Funding a living trust in California involves transferring assets into it to ensure they are properly managed and distributed according to your wishes. Estate planning involves careful consideration of various assets to ensure a seamless transition of your legacy to heirs. With an experienced estate planning lawyer on your side, you can ensure that the funding process aligns with all the applicable laws and addresses any specific challenges in your individual circumstances.
Transferring the Property to Real Estate
Real estate in California is transferred to probate if its value is over $61,500. You would need to transfer the title of real estate properties to the living trust. This typically involves preparing and recording a new deed that names the trust as the owner. When establishing your living trust, your attorney should have recorded a deed to transfer your home’s title. You would need to keep a copy and check property tax bills to ensure your home is listed under your trust.
If you refinance, the escrow company might ask you to sign a deed transferring the title out of your trust. Do not forget to instruct them to transfer it back after the refinance. If your property is a condominium or part of a planned development, there may be additional considerations or documentation required for the transfer. You should consult with an experienced estate planning attorney who can review the rules and regulations of the homeowners’ association, if applicable.
Bank and Investment Accounts
California’s probate threshold for bank and investment accounts in 2023 is $184,500. To sidestep probate, you may want to work with your financial institutions to transfer account titles to your living trust. Whether changing the name on existing accounts or opening new trust accounts, cooperation with your bank or financial advisor is vital.
You can consolidate your estate by placing various assets, including bank accounts and investments into a living trust. This can simplify the administration process and make it easier for your loved ones to manage your affairs when the time comes.
When dealing with retirement accounts such as IRAs and 401(k)s, it is essential to designate beneficiaries thoughtfully. Typically, married couples name each other as primary beneficiaries, ensuring a straightforward transfer of assets. In community property states like California, where spouses have a legal interest in each other’s retirement accounts, spousal consent is required if someone other than the spouse is named as the primary beneficiary.
For added protection and flexibility, especially if your living trust includes “Asset Protection Trusts” for your children, consider naming the trusts as contingent beneficiaries. This strategy not only protects the inheritance but also ensures that the assets are managed responsibly, providing a layer of protection against potential external claims.
While it is common to directly name individual beneficiaries, particularly if they are adults capable of managing their inherited retirement plans, special considerations come into play for minors or individuals with special needs. In these cases, naming a trust, such as a special needs trust, can help manage the inherited retirement assets on their behalf. Coordination with an experienced estate planning attorney is important to align beneficiary designations with the overarching goals outlined in your living trust.
Life insurance policies offer a means to provide financial security for your loved ones after your passing. You may want to name beneficiaries in your life insurance policies to receive the death benefit. When a living trust is part of your estate plan, you have the option to designate the trust itself as the beneficiary of the life insurance policy.
By naming the living trust as the beneficiary, the proceeds from a life insurance policy can be directed into the trust on your demise. This choice can bring several advantages. For example, if your living trust includes provisions for asset protection or specifies conditions for distributing the inheritance to your heirs, directing the life insurance proceeds through the trust allows these provisions to come into effect.
If you own a business or hold an interest in a business, documenting your intention to assign or transfer these interests to your living trust is a key step. This documentation is often done through an Assignment of Business Interest, a legal document that will outline your decision to include the business in your living trust.
For smaller businesses or sole proprietorships, an informal assignment may be sufficient. Furthermore, for businesses with multiple owners, it is essential to consult the existing corporate shareholder agreement, LLC operating agreement, or partnership agreement. These agreements may dictate specific processes and requirements for transferring ownership to a living trust. You can maintain a harmonious transition of business interests while adhering to legal and contractual obligations by ensuring compliance with these agreements.
Dealing with cryptocurrency in estate planning involves a combination of securing access to digital assets, understanding the unique features of cryptocurrency wallets, and updating your living trust to explicitly include provisions for the management and distribution of these assets. You should consult with a knowledgeable estate planning attorney with experience in digital currency.
Depending on the amount of cryptocurrency you own, it may be necessary to explicitly reference these assets in your living trust. This will help ensure that your estate plan explicitly includes provisions for the management and distribution of cryptocurrency, avoiding any ambiguity or oversight.
Our Seasoned Estate Planning Lawyers are Ready to Help You
The experienced estate planning attorneys at Garmo & Garmo, LLP can ensure that your legacy is preserved according to your vision. Our attorneys create estate plans to suit individual family dynamics, financial complications, and long-term aspirations. Act now to avoid potential conflicts among heirs, minimize tax burdens, and ensure that your wishes are communicated clearly. To schedule your free consultation, call us at 619-441-2500 or fill out this online contact form.