April 8th, 2020
If you refer back to our article from last month, you will recall that asset realignment is the essential and final step in establishing your trust. Asset realignment involves reviewing your current assets and retitling assets to match the goals of your trust. Generally, if you follow the instructions of your attorney, you are able to realign your assets independently. However, there are some common roadblocks you may encounter that might require additional assistance.
For instance, if you own real estate, the main roadblock you may encounter is if you have a mortgage on the property. Prior to creating a new deed transferring the property to your trust, contact your mortgage company to ensure that the terms of your agreement allow a transfer without penalty. If you skip this step, you may find yourself incurring unexpected fees – including owing the balance due on your loan! This is remedied by communication with your mortgage company, and in the worst-case scenario, refinancing with another company with more desirable policies on trusts.
Bank accounts and brokerage accounts are common assets to realign. Ask your financial institution what their policy is on trusts before you begin the realignment process. Certain credit unions cannot title assets in the name of a trust. Most institutions that can will accept excerpts of the trust with pertinent information; however, some insist on a full copy of the trust for their records. Based on West Virginia Code (§ 44D-10-1013), the bank assumes additional liability if they make this request instead of relying on trust excerpts.
When you encounter bank policy roadblocks, engaging your attorney for further realignment services to discuss the issue with the bank directly may be the most efficient route to take. Often, the attorney will have a contact at your institution, and it is a simple misunderstanding they can resolve. The worst-case scenario is that you may need to transfer your accounts to a different financial institution that meets your new goals and needs, but this is a last resort.
Most roadblocks with retitling vehicles can be avoided by taking the proper items to the Department of Motor Vehicles. You will need your license, insurance, title, and completed and notarized change of ownership affidavit. Within the past five years, the Department of Motor Vehicles’ policy shifted to prohibit vanity license plates (such as veteran plates) on vehicles titled in a trust. You may also have to pay the fee for registration and new plates in some instances. While this is an inconvenience, it does not prevent you from transferring the vehicle to your living trust.
Additionally, if your vehicle has a lien on it, you will need to satisfy that lien before you can transfer your vehicle to the living trust. Unlike irrevocable trusts, you can add assets months or years later as you acquire them without affecting the protections the trust provides.
Ultimately, it is worth the time now to align your assets to ensure your plan works in a future crisis. Be sure to talk to your attorney about your specific realignment as individual plans will cover a variety of other accounts and be unique to your financial situation. Next month, we will address special considerations for retirement accounts in realignment and also go a little deeper into aligning assets with plans that have multiple trusts.