March 1st, 2020
Last month, we discussed the important decision of selecting a trustee to manage your trust. If you have been following our recent articles, you also know that there are a variety of trusts to accomplish a variety of unique goals. Once you have consulted with an attorney on the right plan and you sign your trust into existence, it is important to realign your assets to coordinate with your new estate plan. Without this realignment, you will not reap the full benefit of your trust.
Before we can realign your assets, we need to have a comprehensive overview of what you currently own. Your attorney will likely provide you with a packet prior to your first consultation to provide information on bank accounts, vehicles, real estate, retirement accounts and more. While you might think that it is early to start preparing for realignment, it is essential that you provide this information so that your attorney can guide you to the plan that fits your needs and goals, even if you’re not sure that you will need a trust.
Once you compile your overall asset list, select a plan, and sign your documents, your attorney will help you develop a strategy to realign your assets. For instance, if you have a home with no mortgage, a car that is paid off, two checking accounts and a whole life policy and you have created a revocable living trust, she may advise retitling the home, car, and checking accounts to the name of your living trust which you can continue to manage as your own.
You will work with a real estate attorney to update the deed to the home, complete the Department of Motor Vehicle paperwork to transfer the title of the vehicle, and contact the bank to transfer the accounts to the name of your trust. In addition, you will contact the insurance company to verify your beneficiaries are up to date. If they need to be updated or if you wish to name your living trust, you will request the change of beneficiary forms.
Completion of all of these items means that your assets are realigned to your new estate plan allowing the trust to accomplish your goals! In the case of a revocable living trust, the assets can smoothly transition to your beneficiaries without going through probate at your death. The life insurance is beneficiary driven, so as long as your beneficiaries are designated properly, it will also accomplish this goal.
The scenario above is relatively straightforward, and you would likely be able to accomplish the realignment by working with financial institutions directly after the initial guidance of the attorney. However, each case is unique, and you should consult your attorney prior to realigning your accounts to avoid unintended consequences.
While realigning assets is the step our clients overlook the most, it is ultimately what allows your estate plan to work properly and accomplish your goals. Next month, we will discuss some of the roadblocks you might encounter while realigning your assets. Remember, a little time spent aligning your financial goals and estate plan now means time and money saved in the event of a crisis in the future.