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Tax time is a good time to review your assets

Thumbnail image for tax paper.jpgAs we head into tax season, now is an excellent time to take a moment to make sure that your assets are correctly titled to your family’s living trust (if you have one). Assets held by your trust should say something like “Joe Smith,Trustee of Smith Family Trust,” or “Joe and Jane Smith, TTE” on the top. If you see your name alone on the top of the statement, that account probably isn’t in the trust yet.

What accounts should be in your trust? You should have your house and your large bank and brokerage accounts in the trust. Most people leave their everyday bill paying account out of the trust because you can easily transfer small accounts (up to a total of $150,000 currently) into a trust after the death of the account holder. Cars are also generally not put into trusts, unless they are valuable collector’s items that will appreciate in value. Finally, your retirement accounts (IRA’s, 401-k’s, 403-b’s, and their Roth cousins) are not held by your trust. Instead, your retirement accounts will pass to those named as beneficiaries of such accounts.

To transfer an account into your trust, you will need to get a form from the financial institution holding that account. Sometimes this is called a Trust Transfer Form, sometimes it’s called a Trust Account Application, and sometimes it’s called a Change of Title form. Whatever it is called, its purpose is to tell the institution that you used to own the account as yourself, and now you want the trust to own it. If you can’t find the form online, call and tell the person who answers the phone that you want to transfer your account into a living trust.

These forms generally ask you the following things:

1. The name of the trust.
2. The date the trust was signed.
3. The name of the Grantors (the people who created the trust).
4. The name of the Trustees (the people who manage the trust).
5. The state law that governs the trust.
6. Who has the power to amend and revoke the trust (these are the Grantors).
7. The trust’s taxpayer identification numbers (this is the Social Security Number of one of the Grantors, if they are boh still alive).
8. Whether the trust has been amended or restated.