revocable trusts contain an Exhibit A stating that the assets listed on the
Exhibit A are part of the Trust. In many
cases, the Exhibit A only lists a token sum such as $100. In some states, a living trust is not valid
unless some asset has been transferred to it and the custom of listing a token
sum on the Exhibit seeks to show that something has been transferred to the
Trust at its execution.
Exhibit A may
be used by some practitioners to list each specific asset owned by the Creator
of the Trust at the time it was signed.
Some states allow the Successor Trustee on the Creator's death to
petition the court and ask for an order that the inclusion of specific assets
on Exhibit A effectively caused them to be owned by the Trust. The Successor Trustee would then take that
order to banks, brokers, title companies and other transfer agents to show them
that probate should not be required for that asset.
One problem that
filling out Exhibit A presents is that it may cause the Creator of the Trust to
believe that he or she does not need to transfer assets to the Trust in the
traditional way. Real estate is
transferred by deed. Bank or brokerage
accounts are transferred by filling out and returning to the bank or broker
relevant forms that they have for this purpose.
Partnership interests are transferred by assignment which the
partnership is given and acknowledges and where applicable by obtaining the
written consent of other partners. Life
insurance is integrated by change of ownership and beneficiary forms. IRAs and retirement plans cannot be
transferred but change of beneficiary forms can be obtained, filled out and
returned to the relevant custodian or administrator.
assets there is no one to file papers with to show the transfer. Jewelry or paintings, for example, can be
assigned to the trust, but the assignment does not need to be filed with
anyone. If these items are later sold,
the assignment can be shown to the potential buyer to prove that the Sucessor
Trustee (after the Creator's death) has good title to the assets.
A bad mindset
is one that says "I will transfer assets to my trust later." Later, typically, means never and never can
mean the assets will be probated even though the purpose of the Trust was to
avoid probate. At the time the Trust was
signed, the Creator should have signed a pour-over Will, which will be probated
when assets are left out of the Trust and which will cause the assets left out
of the trust to be distributed to the Trust by Court Order at the end of the
some of the assets left out of the Trust may be held in joint tenancy with a
third person or may have a third person as beneficiary. That third person may no longer be the
beneficiary under the Trust, but by the Creator's failure to transfer the asset
to his Trust, that third person may succeed to the asset at the Creator's
Spiro is a Beverly Hills attorney who is a certified specialist in
Taxation and in Estate Planning, Probate and Trust Law. He holds a Masters
Degree in Taxation from Golden Gate University and has taught tax and estate
planning courses at UCLA and USC. He has been named as Super Lawyer by
Los Angeles Magazine.
Access Randy Spiro's
Martindale-Hubbell profile on www.martindale.com