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Part III: Transferring property to a trust

On Behalf of | Jun 23, 2017 | Trusts |

In our series on trust basics, we have talked about formation documents as well as the different types of trusts and their purposes. Once you have completed all the up-front work and have a trust, you must fund it.

Tied in with funding a trust may be the need to obtain a Taxpayer Identification Number (TIN) from the IRS. This TIN allows the trust to open financial accounts and file stand-alone tax returns. Requesting this number is as easy as completing Form SS-4 and returning it to the IRS.

Re-title property 

Mistakes are easy to make when transferring title. But the biggest errors is simply forgetting about this requirement.

The first step to change the title of property involves naming. For example, you might re-title the property to “Jane Smith as Trustee for the Orville Smith Cabin Trust on June 23, 2017.” This trust is designed to keep a cabin in the family and available for relatives to get together. Jane Smith, one of the cousins, has agreed to serve as trustee.

Depending on what you want to transfer to the trust, you will need to follow different processes to re-title the property. To transfer the 50 share of Alphabet, Inc. stock you purchased in 1990, you would need to re-register them with the transfer agent from your name to that of the trust, “Jane Smith as Trustee for the Orville Smith Cabin Trust on June 23, 2017” for instance. Transfer of the cabin and property itself would require a trip to the county recorder’s office.

Any need for new financial accounts?

If each of the siblings is going to donate $5,000 to the trust for upkeep, you might need to open a bank account. There are many banks and brokerage companies who cater to trusts. When setting up this account, be aware that banks usually will ask for a copy of the trust instrument.

Your estate planning attorney who assisted in setting up the trust instrument is usually also available to answer questions during the funding process.