How to Fund Your Joint Revocable Living Trust in Texas
By Aju John, Financial Strategist & Retirement Planning Specialist
A Joint Revocable Living Trust helps couples manage their assets while they are alive and ensures a smooth transfer to beneficiaries after their death, avoiding probate. However, signing the trust document is just the first step—you must transfer ownership of assets into the trust to make it effective.
Personal Property
To begin, if you own a vehicle such as a car, motorcycle, boat, or RV, you need to check with the Texas Department of Motor Vehicles (DMV) for the process of transferring its ownership to the trust. The new title should mention both spouses as Trustees of the Trust, ensuring a smooth transition. If the vehicle has a loan, it is advisable to check with the lender to avoid complications. Also, informing your insurance company about the ownership change is necessary so that your coverage remains intact.
For other personal belongings such as jewelry, antiques, collectibles, and tools, a bill of sale should be prepared, stating that these assets are now part of the trust. Keeping a proper record of these transfers will help avoid confusion in the future. If any of these items are insured, the insurance provider should be notified to ensure continued coverage.
Real Estate
When it comes to real estate, transferring a house or land to the trust requires executing a new deed that lists the trust as the owner. This deed must then be recorded with the County Recorder’s Office where the property is located. If the property has a mortgage, reviewing the loan agreement is essential, although federal laws typically protect homeowners from any issues due to the transfer. Updating your home insurance policy to reflect the change in ownership is also important.
Bank Accounts
Bank accounts must also be transferred into the trust’s name by visiting the bank and completing the required forms. Some banks may ask for a Certificate of Trust or a copy of the trust document. If you have a safe deposit box, its lease should be updated to include the trust or re-registered in the trust’s name. This will ensure that the successor trustee has access to it in case of your death or incapacity. For brokerage accounts, the investment firm must be informed to update the ownership details accordingly. If stocks are held in certificate form, the corporate transfer agent will need to complete the transfer process.
Life insurance polices & retirement accounts
For life insurance policies, instead of transferring ownership, the trust should be named as the beneficiary. This will help ensure that the proceeds are distributed according to the terms set in the trust, which is especially useful when minor children are involved. However, for retirement accounts like 401(k), IRA, and pension plans, ownership should not be transferred to the trust as this can lead to tax complications. Instead, the trust can be named as a contingent beneficiary, meaning it will receive the funds only if the primary beneficiary (usually the spouse) is no longer alive. Consulting a financial advisor before making this change is recommended to avoid tax issues.
It is important to regularly update your trust to reflect any new assets you acquire or major changes in your financial situation. Keeping a record of all assets in the trust is useful, especially in marking whether each asset is community property or separate property. Since legal and tax rules may change over time, seeking guidance from an estate planning attorney can help you stay compliant with the latest laws and regulations.
A properly funded Joint Revocable Living Trust provides peace of mind, as it ensures that your assets are protected and passed on to your beneficiaries without unnecessary delays or legal hurdles. Taking these steps now will help secure your financial future and make things easier for your loved ones.
Comments
Post a Comment