Common assets mistakenly omitted from trusts

Being an Attorney in Southern California that concentrates on all aspects of Probate matters, my office has come up with a list of the forgotten assets that are most commonly omitted from trust funding.  That is, these assets are frequently found after death titled in individual names rather than being properly titled to the decedent’s trust. In some cases they can be cleared up by small estate affidavit, under $150,000 probate successions, Heggstad petitions and in some cases the asset requires a “full” probates.  If the trust is properly funded the below omissions could subject the beneficiaries to unnecessary attorney fees and court costs being spent. Below is a list of a few assets that are generally omitted from trusts:

LOANS – By far the most commonly omitted from trusts are loans. This would include loans that are secured by a deed of trust. Loaning money is a tricky business especially when it involves family. I have had people tell me that they “do not need any writing” because the lendee is family. In my opinion that is a prime example to place it in writing.   Promissory note and deed of trust should be payable to the trust and not to you as an individual.

BONDS – People have EE, HH, and other governmental bonds sitting in their safes or safe deposit boxes. If the value of the bonds are substantial then they need to be titled to the trust.

STOCK CERTIFICATES – A few still have stock certificates held in safes or safe deposit boxes. The certificates should be held in the name of the trust. Better yet, if they are commonly traded securities put them into your brokerage account for simplicity.

BUSINESS INTERESTS – I you own a percentage of a business no matter how large the company is, it should be held as an asset of the trust. This could be an LLC, a corporation, an “S-Corp,” a partnership or even a sole proprietorship. Make sure the business records are updated to reflect your trust ownership. At a minimum, you should sign an assignment of the business interests to your trust.

TIMESHARES – Timeshares should be placed in the name of the trust (they are real estate). The timeshare can be easily transferred to the trust by executing a new deed.

With all that said, the following assets are typically omitted from the trust estate. The common exceptions are annuities, IRAs and retirement plans. Do not change the ownership of these to your living trust. Talk to your attorney before you can name your trust as the beneficiary.  The most common beneficiaries include your spouse; children, grandchildren or other individuals; a charity; or a combination of these. Whom you name as beneficiary will determine the amount of tax-deferred growth that can continue on this money after you die.

You spend good money and time drafting and executing a trust. Now, it’s time to make sure it has ownership and will control all of your assets upon your death.

Jeremiah Raxter, Esq
27851 Bradley Rd, S145
Menifee, Ca 92586
As seen in the Menifee Buzz newspaper