Posted 6 years and 11 months agoby Dennis A. W. Fordham
Topic: Trusts and Estates
A General Assignment of Assets to one’s Living Trust can help avoid a Probate.
Re-titling assets, like stock and bonds, from one’s name into one’s living trust is necessary to avoiding an unnecessary probate of such assets if held outside of the trust. Sometimes people fail to transfer some or all of their intended trust assets into their trust. A general assignment of assets to one’s living trust provides an important safeguard. Let’s examine what a general assignment is and how it helps to fund one’s trust and avoid a probate.
A general assignment of assets transfers ownership on a wide variety of assets as the name implies. An all encompassing general assignment is regularly used by estate planners to transfer all types of financial assets (excluding tax deferred retirement accounts) and personal property (such as the contents of one’s home) into the trust. It is a half-step towards actually re-titling the securities and the financial accounts into the name of the trustee. Nevertheless, the settlor should still proceed to contact the banks, brokerages, and stock transfer agents (as relevant) to formally transfer legal title into the name of the trustee. But, in the event that the formal legal title is not transferred prior to death, the general assignment can be used to obtain a court order to transfer legal title into the trust.
In Kucker v. Kucker, (2011), 192 CA 4th, 90, the Court of Appeal reversed a trial court decision wherein the trial court disallowed a petition to transfer stocks into a trust based on a general assignment of all assets by the settlor to the trustee. The Court of Appeal agreed with the petitioner that a general assignment of all or substantially all of the settlor’s assets into one’s trust does cause the stocks to be owned by the trustee. An otherwise unnecessary probate was thus avoided thanks to a general assignment by the settlor.
Similarly, a declaration of trust by a settlor to hold certain assets listed on a schedule of pledged assets attached to a trust document can likewise be used to accomplish the same result. Most attorneys use a schedule of initial trust assets and a general assignment to reinforce one-another. Moreover, unlike the general assignment, the schedule of trust assets will also include the real estate – together with a full legal description — for the same reason. That is, if a trust transfer deed is not properly executed prior to the settlor’s death, then the schedule of initial trust assets to a declaration of trust can be used to petition the court to transfer legal title into the trust without a probate.
While the general assignment and the declaration of trust are important safeguards against the failure to formally transfer title to trust assets while the settlor is still alive and competent, such safeguards are just safeguards. The better course of action is to see that one’s real estate, stocks and bonds, and financial accounts (and other trust assets) are properly titled in the name of the trustee of one’s trust. After all, filing a court petition entails further expenses and delay in the administration of the trust that can be avoided.
Re-titling assets, like stock and bonds, from one’s name into one’s living trust is necessary to avoiding an unnecessary probate of such assets if held outside of the trust. Sometimes people fail to transfer some or all of their intended trust assets into their trust. A general assignment of assets to one’s living trust provides an important safeguard. Let’s examine what a general assignment is and how it helps to fund one’s trust and avoid a prob
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By Harry S. Margolis
If you sign a document saying that all of your assets will go into your revocable trust, will this work to fund the trust and avoid probate, or do you need to retitle each asset and account individually? In the California case of Kucker v. Kucker, the California Appeals Court answered in the affirmative, saying (with some caveats) that the general assignment worked.
Mona Berkowitz, age 84, executed a revocable trust and a general assignment of all of her personal property to the trust. Personal property includes bank accounts, investment accounts, cash, and personal belongings, such as furniture, artwork, clothing, and jewelry.
At issue in this case was whether the general assignment covered certain stock. There was a specific assignment of other stock, but one company was inadvertantly left off the form. If it was not covered by the general assignment, Ms. Berkowitz's estate would have to be probated and the stock might pass to someone different, depending on the terms of her will and trust.
The trial court determined that the general assignment did not cover the stock. But on appeal, the Californial Court of Appeals reversed determining that (1) there is no California law prohibiting the assignment of stock to a trust through a general assignment and (2) that it was clear that Ms. Berkowitz intended to transfer all of her property to the trust. The Court commented that this finding would be different if real estate were involved.
While this case seems to have worked out for Ms. Berkowitz's intended heirs, we counsel clients to go the extra step of changing title to property they want to include so that there's no question that it has been transferred to the trust. And, of course, this case only applies in California.