Planes, Trains, and Automobiles- In or Out of a Revocable Living Trust?

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Planes, Trains, and Automobiles Should Normally Be In Your Revocable Living Trust

In the video above, I discuss a recent MSN.com article entitled "Five Items to Leave Out of Your Revocable Living Trust."  (the article link is already broken, but there is an image in the video, and you can also view the article online here (last accessed 1/18/2025); you will have to scroll down past the first few articles). 

The author writes as follows:

         "Vehicles. Whether it’s a ’63 Corvette, Harley chopper or prop plane, all that’s required to pass it on is a simple written instruction to transfer the title to a beneficiary. In a trust, you’re exposed to lawsuits over accidents that involved the vehicle." 

Generally, I disagree. Vehemently.

In the video, I discuss the following:

1. Articles, publications, seminars, and presentations should never be construed as legal advice

2.  The author suggests that only a simple written instruction is necessary to transfer a title to a beneficiary, which statement is misleading or incorrect.

3.  Beneficiary and Transfer on Death Designations may sometimes work to avoid probate, but they have limitations and risks, and do not constitute a 'plan' to avoid probate (see links below).  

4. The liability issue raised by the author makes no sense for most revocable living trusts settled in most states.

5. The author assumes that the only purpose of a revocable living trust is to avoid probate, which is untrue, and assets outside of a trust do not serve and may impair lifetime planning benefits of a trust:

• Consistent and competent lifetime management of assets is a lifetime planning objective best accomplished with a trust.

• Guardianship avoidance is a lifetime planning objective best accomplished with a trust.

• Protection of assets from a court-appointed guardian is a lifetime planning objective that can only be accomplished with a trust.

• Aging in Place Planning is a lifetime planning objective that can only be accomplished with a trust.

I acknowledge in the video that there are always exceptions, and that the author may not have actually been considering revocable living trusts when drafting the article, but generally I disagrees with the headline and conclusion of the author regarding planes, trains, and automobiles. 

Consider additionally the following: 

• Beware Direct Transfer Designations (TODs and PODs);
• Aging in Place Planning Heightens Necessity of Trust Funding;
• Beware Direct Transfer Designations (TODs and PODs)- Part II: Ohio Transfer of Death Designation Affidavit (TODDA) for Real Estate- Lapse of Insurance Coverage;
• Beware Direct Transfer Designations (TODs and PODs)- Part III- Transfer on Death Deed for Real Estate Results in Loss of Insurance Coverage and Impairment of Asset Value.   

I urge you to attend an "Aging in Place Planning" presentation by signing up for an upcoming live webinar.  You can find these periodically on my blog or on the events page of the firm's Facebook page.  You don't need to wait, however, for a scheduled event; there is a recorded version available here: https://bit.ly/Aging-in-Place-Workshop.  You might also consider inviting your children and trusted advisors to attend.

 

Funding Your Trust

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Funding a trust is the most important first task in implementing the trust. It begins immediately upon executing or signing the trust, and consists of transferring all of your assets and property to the trust. A trust only governs the property or assets it owns or controls. In the video, Attorney Donohew introduces and explains how to use a Trust Funding Checklist to ensure that a trust is fully and properly funded.

Once your Trust is funded, you will need to keep and maintain the trust by, among other things, keeping the trust funded with newly acquired assets. If you purchase a new house or additional real estate, for example, the new property will need to be put in your trust. If you take title directly in the name of the trust, you won't have the administrative burden of preparing a new deed. Similarly, If you open a new bank or investment account, opening it directly in the name of the Trust will make it easier. In other words, keep your trust in mind as you make other legal and financial decisions.

You should also review your estate plan, and the documents that comprise the plan periodically. You should also review your plan after any major change in your life, or in the lives of your beneficiaries and fiduciaries, and any time your circumstances, goals or needs change dramatically. Regardless, the law and practice change periodically, so even if everything in your life seems to be stable and consistent, periodic review ensures that your plan is taking advantage of developments, and is not harmed or thwarted by changes in the law or practice.

Click to get your own Checlist: Funding Instructions Checklist.

The following are important articles regarding trust funding and links to funding forms:

ARTICLES

• A Signed and Recorded Deed is Necessary to Prepare A Deed Funding Your Trust
• Aging in Place Planning Heightens Necessity of Trust Funding
• Tenant's Estate Sues Landlord for Buyout Payment- Contracts and Agreements Are Assets

FUNDING FORMS*

Single Person

• Bank, Credit Union, Accounts and Safe Deposit Boxes 
• Investment Accounts (Stocks, Bonds, Mutual Funds)
• Stock Certificates
• Savings Bonds (call counsel)
• Life Insurance Beneficiary Designation
• Life Insurance Change of Ownership
• Non-Qualified Annuity Beneficiary Designation
• Non-Qualified Annuity  Change of Ownership
• Retirement Plan, IRA, SEP, Keough, TSA. Qualified Annuity Beneficiary Designation
• Homeowner's, Property & Casualty Insurance Policy ANI
• Motor Vehicle Insurance Policy ANI
• Motor Vehicle Title (Ohio)
• Motor Vehicle Transfer on Death (Missouri)

COUPLES

• Bank, Credit Union, Accounts and Safe Deposit Boxes
• Investment Accounts (Stocks, Bonds, Mutual Funds)
• Stock Certificates
• Savings Bonds (call counsel)
• Life Insurance Beneficiary Designation
• Life Insurance Change of Ownership
• Non-Qualified Annuity Beneficiary Designation
• Non-Qualified Annuity  Change of Ownership
• Retirement Plan, IRA, SEP, Keough, TSA. Qualified Annuity Beneficiary Designation
• Homeowner's, Property & Casualty Insurance Policy ANI
• Motor Vehicle Insurance Policy ANI
• Motor Vehicle Title (Ohio)
• Motor Vehicle Transfer on Death (Missouri)

The forms provided on this page are general and simple forms.  These use of any or all of these forms may not be applicable to your situation and circumstance.  Accordingly, these forms should be used only after consultation with counsel. 

Nothing contained herein should be construed as constituting legal advice which can only be given by a licensed attorney familiar with you goals, needs, and circumstances.   

A Signed and Recorded Deed is Necessary to Prepare A Deed Funding Your Trust

One of the more common questions clients ask is why they must provide a recorded deed in order to prepare a new deed funding a trust?  The question often follows a client forwarding an unsigned deed that a title company provides the buyer of property in a closing package.  Unfortunately, these unsigned documents do not provide the information needed to prepare a new deed.

A previously recorded deed is needed for a variety of reasons.  The most important of these is that a new deed must include a reference to the prior recorded deed, which reference is an Instrument Number (Book and Page Number in older deeds) best obtained from the recorded instrument.  

There are other reasons:

1. The legal description may have been changed by interlineation at the time of recording;
2. Limitations or restrictions to further recordings may have been noted on the deed  by the Engineer's (Tax Map) office, e.g. "No Further Transfers Without A Survey");
3. The name or marital status of a party may have been altered or supplemented immediately prior to, or at the time of recording.

The bottom line is that the most recently recorded deed is necessary.  Sometimes an attorney can, and will if possible, obtain the deed electronically in those counties that make the records available online.  In a few cases, however, the deed is unavailable electronically, either because the county does not make recorded deeds available online, or the deed may have been recorded prior to the date on which the county began online electronic availability.  Older deeds may not be accessible in even the largest counties that first began online electronic availability.  

You can obtain your deed from either the county recorder or from the title company that closed your purchase or last re-finance transaction.    

If you need additional help, email Chris at chris@donohew.com.  She can offer additional assistance, including ordering a tax and legal report from an abstracting company if necessary.  

Tenant's Estate Sues Landlord for Buyout Payment- Contracts and Agreements Are Assets

Estate planning is a discipline that requires periodic consideration and reconsideration of your circumstances as they change. When the estate plan involves a trust or other entity, contracts and agreements that are assets of your estate, should work within the estate plan.  Oil and gas leases, land installment contracts, rental agreements, installment sales, notes, security interests that you take in other's property, and the like, should be crafted in order to ensure that these assets remain viable assets of your estate after your death, and are marshaled and disposed in accordance with your wishes.  Sometimes, this is a simple task of assigning or conveying the rights to your trust, company, or other entity. These are too often overlooked, though, leading to unnecessary loss, risk, and legal dispute.  

A recent example resulted in a New York City landlord and the estate of one of the landlord's tenants fighting over whether the landlord is required to continue paying on a buyout of the tenant now that the tenant is deceased.

Walter Blomeyer, a black-cab driver, lived for decades in a single-room apartment in a building owned by Icon Realty Management, according to a recent article in the New York Post.  When Icon decided to convert the building into luxury condominiums, it offered to pay Mr. Blomeyer $525,000 to  induce him to move. Mr. Blomeyer accepted the deal, which required Icon to pay Mr. Blomeyer an initial sum of $300,000, allow him to live rent-free in another one of their buildings for a year, and make a final $225,000 payment.

Unfortunately, Mr. Blomeyer died in February of a heart attack before the final payment was made.  Icon has refused to make the payment to Mr. Blomeyer's estate. Mr. Blomeyer's estate was forced to file suit against Icon for $225,000. According to the Post, Icon's attorney argues it doesn't have to pay the estate because there was nothing in the agreement about the estate benefiting from the agreement.  "His estate is entitled to nothing," the lawyer said.

If the agreement had been reviewed by the estate planning attorney prior to execution, the agreement could have been easily modified to remove any doubt that the obligation was owed to Mr. Blomeyer, "his heirs and/or assigns" and that payments could be made to him, "his estate, his personal representative, or the trustee of his trust." Simple language, and as my niece would say, "mischief managed."

For the article about this case from the New York Post, click here. 

Account Management Complicated By New Banking Rules

Every Account Holder Should Be Aware of Changes

Americans write about 40 billion paper checks each year. In addition, for the first time that number recently was eclipsed by the annual number of automated transactions involving checking accounts. Checking account transactions are such a widespread part of our lives that consumers of banking services are well advised to become acquainted with major changes affecting banking laws. Federal legislation called the Check Clearing for the 21st Century Act, or "Check 21" for short, went into effect on October 28, 2004.

Check 21 will allow financial institutions to process "substitute" checks--high-quality paper reproductions created from electronic images of both sides of an original check. In time, check processing will be faster, and this is where there will be ramifications for check writers and depositors.

While it has always been prudent to have enough money in your account to cover a check the moment you write it, who has not used the lag time in check processing to make a necessary deposit? That will soon become a riskier strategy as electronic check processing becomes more prevalent. It will also be more important than ever to keep checkbooks up to date, especially bearing in mind deductions for ATM withdrawals, bank fees, and debit-card purchases.

The risk is merely financial if you unintentionally "bounce" a check from time to time. But, if you have come to rely upon the float, and particularly if you use the float from two different accounts, you may find your problem is criminal in nature. The increased speed with which banks process checks may mean more charges of check "kiting." Check kiting is among the most common, and most dangerous, forms of check fraud foisted upon financial institutions. A kite is a form of shell game using at least two accounts at separate financial institutions. The common practice of allowing depositors to have immediate use of uncollected funds facilitates the scheme. Indeed, Regulation CC mandates early access to deposited funds. In the typical scheme, an NSF check is written by on one account and then deposited into an account at another institution. A check drawn on the second account is then used to cover the resulting overdraft on the first account. Taking advantage of the float caused by normal delays in the collection system, the wrongdoer creates fictional balances in each account and uses these balances to obtain cash advances.