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How To Fund a Living Trust | Avoid Probate the Correct Way - YouTube
Channel: Clint Coons Esq. | Real Estate Asset Protection
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- Hey guys, in this video,
we're going to talk about
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how to fund a revocable living trust.
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Okay, let's get started.
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(smooth music)
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All right, so if you don't know
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what a revocable living trust is,
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be sure to check out my video
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on the importance of
setting up a living trust,
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because it's a phenomenal estate plan.
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And I recommend any real estate investor
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that they have this type of
entity set up for themselves
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because it's going to ensure
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that their estate doesn't
go through probate
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and all of the property and
entities that they've set up
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will seamlessly pass
to their beneficiaries
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in a way in which they've determined,
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and rather than a bunch of attorneys
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figuring out how it needs to play out.
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But here's the thing.
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Setting up a living
trust, in and of itself,
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is not going to do you any good
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unless you properly fund it.
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So what happens many times that I've seen
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is that people will create
these estate planning tools
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and they never put their assets into it.
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And they think, well, I'm
going to bypass probate.
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That's one of the main
reasons why I set it up,
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only for their heirs to find out
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that because they didn't
properly fund the trust,
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they all have to go through probate,
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and then it goes into the
trust at the very end.
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So you're really paying
twice when you don't need to.
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So if you've set up a living trust
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or you're considering
setting up a living trust,
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then this is going to be
an important video for you
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on the funding aspect of your trust.
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So let's talk about that.
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So, well, the living trust,
think of it as a big box.
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All right, this is a...
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You've seen those videos or
those pods that saved your movie
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and you put your assets into a pod
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and then you have it shipped down
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to wherever you're going to be moving to.
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And you maybe have five or
six pods in your driveways.
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You're loading them up
with all your furnishings,
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all your belongings.
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Well, my living trust
here, is essentially a pod,
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or think of it as a big box
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that's designed to hold all
your life's acquisitions.
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Everything you own is
going to go into that box.
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Now this is where a lot of
times people get confused,
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wondering, what do I need to put in there?
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Do I need to put in this
sport coat into the box?
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No, you don't have to worry
about stuff like that.
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That automatically happens.
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No one's going to want
this sport coat anyways
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by the time I pass on.
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My kids won't be fighting
over it, I guarantee you that.
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But here's what's going to go in there.
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It's going to be any asset
that is a title-able asset,
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where your name is
designated on that asset
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to denote ownership.
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So those are the key things
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that you have to get in this trust.
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Because if you don't,
then when you pass on,
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they're going to have to go
through the probate process
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'cause that's the only way to change title
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for the vast majority of
assets that remain in your name
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upon your passing.
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So that's why it's key if
you set up a living trust,
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you have to get this done right away
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or as soon as possible
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to make sure that you can avoid probate
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with this valuable tool.
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So what's one of the things
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that we need to transfer in right away?
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Well, if you're not using
a personal property trust,
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like I talked about in my video
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for protecting personal assets,
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then you want all your financial accounts
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that are in your name.
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So any financial account
that has your name on it
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as a designated owner.
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Now that doesn't mean
IRAs or pension plans.
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It's where your name appears.
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You get a statement that states on there,
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Clint Coons and Tracy Coons.
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All right, whoa, that's in my name.
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That's a red flag, that's a problem.
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It's got to get into your trust name.
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So then it'll come to
the name of your trust.
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And that'll tell you now
the trust owns that asset.
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Vehicles
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would go inside of here as well.
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Boats, things like that.
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Now there are some states, you
don't really need to do that
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because when you pass on,
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you can easily take a death
certificate to the DMV
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and you can have them
transferred to the beneficiaries.
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Also in some states, there are some issues
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with putting vehicles into trust.
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You do want to check with
a local attorney on that.
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But vehicles would go into there.
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Now with the trust, if you
have business entities,
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let's say you've created a corporation.
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You would put your
corporation into this box.
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Maybe you have a Wyoming
limited liability company
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you set up for anonymity purposes.
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So I'd put my Wyoming LLC into there.
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And so when I say put
these entities into there,
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what do I mean?
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I mean that you're going to transfer
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your membership interests,
or you transfer your shares.
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And it's really simple.
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All you do is say, in fact,
I'm going to put an example.
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Right in the show notes, I'm
going to have a few for you,
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forms that you can use.
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You can download them.
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And they're just merely assignment forms.
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I Clint Cloons hereby assign
100% of my ownership interest
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in XYZ LLC, to my living trust.
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That's it, sign it;
notarize it if you want.
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You're not required to.
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Put it with your trust documents.
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Now your entities owned by there.
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Now what happens with that bank account
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that's in the name of the LLC?
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Do you need to transfer
that over to your trust?
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No, it's in the LLC, right?
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This LLC is a little box
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and you put that box into a larger box.
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And so whatever's in this
small box goes with it.
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So you don't change the accounts.
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This account in your corporation
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stays in your corporation name.
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Now let's assume this LLC owns
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three limited liability
companies that own real estate.
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Do I need to change those three
LLCs over to my trust name?
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Not at all, because remember,
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they're going with this one right here.
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They moved with that blue box.
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So you're covered by setting it up there.
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So what you need to look at
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when you're dealing
with business entities,
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where are you listed as
an owner or a member,
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a shareholder.
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Let's assume that you have an
account with Charles Schwab.
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What do you do with your
account with Charles Schwab,
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your brokerage account
that's in your name?
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Do you put it in your trust?
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No, wrong.
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You want asset protection for it?
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So what you need to do
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is set up a limited
liability company for that.
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Set up a Wyoming LLC for
your brokerage account.
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Hopefully you've already done this.
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It should hold your savings.
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Put your brokerage account
and your savings account
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inside of this LLC for asset protection,
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and then put the LLC into there.
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All right, because we
want to stay consistent
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with how we're doing our structuring
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to make sure we're protected.
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What about these IRAs over
here and your 401(k) plans
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that you have, that you've
set up and you're member of?
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Well, those types of entities,
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if you've set up your trust the right way,
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you'd want to designate
the trust as a beneficiary.
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And again, you can talk to your
financial planner, your CPA,
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talk to an attorney about
how to properly do this
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so that it doesn't screw anything up.
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And you want to make sure
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your trust is drafted the right way
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so it can hold onto those
assets after your passing
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by having the proper
provisions inside of it.
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So when it comes to funding the trust,
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the first rule of thumb is go through
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and find any account annuities
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and wherever your name
appears on entities,
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and get those transfer,
changed over to the trust name.
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Life insurance, another
common question we get.
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What do you do with life insurance?
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Well, typically it's going
to be if you're married,
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your spouse may be the
primary beneficiary.
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Trust would be the contingent beneficiary
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on a life insurance policy.
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So these are all assets
that ownership is denoted
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by your name being associated with them.
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My sport coat doesn't have
my name on the inside,
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so I don't need to worry about it.
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It automatically will
be passed on to my kids,
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who will then take it to
goodwill after my passing.
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All right, guys.
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That's how you go about
funding a living trust.
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Take care.
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(smooth music)
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