Q: A living trust was created with its initial "funding" being a very confusing clause.
The funding is described as: "all that tangible and intangible personal property owned by (the Grantor) not requiring legal evidence of ownership." What exactly does this mean? I understand it would exclude real estate or vehicles requiring deed or title. Would it include membership in an LLC - which may not be considered "personal" and likely needs legal evidence of ownership.
A: Is there real estate ? If the house or condo, or an empty lot(s) were transferred to the Trust it would be a Titled document and listed as assets transferred to the Trust. Tangible personal property is Not a "Titled" asset nor bank accounts (which are intangibles).You can check online with the local Property Appraiser's or Recorder's or Clerk of Court office (depending on the County where the real property is located if a house ,condo or lot(s) were transferred to the Trust.
Thanks for your question. In addition to the funding language included on a schedule attached to a trust agreement or in the trust agreement itself, certain assets such as bank accounts and real estate must actually be retitled during the grantor's lifetime in order to be made part of the trust and to avoid probate of those assets. For example, a grantor would take a copy of their trust agreement to the bank or brokerage where they had an account and ask them to assist with retitling those accounts as trust accounts. Then accounts would be considered to be "in the trust" for trust funding purposes.
With real estate owned by the grantor, there must be a deed into trust which transfers the real estate from the grantor as an individual back to them as trustee of their trust. After such a deed into trust is recorded, then the real estate would be considered to be "in the trust" for trust funding purposes.
Tangible items of personal property that do not have a title can be referenced in the trust language and such language serves to transfer those items into trust. However, tangible items such as vehicles which do have titles still need to be transferred either to the devisees named in a will, or if the will is a pourover will, then whoever is the personal representative/trustee could should be able to complete the transfer of vehicles by showing the original will and original trust at the tag office, and depending on the terms of these documents, complete the distribution of vehicles without probate.
If some of the bank accounts or brokerage accounts were not retitled as trust accounts OR did not have POD beneficiaries, or if retirement accounts did not have TOD beneficiaries, then it may still be necessary for there to be a probate administration to fund the trust. The same goes with real estate. If there was no deed into trust during the grantor's lifetime, there may still need to be a probate administration to transfer real estate from the estate to the trust for distribution to the trust beneficiaries.
I would recommend that you consult with a probate/trust attorney to clarify any of these issues. Our office provides a free 15 phone consultation if you would like to discuss this case further.
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