Plan and organize your individual Living Trust: Individual Living Trust Funding Worksheet

LIVING TRUST FUNDING WORKSHEET

Name of the Living Trust:

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Tax Identification Number:

If the initial trustee is not the grantor, it will be necessary to obtain a tax identification number for the trust and begin filing trust tax returns.

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Especially after the grantor's death, the trust may provide that trust INCOME is to be paid to one beneficiary, perhaps a brother, while the trust PRINCIPAL is to be maintained intact for the "remainder" beneficiaries, those who will receive the assets that remain in the trust after the death of the income beneficiary. In such cases, it is especially important for the trustee to follow the terms of the trust instrument, or established state law if the trust is silent, in making allocations between income and principal. Income receipts consist of earnings from the investment of the principal, usually including such items as dividends, interest, rents and royalties. Principal receipts consist of such items as the proceeds received from the sale of assets, stock dividends, casualty insurance proceeds, royalties from depletable resources, and principal payments from loans and installment obligations. Expenses attributable to income consist of the costs of administering and preserving the trust property. Expenses attributable to principal consist of the costs of investing and reinvesting the principal, including defending an action to protect the trust property, making capital improvements to the assets, and taxes on capital gains.

An example may be useful: Thomas purchased 100 shares of Acme stock in 1981 for $1000, which $1000 then constitutes his cost "basis" on which to compute taxable gain if he should later sell the stock. In 1998 the stock is worth $2500. If Thomas sells the stock in 1998, he must report $1500 in taxable gain. If he dies in 1998 still owning the stock, the basis is "stepped up" tax-free to the stock's $2500 date-of-death value, resulting in no taxable gain if his beneficiaries immediately sell it for $2500. Likewise, if Thomas transfers the stock to his living trust at any time before his death in 1998, the basis inside the trust remains at $1000 while Thomas is alive, but enjoys a step-up basis to $2500 at his death.

Protecting Trust Assets

Insurance Coverage:

Insurance. After insured assets have been transferred to a living trust, the insurance agent should be notified of the change. The named insured on the policy should be amended to add the trustee. The change should not affect the coverage or cost of the policy.

Documents. After the title of each asset has been transferred from the grantor to the trustee, there will be various title documents such as deeds, stock certificates, bank certificates, etc., which evidence the fact that these assets are owned by the trust. Each such title document should be kept in a safe place, such as a safe deposit box, and the person named as the successor trustee should be notified as to the location of these documents. If any securities are held in "bearer" form, such as bearer bonds or unregistered securities, it is recommended that a separate safe deposit box be obtained and clearly identified as holding only trust assets. If such items were instead held in the grantor's safe deposit box or at the grantor's home, it could be argued that those assets should be subject to probate administration, that is, that they are not effectively owned by the trust. Additionally, the safe deposit box should be held in the name of the trust so that the successor trustee will have the right to gain entrance to the box.

BILL OF TRANSFER

I, (the "Grantor") hereby sell, transfer, and assign to the Trustee of , all of my right, title and interest in the assets listed on the attached Schedule A.

Bill of Transfer

Schedule A

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Initials