Friday, January 30, 2009

Funding Living Trust - What You Need to Know - Part 2 - Securities and Brokerage Accounts

In part one of Funding Living Trust I wrote about changing title to your bank accounts from you as an individual to your t. Remember in addition to signing your living trust, you must also fund it. Funding means changing ownership, beneficiary or both of all assets to your Trust.

Like bank accounts, Brokerage Accounts, Individual Securities and Mutual Funds must also be re titled.

The easiest is if you hold these assets within a brokerage account because it is the account itself that is re registered. Unlike bank accounts, most brokers will require you to open a new trust brokerage account and then transfer the assets instead of re titling your current account. The broker may use the term journal the assets to the new account. This is usually the same as transfer. Make sure the assets are transferred and not sold and re purchased.

If you own individual stock certificates and or bonds you will need to re register each one. Contact each company in which you hold stock and request that their stock transfer agents provide you with instructions for transfer and the forms they require. As you might expect, no two stock transfer agents do things quite the same. Most require that you surrender your original stock certificate, complete a stock power, and have your signature on the stock power or certificate guaranteed by a bank or brokerage firm. (This is not the same as a notarization). Once they have received the paperwork, some transfer agents will complete the transfer and issue new certificates in a matter of days, others it may take a few weeks. If you do own several individual securities, you may wish to first transfer them to a brokerage account and then re title the brokerage account in the name of your trust.

Individual Mutual funds are similar to individual securities. You must contact the mutual fund company and follow their directions.

If the mutual fund companies or transfer agents require something in writing, you may want to use language similar to this:


Dear ____________________

On _____________________ we signed the __________________ Revocable Trust Agreement for estate planning purposes.

This trust is a GRANTOR TRUST as defined under the Internal Revenue Code §676 which states in part;

The grantor shall be treated as the owner of any portion of a trust where at any time the power to re vest in the grantor title to such portion is exercisable by the grantor,

We are requesting that you RE TITLE the above referenced account instead of opening a new account because:

The address and all other records stay the same;
The social security number (which is the tax id of the trust) remains the same;
The cost basis remains the same; and
The authorized signers remain the same

This account should now be titled _________________ & _________________, trustees or successors of the _______________ Revocable Trust Agreement dated ________________

We have attached a signed and notarized copy of the Certificate of Trust. If there is any problem with the above request for funding living trust, please give me a call at _______________. In addition please confirm this change in writing to me at the address below.

Please check back soon for part 3 in the series Funding Living Trust on Retirement Assets and Life Insurance.

Robert Olson is the lead attorney at DIY Lawyer. A website dedicated to helping people do their own legal work including drafting a Living Trust. They offer an e-book with a money back guarantee titled the Living Trust Annotated. This book teaches you to draft your own Living Trust for a fraction of what you would pay an attorney. With the purchase of the e-book you also receive a free half hour phone consultation with a DIY Lawyer to answer your questions about the book. You can read about it at DIY Lawyer's Living Trust Annotated.

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