, it is recommended that the best course of action is to provide
my firm with a photocopy of the document of title to ensure that the
appropriate state office is contacted to change the ownership name from
its present form to the Trust form. Depending on the size of the mobile
home or other vehicle, the license and ownership documents may vary
Partnerships fall into two (2) categories. Those categories are
either General Partnerships or Limited Partnerships.
If either Partnership was bought through a public offering, then the
institution making the sale should be contacted and given a photocopy of
the instructional letter with a request that the name of the ownership
be changed to the name of the Trust. On rare occasions, such
institutions may also require some type of demonstration as to the
existence of the Trust, but, normally, they will tell you exactly what
they require. This will often raise questions that are best discussed
with the firm.
When transferring a privately held interest in either a General or
Limited Partnership, it is recommended that a photocopy of the
Partnership Agreement and/or Certificate be provided to the firm. This
will enable the firm to thoroughly analyze the Agreement to determine
whether there are any prohibitions that would require a special handling
of the asset when making the transfer to the Trust.
In the circumstances of a private Limited Partnership where there is
an intended transfer of the property from its present form, it is not
unusual that an approval be obtained from all Limited Partners.
Unfortunately, this type of provision was intended to apply to a
situation where individuals attempted to sell their interest to a third
party and was not intended to address the question of individuals
transferring their interest in the Limited Partnership to a Trust.
However, the legal effect may require that when a transfer to a Trust is
desired, permission must be obtained. This is normally a simple
formality but failure to follow that formality may invalidate the
transfer of the Limited Partnership interest to the Trust.
Where there is an ownership interest in either a Promissory Note or
some other type of debt instrument, you should send a photocopy of the
debt instrument along with a photocopy of any security documents, such
as a Deed of Trust or a Mortgage, to the firm so that an appropriate
transfer can be made with the documents normally required under State
Law. This is a fairly easy procedure but one which is best handled
through my law firm. If there is either a mortgage or deed of trust, the
transfer document may be required to be filed with the County Recorder.
Oil, gas, and mineral rights are often the most troublesome assets
when transferring them to a Revocable Living Trust. The reason is,
depending on the location or depending on how the asset came into
existence, they may be treated either as an interest in real estate or
an interest in personal property. Only through an examination of the
document of title would it be possible to determine exactly the method
by which such right should be transferred to the Trust. Accordingly, a
photocopy of the document of title should be sent to the firm for
review. Appropriate preparation of the necessary document would
correctly reflect the jurisdiction in which the interest is located as
well as the form in which it must take after it is determined whether
the interest is in the form of real estate or in the form of personal
property or a mixture of the two.
When the Trust Agreement was originally signed, an Assignment
transferring all personal property, including furniture, furnishings,
and personal effects, was signed and notarized and the original
delivered to you. This normally covers most assets of a personal nature.
However, if there is within the family, a collectible asset of
significant value, such as a Coin Collection, unusual art, or the like,
it may be appropriate to make a specific Assignment to the Trust. The
issue is really one of making sure that there is a clear identification
of an asset that has an unusual value. Therefore, interests in
Collectibles should either be described in writing and in detail and/or
a discussion be held with the firm to ensure that a thorough analysis
can be made of the options available and a course of action recommended.
Other assets may exist in the Trust Estate other than those listed
where consideration should be given to transferring your interest to
your Revocable Living Trust. In this circumstance, if there is a
document of title, then it is recommended that a photocopy of the
document be provided to the firm so that a thorough analysis can be
made. Also, if there is any interest in the Trust Estate, such as in the
circumstance of a family member being the Beneficiary of a Probate
presently in process, then that should be personally discussed to
ascertain what steps should be taken.
The Beneficiary designation given to you in the instructional letter
also includes the actual name of the Trust designation for other assets.
It is recommended that the Trust be named as Beneficiary of all
existing and future life insurance policies of a significant size.
This same designation may be used not only on life insurance policies
but also in any other situation where it is appropriate to name the
Trust as Beneficiary.
As it applies to life insurance, there is one type of policy which
may not name a Trust as Beneficiary. That is, the policies that are
provided to Veterans. These policies are normally between $5,000.00 to
$10,000.00 in value and, therefore, not significant in terms of the
overall Estate Planning. Normally, in this circumstance, the most common
used Beneficiary designation is the spouse with the children named as
the alternate Beneficiaries.
Regarding life insurance, consideration should be given to having the
Wife own the insurance policy on the life of the Husband and vice versa,
and the Trust named as Beneficiary using the designation given above.
You should contact your insurance agent and request that he provide
you with the necessary forms to change the ownership of the policies and
to make the change of Beneficiary as indicated. If your life insurance
is already owned as discussed above, you should discuss with your agent
the naming of a contingent owner to provide for the eventuality if the
wife is the first to die. It may be determined best to name the Trust as
a contingent owner. Do not hesitate to have your agent contact the firm
to work out the details.
Because of the present status of law in those situations where either
party is covered under a Corporation or individual Pension Plan, such as
a Keogh Plan or IRA, it is recommended that the primary Beneficiary be
the spouse and that the Trust be named as a contingent Beneficiary.
Concerning the contingent Beneficiary, it is recommended that the same
name be utilized as has been recommended for the designation of the
Trust for life insurance purposes.
This is one area where there is often a considerable amount of detail
created simply by virtue of the forms which are used by the Pension
Administrators managing the Plans. If there is any confusion regarding
the preparation of those Beneficiary designation documents, photocopies
should be sent to the firm so that appropriate recommendations can be
made and assistance rendered.
The reason it is recommended the spouse be named as the primary
Beneficiary is that failure to name the spouse may require waiver
documents, the exact design of which is in much dispute, to insure
compliance with the Federal Law. It has been found to be simpler to name
the spouse recognizing that there is normally sufficient other assets to
fund the Decedent's Trust so that there will not be an adverse tax
consequence imposed on the family by virtue of this situation. Also, by
naming the spouse as the Beneficiary, there is an absolute guarantee
that the 100% marital deduction would be in effect. This provision
provides that the transfer of any asset to the surviving spouse by
virtue of a death is functionally tax exempt.
The only transfers to be made to a Revocable Living Trust are
interests which are owned in assets. Debts that have been incurred by
the family are not transferred to the Trust.
On rare occasions, it has been found that some institutions, because
of the peculiarities in which their Charter documents are written, may
require a minor modification in the Trust Agreement to accommodate their
individual rules. If such is the case, please request that they give you
and/or the firm the verbiage that they require in writing. From that
information, an appropriate Amendment can be prepared to ensure that the
asset can be properly transferred to the Trust.
Occasionally, the question arises as to whether or not the assets
that have been transferred to the Trust are protected from creditors.
The answer is that the Trust instrument is not designed for the
protection of assets from creditors and, therefore, is completely
neutral as to any rights which the creditors would have whether or not
you had a Trust. However, after the death of one spouse, this issue
changes and a thorough analysis should be undertaken with my firm at
Also, the question often arises as to whether a tax return for a
Revocable Living Trust is required to be filed on an annual basis. For
many years, the filing of Form 1041 was required, but the present status
of the Law specifically precludes even the filing for an identification
Number and, hence, there is no need to prepare or file a Form 1041,
Fiduciary Tax Return, until the death of one of the Trustors.
As a practical matter, after the death of one of the parties, it may
be necessary that an asset that had been transferred to the Trust may be
required to be probated. An example of such a situation is when there is
a cloud on the title of a parcel of real estate. Fortunately, in most
jurisdictions, this would simply require the use of the Probate Court to
determine the ownership rights as to that particular asset and would not
require any other asset not in question to be subjected to Probate.
You are invited to seek advice on any questions which may arise in
transferring assets to the Trust to ensure that appropriate procedures
are followed in satisfying the general legal requirements of the
transfer of assets to the Trust as well as any special requirements that
may come into existence by virtue of the peculiar requirements of some