Having been an estate planning attorney for over 20 years I have come up with a short 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 name rather than the trust. In some cases they can be cleared up by small estate affidavit, under $150,000 probate successions, Heggstad petitions and in some cases full probates. However, it’s important to realize that in any of the above examples there are unnecessary attorney fees being spent. Our job is to help you avoid that unnecessary fees! So, without further adieu, here are some assets we commonly find after death having been omitted (accidentally for the most part) from trusts.
LOANS – By far the most commonly omitted from trusts are loans. Even when secured by a deed of trust. People loan money and do not seem to put them into their trust. To clarify I am talking about when you loan money to someone else so it’s an asset and not an obligation. The promissory note and deed of trust should be payable to the trust and not to you as an individual. I bet 50% of people with notes have them in their name and not their trust name.
BONDS – People have EE, HH, and other governmental bonds sitting in their safes or safe deposit boxes. A large percentage are in their names rather than their trust names. Before I go on, let me say that if they are small in value maybe it’s easier to cash them out. However, if larger value then get them changed into your trust name. You will need to fill out governmental forms to make that happen but I would say it’s worth it!
STOCK CERTIFICATES – People still have stock certificates in their safes or safe deposit boxes. Sometimes large numbers of shares but more often small numbers. Stocks they received as gifts, as an employee bonus, or they liked holding the paper. In any event, I often see these in individual names rather than owned by a trust. If they are commonly traded securities you might put them into your brokerage account for simplicity!
BUSINESS INTERESTS – Many people own a percentage of a small business. Maybe an LLC, a corporation, an “S-Corp,” a partnership or even a sole proprietorship. You should have the business records updated to reflect your trust ownership. At a bare minimum you should sign an assignment of the business interests to your trust. If the value is low it’s not a big deal but if the value exceeds $150,000 it will require a full probate to legally transfer the assets to a trust.
TIMESHARES – I understand that you had a couple mai tais when you bought the timeshare so maybe you forgot about your trust. However, eventually you remember you have a trust, right!? I almost have to fight some clients to put their timeshare into their trust. “It’s not worth enough to worry about” is what I always hear. Ya, it might not be worth anything but it will be a headache for your kids after you are incapacitated or dead. Put it in your trust now!
There are other assets omitted from trusts all the time but the above are ones people don’t think about for some reason. They forgot about their trust with these assets. Don’t be that guy! Get it done right and get everything into your trust.