Effective Transfers to a Trust

Effective Transfers to a Trust

In New York, a lifetime trust shall be valid as to any assets that are effectively transferred to the trust. However, a transfer is not accomplished by a simple recital of assignment or a listing of an asset on Schedule A. Matter of Rothwell, 189 Misc. 2d 191, 730 N.Y.S.2d 664 (Sur. Ct. Dutchess County 2001) [enhanced version available to lexis.com subscribers]. 

Pursuant to NY EPTL 7-1.18,

...transfer shall mean in the case of assets capable of registration such as real estate, stocks, bonds, bank and brokerage accounts and the like, the recording of the deed or the completion of registration of the asset in the name of the trust or trustee, and in the case of other assets, a written assignment describing the asset with particularity.

The statute is clear and easily complied with concerning registered assets. A house deed can be changed to name the trust as the new owner. Stock certificates can be issued in the name of the trust and/or trustee. These transfers can be documented and registered by completing the necessary paperwork. 

Transfers become more problematic when the assets are in the "other" category. Drafting an assignment that describes an asset, or a class of assets, with sufficient particularity may prove more difficult. 

Particularity is subjective by its very nature. Moreover, there is little case law to guide the estate practitioner. It has been suggested by members of the Advisory Committee to the Estate Powers and Trust Law that the committee was concerned that an assignment transferring "everything in my house" may not be specific enough. Does this transfer include the furniture, as well as jewelry or artwork found within the house? There are too many variables and potential assets that could be included, but nothing documenting what actually is transferred. In contrast, the committee felt an assignment of "all the items in my safe deposit box located at XYZ bank" may be specific enough to meet the particularity requirement because the variables are considerably decreased to whatever is found within a specific safe deposit box.      

The effective transfer of assets into a trust has far-reaching implications. Practitioners should use their best judgment and be as specific as possible when drafting assignments. It may also be helpful to review previously executed assignments periodically to determine whether further documentation is needed.    

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Jennifer F. Hillman is an attorney at Ruskin, Moscou Faltischek, P.C., Uniondale, New York where her practice focuses in the area of trust and estate litigation.  She can be reached at jhillman@rmfpc.com