Getting your estate plan in order can be challenging – there is almost always something more interesting to do. Not necessarily more important but certainly more interesting. Once you have gotten yourself moving and signed your estate planning documents, there are still a few things you should ensure you do: (1) fund the trust and (2) make sure your loved ones know where your plan can be found.
Funding Your Trust
Direct titling: ownership of an asset, such as a house or investment account, can be transferred making the trust the owner. With a revocable trust where you are both the grantor and the trustee, the tax identification number for the trust is your Social Security Number, meaning you see absolutely no change in tax reporting: all is still reported on your 1040. (A new tax identification number is not needed unless/until someone other than you is the Trustee.)
Payable on Death ("POD") or Transfer on Death ("TOD") designations: Banks use the "POD" designation for their accounts while investment companies (among others) use "TOD." Either way, it is a short cut to get assets into the trust, but not until you are deceased. This can be useful for smaller bank account-type assets, but is less effective, should you become incompetent. Having a durable general power of attorney in place as back-up protection is beneficial: your agent can use the power of attorney to transfer assets into the trust so the trustee can manage and use them for your best interests.
Remember that if you fail to make arrangements, you likely executed a pour-over will to catch any forgotten assets in the probate process and transferred it into the trust. However, this process means you missed out on the savings of probate minimization.
Keep Your Estate Plan Organized and Available For Family
Once your documents are signed, you should place the originals, or copies if you have deposited the originals with your attorney, in a binder so everything is kept in one place. It is a good idea to place the following documents in the very front of the binder, as they are medical in nature, and are the most likely to be needed in an emergency:
- HIPAA Authorization
- Health Care Power of Attorney
- Living Will
The items that should then follow would be:
- Durable (Financial) General Power of Attorney
- Revocable Trust and amendments, if any, in chronological order (if there is a restatement, make sure you keep initial version of the trust as well, since you may need to refer back to it for its creation date and authorization to amend)
- Will and codicils, if any
- A Memorandum detailing what to do with items of tangible personal property
- Either a summary of assets (to include the following), or documentation of each:
- Life insurance policies (with beneficiary designations, if available)
- Retirement plan documents (with beneficiary designations, if available)
- Deeds (just copies, no need for originals)
- Income tax returns for a running three year period.
Lastly, but maybe most importantly, make sure everyone knows where to find the binder should something happen to you unexpectedly. The family needs to know where to everything is stored.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
