How to Transfer Bank Accounts into Your Living Trust and Why It’s Important
Setting up a living trust is one of the best things you can do for your estate plan. It helps you manage your assets during your life and makes it easier to pass them on without the hassle of probate. To ensure your trust works properly, though, it’s crucial to transfer your bank accounts into it.
In this post, we’ll go over how to transfer your bank accounts and why it’s so important.
Why It’s Important to Transfer Bank Accounts into Your Living Trust
- Avoid Probate: Probate is a time-consuming, expensive legal process. If your bank accounts aren’t in your living trust, they’ll likely go through probate, delaying access to your funds. When you transfer them to the trust, they pass directly to your beneficiaries—no probate necessary.
- Manage Finances If You’re Incapacitated: If you become unable to manage your finances, your successor trustee can take over. Without the trust, your family may have to go to court for permission. Having your bank accounts in the trust ensures your finances are managed without delays.
- Protect Your Privacy: Probate is a public process, which means anyone can see how your estate is divided. A living trust keeps things private. If your accounts are in the trust, your financial matters stay confidential.
- Smooth Transition: When your accounts are in the trust, your successor trustee can manage them immediately, without the need for court approval. This makes things easier and faster for your loved ones when you’re gone.
How to Transfer Your Bank Accounts into Your Living Trust
- Review Your Trust Documents: Make sure your living trust is up to date. If necessary, consult an attorney to ensure everything reflects your current wishes.
- Contact Your Bank: Call or visit your bank to ask about their process for transferring accounts into a living trust. They’ll likely require a copy of the trust agreement, ID, and possibly a Certificate of Trust.
- Update Account Titles: To transfer your accounts, the bank will change the title to reflect the trust. For example, “John Doe” becomes “John Doe, Trustee of the John Doe Living Trust.”
- Submit Necessary Paperwork: Your bank may request documentation showing the trust exists and that you’re the trustee. Be prepared to provide what they ask for.
- Transfer All Relevant Accounts: Don’t forget to transfer all your bank accounts—checking, savings, and even business accounts—into the trust. Review joint accounts to decide whether they should be included.
- Keep Records: After the transfer, keep copies of all paperwork showing that your accounts are now part of the trust. This will help your trustee manage the assets later.
A Few Additional Considerations
- Retirement Accounts and Life Insurance: These accounts should not be transferred into your trust because they have their own beneficiary designations. Instead, name your trust as the beneficiary.
- POD Beneficiaries: If you’ve set up Payable-on-Death (POD) beneficiaries, make sure they align with your estate plan. You may need to update the designations to reflect your trust as the beneficiary.
Transferring your bank accounts into your living trust is a simple yet important step in making your estate plan effective. It helps you avoid probate, ensures your finances are managed if you’re incapacitated, and protects your privacy. Plus, it’ll save your loved ones time and trouble later, giving you peace of mind.
Call Regal Estate Planning today to make sure your accounts flow into your estate plan. Don’t have a plan yet? Call us to get started today.