Joe and Judy Grantor (names changed for article) have three adult daughters. Their assets include: a house, personal property, two IRA’s, a stock portfolio at a local brokerage, a bank account and a classic car which they park in the attached garage of their house. The Grantors want to leave their house and contents to daughter Debbie, who lives with them. They want the IRA’s to go to daughter Donna, and they want daughter Darlene to inherit their stock portfolio and the other bank accounts. Their living trust contains language reflecting their intent, and further provides that any residuary estate should be divided equally between their daughters.
Have they done enough? No.
1. They must sign and record a deed, transferring the house to the trustee of their trust.
2. They should sign an appropriate document transferring all their personal property to the trustee.
3. Typically, they would name each other as beneficiary on the IRA’s. Then, they would name either the trustee of their trust or Donna as alternate beneficiary.
4. The stock portfolio should reflect that it is owned by the trustee of the trust. The brokerage can furnish a stock certification form to provide for this change of title.
5. The bank signature card should be amended to show title in the trustee. If the Grantors prefer, the bank account could be set up as a Totten Trust, naming Darlene as beneficiary.
6. What about the car? Is that to be considered “contents” of the house, to go
to Debbie, or part of the residuary estate to be divided among the three
daughters? Some clarifying language should be added to the trust.
Furthermore, the title to the car should be changed to reflect ownership by the trustee of the trust.
No trust agreement funds itself. Funding should be discussed with the attorney who prepares the trust agreement, and should be accomplished promptly once the trust is formed.
Jerry Kessler practices law in Santa Clarita. For more information, please call 661-255-1001.