How do I get access to some of these trust assets? | Trust 101 Series | Lawvex

Welcome back to our Trust 101 series. This is video four of module two of our Trust 101 series.  

In the first module in our Trust 101 series we covered some of the basics of what wills and trusts are and what executors and trustees do. In the second module we have covered how to be installed as a trustee, who you need to notify and how, and what your first steps should be. In this fourth video, we will talk about how to get access to the trust assets. 

First of all, in collecting assets, it’s important to recognize the different types of assets. In this video, we’re  going to talk about real property a little bit. We’ll talk about bank accounts, and we’ll talk about personal  property.  There are lots of other kinds of assets that might be in a trust but these are the most common so we will cover these first.

Real property is obviously real estate; residential real estate, or investment real estate. Personal property includes your household furnishings, cars, anything tangible and loose that’s not fixed to real estate. Then we have bank accounts which we will just kind of combine with bank and investment accounts, and we’ll go over that as well.  

We start with the Affidavit of Successor Trustee that we created in the first video of module two where we talked about “How to become a  trustee?” That Affidavit becomes kind of your legal marching orders with each of these assets. So if you don’t know what an Affidavit of Successor Trustee is, you need to go back and watch my first video in this module. 

Getting Real Property in the Trust

Let’s start with understanding how we collect real property into the trust. With real property, there is a  chain of title, and deeds make that chain of title. And if you think about the links in a chain, each person who owns that property is a link in the chain.  So if an asset is in the trust, then that means that the trustee or the prior trustee to the trust is on  title; they’re on the deed to the real property. If I read a deed, it would say “Joe Smith, trustee of the  Joe Smith Trust”, and that’s on title for this real property. So what we need to do is we need to make the next link in the chain of title to you as the trustee of the trust.  

In order to do that, we take the Affidavit of Successor Trustee, which is your legal marching orders that  we’ve already created, and we record it with the county recorder’s office with a legal description for that  property or any other properties that were held by the prior trustee. That document, by recording it, actually perfects and moves the  chain of title from “Joe Smith, trustee of the Joe Smith Trust” to you as trustee of the trust. Once the Affidavit is recorded then you’re holding  title to that real property in the trust.  

So linking up that chain of title is critical because sometimes people want to list trust real property for sale or they want to deal with tenants in trust property because there’s a lease in place. But, you personally or even you as trustee of the trust, can’t do much of anything with that property until you’re actually on title and you’re the vested owner on title of that property. Once you record the Affidavit of Successor Trustee in  the county recorder’s office with that legal description, then you’ve got the legal authority, you’re  wearing the hat of trustee, and you can enter into listing agreements with a realtor to sell the property, you can enter into leases with the tenants, or you can evict tenants.  

This is often a step that trustees miss when they don’t have legal counsel. They’re trying to list a property  for sale, and the broker is telling them you can’t do it. Maybe they’ve even listed it for sale, and they’re trying to sell it but the title company says, “wait a second, you’re not the owner, the prior trustee is.” So that link of the Affidavit of Successor Trustee being recorded against the property is a critical link to get access and  control of a piece of real property vested in you as the trustee of the trust.  

How to Get Bank and Investment Accounts in the Trust

The second type of asset we will talk about is bank accounts and investment accounts. Bank  accounts and investment accounts don’t have deeds, but they do have account statements, and they have records with the financial institution that say that the prior trustee is the owner. So what you have to do is you have to go to that bank or go to that financial institution and if there’s an account there and it says “Joe Smith, trustee of the Joe Smith Trust”, then you give that bank or a financial  institution your Affidavit of Successor Trustee and your letter from the IRS with a new tax I.D. number. Because we don’t want a tax I.D. number associated with the trust as your personal Social Security number. That’s not appropriate because that would be  commingling trust assets, and we have a duty as trustees not to commingle trust assets. We are supposed to keep  them separate. One of the ways we do that is we obtain a brand new separate tax I.D. from the IRS for the trust, which is for you wearing the trustee hat of the trust. So you go to the bank or the investment company and you hand them the Affidavit of Successor Trustee and your tax I.D. letter that says the tax I.D. for the  trust. Then they will open a new account (they will not change the existing account typically) instead they’ll open  a new account in your name as trustee of the trust with a new tax I.D. number, and they will roll over the  funds or the assets to the new account. Now when that happens, there’s an account with your name as  the trustee and the tax I.D. and you have access to those funds – they are in the trust. It’s pretty straightforward.  

How to get Personal Property in the Trust

The third type of asset is personal property that doesn’t have a deed or an account statement or a pink  slip, and that would include couches and furnishings and so forth that you might find in somebody’s home.  If there isn’t a deed or a pink slip showing title, then there isn’t much of any kind of formality required other than you’re the established trustee of the trust, and those things belong to the trust. So, therefore, by literally taking custody or possession of them,  you’re the trustee, and you’re holding them, so they are in the trust. It’s pretty straightforward.  

Personal Property Memorandums and Specific Gifts

I mentioned in the last video, and I’ll mention it again here, that one thing you need to watch out for as a  trustee is it’s possible for a grantor of a trust to write into the trust a specific gift of an item of personal property,  maybe something sentimental, like a clock or a watch or jewelry or some item of furniture in the house.  And it’s possible for them to say that that item is supposed to go to a certain person and they can do  that actually in their will, the trust or they can do it in a document called a Personal Property Memorandum.  

If they follow the proper procedures to do that, they can list low-value things, less than $5,000 to go to a certain person or charity. So you will want to watch out and make sure that you’re not missing that as  you’re doing your trust administration and missing out on any potential gifts, going out to the right people. If  you’re unfamiliar with what a Personal Property Memorandum is and you want to learn more about it. There’s a  video and there’s software that we created on our website that allows you to make your very own Personal Property Memorandum totally free, on your own time, with access 24 hours a day at  www.lawvex.com/ppm for your own Personal Property Memorandum. The videos there explain all the details of how one  works and what you need to do in order to have one. Even if you’re the trustee of a trust and you don’t  want to make a Personal Property Memorandum, but you’d like to learn more about them, I encourage you to go to that web page on our site and check it out, because there’s a full video explaining Personal Property Memorandums there for you.  

Hopefully this video is helpful in understanding “How do I get access to real property by recording that  Affidavit of Successor Trustee?” “How do I get access to bank and investment accounts by providing the  Affidavit of Successor Trustee and the tax I.D. to the bank or financial institution?” “How do I get personal property in the trust by taking custody of that personal property, subject of course to distributions and a Personal Property Memorandum?” We’re  going to talk more about other types of assets, specifically assets that are not titled in the trust. How do we get them in the trust? That’ll be coming up in our third module.  

We’ve got more videos coming your way with really helpful information, and hopefully, you’re enjoying the series. Thanks for watching it. And we look forward to doing some more for you. 

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