FREQUENTLY ASKED QUESTIONS REGARDING TRUSTS (Courtesy of parishioner, Tom Frame)
What happens when I am incapacitated or die? (Post-mortem administration of your trust) Many people believe that once their Trust is completed and their assets transferred to the Trust, or they become incapacitated or die, there is no further need for professional help. Your Successor Trustee will need the help and guidance of an attorney or an accountant in the proper administration, distribution and termination of your Trust. However, the time and expense is negligible compared to the court procedures known as conservatorship and probate.
How is my real property transferred to the trust? (Deeds) A deed is executed by you as an individual to yourself as Trustee of your Trust. It is then recorded with the County Recorder and returned to you in a few weeks. This should be done for each property owned. This also applies to out-of-state property, which avoids a probate in another state. Sister states will recognize your California Trust. At the same time as the deed is recorded a Preliminary Change of Ownership Report (PCOR) is filed with the County Assessor notifying the Assessor that the conveyance is not a sale but a transfer for the benefit of the original owner and therefore exempt from reassessment. In other words there will be no change in your real property taxes by transferring your real property to your Trust.
Do I need to transfer title to automobiles to my trust? Generally I find that transferring vehicles to the Trust through DMV is both challenging and confusing. I prefer to list the make and model of vehicles and how they should be distributed on a schedule of assets attached to the Declaration of Trust. Successor Trustees have had no trouble using this, a death certificate and the DMV forms for this purpose to transfer title to beneficiaries or otherwise dispose of them.
Transferring other assets-what is a certification of trust? This is a short form of your Trust outlining the specific terms that a financial institution such as a bank or stockbroker would need to transfer title of your accounts from your individual name to yourself as Trustee of your Trust. Many will have their own form to which you will transfer the information from the Certification.
Are insurance policies, IRA’s, pension plans, etc. transferred to the trust? Depending on particular circumstances insurance policies and annuities may either name individuals or the Trust as the primary beneficiary. They would ordinarily pass outside of probate whether you have a Trust or not. However, regarding IRAs, Pension Plans, etc., there may be income tax advantages to naming your spouse (if applicable) as the Primary Beneficiary and the Trust as the contingent Beneficiary. Unlike the majority of transfers you will be completing, unless your tax accountant advises to the contrary, you are not changing ownership of your policies and IRAs, as you do with bank accounts, stocks, bonds, etc. You are merely changing beneficiaries.
Are my assets protected from creditors by the trust? No. The Trust is not designed for the protection of assets from creditors. In fact, you cannot legally transfer your assets to your Trust in order to deny your creditors their right to be paid.
How do I file my income tax returns? The income generated from assets held in your name as Trustee of your Trust continues to be treated as your personal income and you continue to file the same type of income tax returns as you always have.
Do I need a special tax ID number? It is not necessary to obtain a separate tax identification number (TID or EIN) for your Trust. As far as the taxing authorities are concerned as long as you are alive you simply continue to use your social security number even when the asset is titled in your name as Trustee of your Trust.
You have sold me on the idea of a trust, why am I also signing a will? Known as a “Pour Over Will” this document serves as a means to transfer any asset that may have inadvertently not been conveyed to the Trust. They are then available for distribution to the beneficiaries named in the Trust. It will also serve to nominate an Executor who is generally the same person as the Successor Trustee who will serve as personal representative of your estate concerning matters that may not be covered by the Trust.
Do I need a power of attorney if I have a trust? The typical estate plan includes a Power of Attorney that appoints an Agent or Attorney-in-Fact to act for you when you are unable to act for yourself. There may be issues or assets that are not properly dealt with by the Trust. While such circumstances may never arise a comprehensive estate plan provides for any eventuality. Note: a Power of Attorney is only effective while the principal is alive.
Does my estate plan include an advance health directive? A comprehensive estate plan will include an Advance Health Directive if the client does not already have one. It both names an Agent to make health care decisions when you cannot as well as outlines your wishes in defined medical circumstances. Your Agent need not necessarily be the same person who is you Successor Trustee/Executor.
If you have any questions concerning your trust or how you can remember St. Ignatius Parish in your estate plans, please contact Fr. Dave Ayotte, SJ or our estate administrator, Sue Kneer, at 916-482-9666 x 234.