Transferring Titled Property Into Your Trust

To transfer titled property into your living trust, you must change the owner's name on the title document—from your name as an individual, to the trust's name. The trust is the new owner of the property.

Here are some details about transferring the title of various types of property. A separate article covers Transferring Real Estate into Your Living Trust.

Bank Accounts and Safe Deposit Boxes

It should be simple to reregister ownership of a bank account as trustee of your living trust or open a new account in the trustee's name. Just ask the bank what paperwork you need to submit.

The bank will be concerned with the authority granted to the trustees to act on behalf of the trust. Depending on the kind of account, the bank may want to know if the trustees have the power to borrow money, put funds in a non-interest-bearing account or engage in electronic transfers. (The trust document created by WillMaker includes all these powers.)

To verify your authority, the bank may want to see a copy of your trust document or have you fill out its own form, often called a Trust Certification.

If you want to transfer title to a safe deposit box, you'll have to reregister its ownership, too. The bank will have a form for you to fill out.

Credit unions: If you want to transfer a credit union account to your living trust, you cannot simply change the name on the account. Because credit unions are membership organizations, the trust must qualify as a member of the credit union. Most credit unions accept living trusts as members. Ask your credit union for instructions.

Vehicles – Cars, Motorcycles, Boats

Most people don't hold vehicles in trust, for reasons discussed in Vehicles and Property That Is Often Sold. But if you want to hold a vehicle in trust, you must fill out a change of ownership document and have title to the vehicle reissued in the trustee's name. The title certificate to your vehicle may contain instructions. If you have questions, call your state's motor vehicles agency or check its website.

You need special forms to transfer some vehicles to your name as trustee, including:

• Airplanes. The Federal Aviation Administration, which registers all aircraft, has forms for you to use. For information about its Civil Aviation Registry, check out the FAA's website at www.faa.gov.
• Large boats. The Coast Guard has its own forms. (See www.uscg.mil.)

Securities

How you transfer stocks, bonds and other securities to your living trust depends on whether you hold your stocks in a brokerage account or separately.

Brokerage Accounts

If you hold your stocks, bonds or other securities in a brokerage account, either change the account to your name as trustee or open a new account in that name. Simply contact your broker and ask for instructions. The brokerage company will probably have a straightforward form that you can fill out, giving information about the trustees and their authority.

If not, you will probably need to send the broker:

• a copy of the trust document or a certification of trust (see Making a Certification of Trust), and
• a letter instructing the holder to transfer the brokerage account to (or open a new account in) your name as trustee.

After you've submitted your request, get written confirmation that the account's ownership has in fact been changed.

With some brokerage houses, you may run into a slight glitch. Here's what happens: When you go to transfer your account into your name as trustee, the brokerage house assigns it a new account number. Suddenly your property schedule, where you listed the account, has the wrong account number on it.

What to do? Just amend your property schedule to show the new account number. (See After a Grantor Dies.) Then replace the old schedule with the new one, and you're all set.

Stock Certificates

If you have the stock certificates or bonds in your possession -- most people don't -- you must get new certificates issued, showing that you hold the shares in trust. Ask your broker for help. If the broker is unwilling or unable to help, write to the "transfer agent" of the corporation that issued the stock. You can get the address from your broker or the investor relations office of the corporation. The transfer agent will give you simple instructions.

You will probably have to send in:

• your certificates or bonds
• a form called a "stock or bond power," which you must fill out and sign, and
• a copy of the trust document or a certification of trust.

The stock or bond power may be printed on the back of the certificates; if not, you can probably find a copy at an office supply store. Send these documents to the transfer agent with a letter requesting that the certificates be reissued in your name as trustee of the living trust.

Stock in closely held corporations. (See Small Business Interests.)

Government Securities

To transfer government securities -- for example, Treasury bills or U.S. bonds -- have your broker contact the issuing government agency, or do it yourself.

Mutual Fund Accounts

Ask the company that issues the mutual fund what it requires for you to reregister ownership of your mutual fund account in your living trust's name. Most will send you an easy-to-use form to fill out. In addition, most will usually want a copy of your trust document or a certification of trust.

How you transfer small business interests to your living trust depends on the way the business is owned.

Business Interests

How you transfer small business interests to your living trust depends on the way the business is owned.

Sole Proprietorships

First, list the business, by name, as an item of property in the trust document. That transfers the name and whatever customer goodwill goes with it.

Because you own the business assets in your own name (a sole proprietorship, unlike a corporation, is not an entity that can own property), you transfer them as you would any other valuable property.

If you have a registered trademark or service mark, you must reregister ownership in the living trust's name.

Trademark: Legal Care for Your Business & Product Name, by Stephen Elias (Nolo), contains sample forms for reregistering trademarks.

Solely Owned Corporations

If you own all the stock of a corporation, you shouldn't have any problem transferring it to yourself as trustee of your living trust. Follow these four steps:

Step 1: Fill out the stock transfer section on the back of the certificate.

Step 2: Mark the certificate "canceled" and place it in your corporate records book.

Step 3: Reissue a new certificate in your name as trustee.

Step 4: Show the cancellation of the old certificate and the issuance of the new certificate on the stock ledger pages in your corporate records book.

Closely Held Corporations

Normally, you can transfer your shares in a closely held corporation to your living trust by following corporate bylaws and having the stock certificates reissued in the living trust's name. But first, check the corporation's bylaws and articles of incorporation, as well as any separate shareholders' agreements, to see if there are any restrictions on such transfers. If an agreement limits or forbids transfers, it will have to be changed before you can hold your shares in trust.

Special rules for S corps. If you own shares in an S corporation, you cannot hold them in trust unless the trust is "qualified" under IRS rules. Consult a tax adviser.

Partnership Interests

To transfer a partnership interest, you must notify your business partners and modify the partnership agreement to show that your partnership interest is now held in trust. If there is a partnership certificate, it must also be changed.

Occasionally, a partnership agreement limits or forbids transfers to a trustee. If so, you and your partners may want to see a lawyer before you make any changes.

Limited Liability Companies

You should get the consent of all of the other owners before you can transfer your interest to yourself as trustee. (Even if your operating agreement requires the consent of only a majority of the other owners, it's a good idea to have everyone's consent, just to head off any difficulties.) Getting the other owners to agree shouldn't be a problem; they'll just want to know that you, as trustee of your own trust, will have authority to vote on LLC decisions.

To make the transfer, you'll need a document transferring your interest. You can use the Approval of Transfer of Membership form in Your Limited Liability Company: An Operating Manual, by Anthony Mancuso (Nolo).

Limited Partnerships

Limited partnerships are a form of investment governed by securities laws. Contact the partnership's general partner to find out what paperwork is necessary to hold your interest in trust.

Copyrights

If you want to hold your interest in a copyright in trust, you should list the copyright in the trust document and then sign and file, with the U.S. Copyright Office, a document transferring all your rights in the copyright to yourself as trustee. Sample transfer forms are in The Copyright Handbook, by Stephen Fishman (Nolo).

Patents

If you own a patent and want to hold it in trust, you should prepare a document called an "assignment" and record it with the Patent and Trademark Office in Washington, DC. There is a small fee for recording. Sample assignment forms and instructions are in Patent It Yourself, by David Pressman (Nolo).

Property That Names the Trust as Beneficiary

You can name your living trust as beneficiary of a life insurance policy, an individual retirement account (IRA) or a Keogh account. You don't (can't, in the case of retirement accounts) transfer the policy or account itself to the trust. You are the owner. The living trust is the beneficiary, which will receive the proceeds at your death.