NorCal: (510) 742-9500 | SoCal: (818) 459-3500

Funding Your Trust

Which Accounts go into the trust?

  1. Checking, Savings and brokerage accounts, all your non-retirement accounts should be transferred to trust. If you bank with a bank that has a banking location, you will need to take your Estate Planning Binder (if you are married, both spouses must go together) to the bank and let the banker know you want to “Transfer all your non-retirement accounts into the name of your trust.” The bankers normally take care of all your paperwork. Most of the time, your old account numbers should not change, thus the title of the account should be the only thing that changes.

What do we do with:

Check Books:

  1. Checkbooks do not need to change into the name of your trust. The underlying checking account that the checkbook draws from should be in the name of the trust.

Certificate of Deposits (CDs):

  1. If you have a CD that has not matured yet, you will not be able to change title at the moment, as doing so may cause you to incur penalties. What you should do for the interim is nominate the trust to be the Pay on Death (POD) beneficiary of the CD. When the CD matures and you decide to roll it into another CD, please open the new CD in the name of your trust.

What do we do with Retirement Accounts?

401K, IRAs, Roth IRAs, and a number of other qualified plans are called retirement accounts. Retirement accounts have beneficiaries. You should check to see who you have nominated as your beneficiaries.

i. If you are married, the most common beneficiary designations are as follows:

  1. Primary Beneficiary = Spouse (100%)
  2. Contingent Beneficiary = Kids (equally)
  3. If you would like to assign other percentages, that is fine.

ii. If you are single, the most common beneficiary designations are as follows:

  1. Primary Beneficiary = Kids (equally)
  2. If you have no children, then [person(s) of your choice with assigned percentages]
  3. Contingent Beneficiary = [person(s) of your choice with assigned percentages]

iii. If you have SPECIAL NEEDS CHILDREN, please call your attorney to understand how to best assign beneficiaries on your retirement accounts.

Why isn’t the trust nominated as a beneficiary of my retirement account?

  1. If you nominate a trust as a beneficiary of a retirement account, and god forbid you pass, your trust could be forced to take the entire distribution out entirely in the fiscal year die. Thus, this will be seen as income and taxed as ordinary income and penalized, if you passed away under the age of 59 ½ .
  2. When you nominate people (Spouse, kids, family member, friends) , they can inherit the retirement account into an inherited IRA or another type of qualified plan available and keep the proceeds tax sheltered according to IRS rules. This allows a huge tax savings. Further, if the beneficiary needs the money, they can access the retirement proceeds, subject to the same penalties and taxation if we were to utilize any money in our retirement plans.

How should my beneficiaries be listed on Life Insurance policies?

Whether you have life insurance through your employer or through a private entity, your beneficiary designations are very important.

i. If you have minor children, children with disabilities, if you want the children to wait to receive their inheritance, or no children and are married:

  1. Primary Beneficiary = Spouse (100%)
  2. Contingent Beneficiary = your Living Trust (100%)

ii. If you have minor children, children with disabilities, if you want the children to wait to receive their inheritance, or no children and are NOT married:

  1. Primary Beneficiary = your Living Trust (100%)

I have assets overseas, how do I do my inheritance planning for those assets?

  1. Many of our clients have this same concern. Many professional predators will attempt to tell you what to do or say they are licensed to assist you with another countries Estate Planning. Run as far away from these individuals as possible. It is very important you consult with a licensed attorney who is based in the country you are concerned with to seek their up to date, sound legal advice on that county’s inheritance laws and inheritance tax laws. You can be a jack of all trades, but your will surely be a master of none!

I own shares in a Corporation/LLC, how do I include those interests to my trust?

  1. If you own shares in a corporation or an LLC, you can assign your interests in those companies to your trust in the vent something should happen to you. A “stock power” or an “assignment of interest” should be sufficient to protect your interest. Many times, if you are a partner in a corporation, they will also have their own requirements within the operating agreement or bylaws of the company should something happen to you.
  2. In the future, after you have created your trust, if you decide to open a new company, the new company shareholder or member can be your trust.

Remember, never undertake “guessing” how you should structure your Estate Plan or assign your interests in any company you won. Always talk to your Estate Planning Attorney to get the best advise based on your family situation, the restrictions of the business, and/or the type of asset it is you are trying to include in your trust.


Let Us Answer Your Questions
Schedule a Free Consultation

Get customized and devoted help at every stage of your financial journey. We have helped thousands of clients. As a top estate planning attorney in the Los Altos, California area, we can help you, too.


43480 Mission Boulevard, Suite 270
Fremont, CA 94539