Use Of Asset Transfer Letters And Substantive Legal Help Increases Law Office Income And Enhances Client Service

The current economic climate causes clients to be concerned with value more than ever, and accentuates the importance of making clients see the benefit of utilizing our services. Use of asset transfer letters within the Cowles Trust Plus system significantly streamlines the process of changing names on clients' accounts from themselves as individuals to themselves as trustee(s) of their trust. This minimizes law firm overhead, enhances client service, reduces potential liability, and promotes referrals.

The Instructions to Banks and Credit Unions letter directs the institution to retitle the account in the name of the grantor(s) as trustees of the trust dated ___. The letter provides citations to the institution to support use of the grantor(s)' social security number as the taxpayer identification number of the trust. Use of this letter makes retitling of accounts much easier for the client, and promotes referral of additional business from the institution, since the banks, credit unions, and other institutions greatly appreciate detailed, written instructions.

Use of this letter also substantially minimizes the time spent by the law office in answering questions and in solving issues which may be created in the funding process. The instructions specifically request that the existing account be retitled, rather than closing the existing account and reopening a new account, since, if this is done, outstanding checks may bounce, and automatic deposit and withdrawal arrangements are affected. Additionally, the letter states that the transfer should not affect the language on the checks. Most clients prefer to keep the estate plan private, and do not want to complicate check cashing due to references to the trust on the check itself. The letter also states that, if the retitling to the trust will negatively affect interest, dividends, life insurance or other income on the investment, retitling should not be completed without contacting the client first. Instructions specifically tell the institution NOT to retitle IRA's or tax deferred assets, and that, if an IRA or tax deferred asset is held by them for this client, they should request a copy of the letter entitled RETIREMENT PLANS, IRA's, KEOGHS OR ANNUITIES. This instruction prevents inadvertent transfer of a tax-deferred investment which could trigger recognition of deferred tax.

Use of the letter—customized for the client by the law office but delivered or sent by the client—works very well to complete trust funding smoothly. If the law office fully completes correspondence to institutions and mails correspondence, the law office assumes liability if transfers are not properly made by the institution, or if an account is inadvertently missed, with no letter sent. In order to cover this potential liability, if assuming responsibility for completing transfers, the law office would need to receive written verification of transfers, which is extremely time consuming for the firm and expensive for the client. Additionally, upon receipt of the letter, each institution completes its own paperwork. If the client simply hand carries the letter of instructions into the local institutions, the new signature card or other paperwork may be prepared, and the client's signature may be obtained with one visit. If the law office sends correspondence directing the transfer, the institution sometimes mails items needing the client's signature to the firm, and sometimes mails items directly to the client, making it very difficult for the attorney to keep track of the asset transfer process. Finally, when the law office takes too great a role in the asset transfer process, with the client not taking responsibility for processing transfers, there is a much greater likelihood that, when the client opens a new account, the client will forget to title the new asset in the trust.

Using the asset transfer letters (on bank accounts, as well as various other types of assets) has worked extremely well for attorneys nationwide. This process provides the client with a tangible piece of paper to be processed, so the client knows that, upon leaving the appointment where the estate plan is executed, the letters need to be delivered. The content of the letter is based upon many years of questions and considerations which arose in funding thousands of trusts. The letters balance the importance of direction and aid from the law office in funding the trust with the importance of keeping the estate plan affordable, educating the client about the importance of the funding process, and leaving some responsibility with the client regarding the titling of currently owned assets and assets acquired in the future.

Although it is important for the attorney to be aware of the net worth of the client and the makeup of the assets in the estate planning process, when the client completes the account information on the letters, the law office is not perceived as "big brother", as it sometimes is if exact account numbers and names and addresses of institutions are required by the firm. Use of the letter facilitates efficient transfer of assets in a cost effective and positive manner.

In most cases, all bank and credit union accounts including, but not limited to, checking accounts, savings accounts, and certificates of deposit, should be in the name of the trustee(s) of the trust. It is generally best to make the name change on checking accounts, even if only a small sum of money is kept in the account, since, if a deposit is made and checks haven't cleared, the account value on date of death could exceed transfer by affidavit or other summary procedure limitation amounts.

If the client leases a safe deposit box, and if your state statute or local practice would freeze the safe deposit box upon the client-lessee's death, the lessee's name may be changed to the trustee(s) of the trust. A blank exists on the Instructions to Banks and Credit Unions letter to insert the safe deposit box number if the safe deposit box lease should be changed. Safe deposit boxes cannot be held in the name of the trust and still name another person as agent or joint tenant if that person is not also a primary trustee of the trust. If an "agent" routinely accesses the box (a child who runs to the bank for mom), it may be advantageous to lease it outside of the trust. State law varies regarding freezing of boxes. If the box is leased by the trustee(s) of the trust (currently the client-grantor), whenever successor trustees assume management of the trust, they will also have access to the box. The original of the power of attorney document and the original of the certificate of trust should be kept outside of the box, in a place accessible to the attorney-in-fact/successor trustee. Otherwise, the legal documentation to show the right to access the box may be in the box, inaccessible unless documentation is provided!

Information like this for each type of asset transfer letter is easily accessible in the substantive legal area of Cowles software—available to you with the click of a mouse!