You have taken the important step of creating a revocable living trust. However, the document itself does not protect your assets. For your trust to work as intended, you must transfer ownership of your assets into it.
This crucial process is known as funding your trust. An unfunded or partially funded trust may not avoid the Washington probate system, defeating a primary reason for its creation. Here is a general checklist to help you understand the steps involved in this process.
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Take inventory of your assets
Before you begin, create a comprehensive list of everything you own. This includes real estate, bank accounts, investment portfolios, business interests and valuable personal property. Having a clear inventory will ensure you do not overlook any important assets during the transfer process.
Transfer your Washington real estate holdings
For your trust to control your real property, you must change the title on the deeds. This applies to your primary residence, vacation homes and any rental properties you own.
The ownership on the new deed must reflect the name of your trust and have a record with the proper county, such as the King County or Pierce County recorder’s office. Navigating the specifics of Washington’s community property laws makes professional guidance essential during this step.
Update your financial accounts
Most of your liquid assets need to be retitled in the name of your trust. Contact your financial institutions to update the ownership for the following:
- Checking and savings accounts
- Non-retirement brokerage and investment accounts
- Certificates of deposit (CDs)
- Money market accounts
This usually requires completing new account agreements or ownership forms provided by the bank or brokerage firm.
Address titled vehicles and vessels
A common oversight is failing to transfer ownership of vehicles. In Washington, cars, boats and RVs must be formally transferred to your trust.
This involves submitting a signed-off title and other required forms to a Washington State Department of Licensing vehicle licensing office.
Designate beneficiaries for retirement plans
Retirement accounts like 401(k)s, IRAs and other tax-deferred plans have unique rules.
You should generally not change the ownership of these accounts to your trust, as doing so can trigger significant tax penalties. Instead, you can often name your trust as the primary or contingent beneficiary of these accounts.
Securing your legacy from state estate tax
Properly funding your trust is the essential step that funding your trust. It is also a key strategy for managing potential Washington state estate tax liability, which can apply to estates of significant value.
Consider speaking to an attorney experienced with Washington’s trust laws. They can provide crucial guidance to ensure the funding process is completed correctly and your legacy is secure.
