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What happens to your trust when you open a new bank account or buy a new home?  Many people worry that a change in their assets will require a trust amendment.  The good news: it doesn’t, but there are two simple things you need to do when you get rid of an asset or acquire a new one.

Keep Your Trust Exhibit Up To Date

Your trust exhibit does two important things: first, it shows your intent to have the trust own those assets, and secondly it tells your successor trustee what you own.  Be nice to your successor trustee and don’t send them on wild goose chases by keeping your exhibit up to date.  Print out a fresh page with a list of your current assets and put it in the back of your original trust.  Make sure the page is dated, both for your reference and anyone coming after you.

Title, Title, Title

Make sure your trust properly holds title to your new asset.  If you’re not sure of the correct way, and even if you think you’re sure, check with your estate planning attorney.  An ounce of prevention here can save thousands of dollars and hours of frustration later. 

What to Keep Out

It’s important to remember that life insurance and retirement plans are controlled by the beneficiary designation.  Retirement plans in particular should not be directed towards your trust unless your trust is specifically designed for retirement funds.  If you send retirement funds into a trust that is not designed to hold that type of asset you could end up triggering the 5 year rule, forcing your beneficiary to pull out all the retirement funds in 5 years. 

So, when you buy that condo in Hawaii or open that new bank account – update your trust exhibit, and make sure your trust holds title to your asset.

 

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