Moore & Bruce, LLP



Law Office ofLewis J. Saret1025 Thomas Jefferson Street, NWSuite 420 EastTel: +1 202 965 7748Washington, DC 20007Fax: +1 202 747 2918PERSONAL AND CONFIDENTIALMEMORANDUMMONTH DAY, YEARlewis.saret@ To:FIRST NAME LAST NAMEFrom:Lewis J. Saret Re:Funding Instructions for The FIRST NAME LAST NAME Revocable Trust This memorandum contains general instructions regarding the manner in which you can fund your trust with your various assets. This memorandum discusses how to transfer many of the types of assets that you now own or may expect to own in the future. Of course, if you have any questions, please do not hesitate to call or write.[OBJ:RT 1623] Name of Your Revocable TrustThe legal name in which assets should be held in your revocable trust is: FIRST NAME LAST NAME, Trustee, The FIRST NAME LAST NAME Revocable Trust U/A MONTH DAY, YEAR.[OBJ:RT 1624] This is the form (i.e., title) in which you should hold any properties under your trust. You may find that a particular insurance company, bank or other financial institution may require slightly different wording, but as long as your trust is clearly identified, such slight variations should cause no concern.[OBJ:RT 1625] Copies of Trust AgreementDo not be surprised if a bank, brokerage firm or other financial institution requests a copy of your trust. This occurs routinely. Legally, it is not necessary for them to see the instrument, but often they feel a responsibility to be sure that the trust has been properly drawn and executed and that the trustee has the represented powers. You can usually satisfy these institutions by giving them a photocopy of your trust, or even just a copy of the pages with the trustee information, trustee powers, dates and signatures.[OBJ:RT 1626] Tax Identification NumberWhenever you are asked to supply a Federal tax identification number for your trust, you should furnish your Social Security Number, if you serve as a Trustee. Funding your revocable trust will not change the income tax reporting of interest, dividends, gains and losses or other income on your annual Form 1040 (U.S. Individual Income Tax Return). It is as if your revocable trust did not exist for income tax purposes. Therefore, no separate trust income tax return need be filed. Regs. §§1.671-4(b) and 301.6109-1(a)(2). However, as indicated, you must report any income earned by the trust on your personal income tax return.[OBJ:RT 1627] Savings Accounts, Certificates of Deposit, Money Market Accounts, Etc.You should consider transferring significant accounts held at a bank, savings and loan, credit union, etc. to your trust. The wording indicated above should be used as the name for each account. Title to a bank account is normally indicated by a signature card that records the name of your trust.[OBJ:RT 1634] Stocks, Bonds, Street Accounts and Other SecuritiesYou may also consider transferring your stocks, bonds or other securities or brokerage accounts to your revocable trust. The wording indicated above should be on the certificates.[OBJ:RT 1635] If your broker holds the certificates on your investments, you need only change the name on your brokerage account to change the ownership of these assets to your trust. If, however, you hold the certificates yourself, one method to re-register them to your trust is to take them to the brokerage firm with whom you do business and request that they have them retitled in your trust's name. The certificates will be sent to the stock or bond transfer agent, who will cancel your certificates and reissue new certificates in the name of your trust.[OBJ:RT 1636] Another method to re-register certificates is to deal directly with the transfer agent. However, if the stock or bond certificate is lost in the mail, you will have the responsibility of having a new certificate issued. Thus, we recommend that you go through your broker.[OBJ:RT 1637] Whether you go through a broker or deal directly with the transfer agent, the back of the certificate (or an irrevocable stock power identifying the certificate) must be signed by you. Your signature must be guaranteed by a bank, trust company or a New York Stock Exchange firm before surrendering your certificate for reissuance. Before you sign the certificate or irrevocable stock power, you should fill in the name of your trust as indicated above.[OBJ:RT 1638] Limited Partnership InterestsYou may (or may not) be able to transfer any limited partnership interest you acquire to your revocable trust. You should contact the general partner to learn whether a particular partnership interest may be transferred to your revocable trust.[OBJ:RT 1640] Title to a limited partnership interest is changed by requesting that the general partner rename your interest. The general partner will reissue the certificate in the name of your trust. Sometimes, however, the general partner will charge you for this service. Often this charge is nominal, but you should get a written statement of this fee from the general partner before you change your partnership interests to your trust's name.[OBJ:RT 1641] Real PropertyThe wording indicated above should be used on deeds to real property that will be transferred to your revocable trust. You will need a new formal deed (known as a "deed of gift"), and recording fees may be charged to transfer real estate holdings to a revocable trust. As we have discussed, we will work with your real estate attorneys to transfer your real property to your revocable trust.If there is a mortgage on the property, you should contact the mortgage holder in writing to ensure that the transfer of ownership to the trust will not cause the debt to become due. Even if the debt will not become due, the lender may want to record a new mortgage (or deed of trust), with attendant fees or other charges. You should check with the title insurance company to determine if the transfer will affect the policy and, if so, get a new policy for the trust. Similarly, you should check on other insurance relating to the property (i.e., household or liability insurance) to see if the transfer will affect that coverage.[OBJ:RT 1643] If you own real estate in a state other than that of your residence, you should usually transfer this real estate to your trust. This will avoid the added costs of ancillary probate proceedings in the state in which the real estate is located. The costs of ancillary probate proceedings (or recording of the probate record) usually exceed the real estate transfer costs of recording and attorneys' fees. However, be sure to check the actual transfer costs with a local attorney.[OBJ:RT 1644] Since only real estate, and not the debt it secures, is transferred to your trust, it is not necessary to change any mortgage note or deed of trust secured by your real properties. However, prior to recordation of any deed to real property, you should investigate the lender's requirements to ensure that the transfer of real property to your trust will not cause an acceleration of the debt.[OBJ:RT 1645] Automobiles, Furniture, Furnishings and Personal EffectsTangible personal property (e.g., motor vehicles, clothing, jewelry, household goods and coin and stamp collections, etc.) is not normally transferred to a trust. Such assets, unless they have very substantial value, tend to be distributed without formal probate proceedings.[OBJ:RT 1646] On occasion, clients do insist upon avoiding all possible probate proceedings at death, usually because of some unusual situation. To do so, all tangible personal property must be transferred to a revocable trust. If an item is small enough to fit within a safe deposit box, you can place the item in such a box titled in the name of your trust. For other types of tangible personal property, you will need to execute a written assignment of such property to your trust. Again, you should check whether changing ownership has any effect on your insurance policies on these assets.[OBJ:RT 1647] Because these assets have no formal documentation or ownership, an assignment document is necessary to transfer untitled assets to your trust. We can provide you with assignment documents. They can be photocopied and used to transfer such items to each trust as additional assets are acquired.[OBJ:RT 1648] As you transfer tangible personal property to each trust, you would sign and have notarized an assignment document. You will need to attach an exhibit describing the asset or assets to be transferred (such as an appraisal description). In addition, we recommend attaching a photograph of the items of significant value to be transferred to each trust. This will help clarify your intent to add these assets to your trust. Your objective is to avoid misunderstandings by providing enough facts to guide your successor Trustees.[OBJ:RT 1649] In ConclusionPlease remember, however, that funding your trust will not change the estate tax obligations of your estate or your income tax obligations on income of the trust.[OBJ:RT 1650] Funding your trust should keep the assets in the trust free from probate before the state courts and permit their easy management by the successor Trustee in case of your disability. These may be very significant benefits, particularly with respect to certain assets, such as out-of-state real estate.[OBJ:RT 1651] Though we believe that funding your trust is generally a very good practice, you should be aware that transferring all of your assets to your trust and eliminating entirely the probate of your estate can, in a few unusual instances, have adverse consequences. For example, an estate may hold stock of certain types of tax-advantaged corporations ("S corporations") with fewer restrictions than may a revocable trust. There are other minor disadvantages to funding a revocable trust and, if you would like further information, we will be glad to discuss this subject.[OBJ:RT 1652] We are also attaching to these Funding Instructions letters that you can copy and use in effecting transfers of your assets to your trusts. [OBJ:RT 1653] Again, if you have any questions, please do not hesitate to call or write.[OBJ:RT 1654] RE: TRANSFER ASSET OR ACCOUNT FROM SOLE NAME OF FIRST NAME LAST NAME TO HIS/HER REVOCABLE TRUST TO WHOM IT MAY CONCERN: You presently hold an asset or account in the name of FIRST NAME LAST NAME. You are hereby requested to change the ownership of this asset or account to " FIRST NAME LAST NAME, Trustee, The FIRST NAME LAST NAME Revocable Trust U/A MONTH DAY, YEAR." Please note the following points:[OBJ:RT 1655] The documents of title for the asset or account (signature card, brokerage contract, etc.) should be in the name indicated above. Any periodic statements that are sent to Mr./Mrs. LAST NAME may be addressed simply to FIRST NAME LAST NAME, followed by the notation "Trustee."[OBJ:RT 1656] For tax purposes, you should continue to report the account or asset using Mr./Mrs. LAST NAME’s Social Security Number: ____________. As long as Mr./Mrs. LAST NAME is a trustee of this trust, it may use his/her Social Security Number as its tax ID number. (Treas. Regs. Section 1.671-4(b).)[OBJ:RT 1657] You are not being asked to create what is often known as a "trust account." That is, the account itself does not create a trustee/beneficiary relationship. Rather, you are being asked to make a trust the owner of an account or assets it holds as an investment.[OBJ:RT 1658] If you have any questions, please call or write to me. Dated: ___________________ ________________________________ FIRST NAME LAST NAME, as Grantor and as Trustee ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download