In California, a living trust is often used to avoid the inconvenience of a probate and to provide a simple administration of the estate assets. However, living trusts will only be effective if these are well-maintained with assets transferred to it.
In maintaining your living trust, you have to be aware of five major estate concerns. Moreover, you have to review your living trust periodically with the assistance of an estate planning attorney to make sure the assets remain with the document – and not in your name. These concerns are:
Real estate property. Make sure your home and other real properties you own are titled in your living trust. A proof that this is so can be seen from the grant deed and your property tax bill. These should show that the trust is the owner
Be sure that your house and other real properties are in the name of your living trust. When your house is undergoing refinancing, your bank may ask you to sign a document transferring ownership from the living trust back to you. You can actually sign another document transferring ownership back to the living trust. (Many forget that ownership has been transferred back to their name. A review with your Orange County estate planning can prevent this oversight.)
Bank accounts. Your bank accounts and non-qualified investment accounts (non-retirement plan accounts) should also be transferred to your living trust. A rule of thumb is for all accounts with balances of $10,000 or more to be transferred to the trust.
Ownership of business. You may also be a business owner by way of ownership of shares of stocks in a partnership or corporation. Or you may even be the sole owner of a going concern. If you do, then you must transfer ownership of these to the Trust.
Retirement plans. Proceeds will be distributed to the beneficiary you name in the plan. Normally you name your spouse or a close relative. You may also designate your living trust as a beneficiary. If you do so, be sure it includes a clause to qualify the plan as a beneficiary. Be sure to name a secondary and even a tertiary beneficiary in your plan. If you survive your only beneficiary and then you die, the proceeds of your retirement plan will go through a probate.
Life insurance policies. Just like with retirement plans, life insurance benefits will be paid to the named beneficiaries. Be sure that your beneficiary designations are current and updated. If you have minor children, you should name your living trust as the beneficiary rather than your minor children.
Every year, you may acquire new property or gain substantial finances. Be sure that these are transferred in your updated living trust. In Orange County, have a periodic review of your living trust with your estate planning lawyer.