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