A trust is an estate-planning tool that allows you or a legal representative to manage your assets during your lifetime and distribute them or the income from the assets to your beneficiaries after your death. You can additionally use a trust to provide resources to one or more parties with special needs without compromising their access to government benefits.
A trust that's established to distribute the assets of your estate upon your death—or the death of you and your spouse—helps your beneficiaries avoid the probate process, expediting asset distribution.
Types of Trusts
Revocable living trusts are usually established during the life of the grantor or creator. You can act as trustee and manage your trust assets personally as long as you're alive and competent if you opt for this type of trust. You can change its terms easily.
Irrevocable trusts prevent the grantor from managing their own assets after they've been transferred to the trust and they're difficult and often impossible to amend. You would have to go to court and prove a valid reason for wanting any changes. An alternative would be to have all the beneficiaries agree to the changes.
Transferring Fidelity Investments Into a Living Trust
Your assets aren't subject to the directives of the trust until they're transferred into it, so you must legally transfer them to fund the trust and ensure that they're protected within it. You can do this via Fidelity Investments.
Only three forms are generally required when transferring your Fidelity Investments assets into a family trust.
Creating a Living Trust
You can’t do a Fidelity transfer of assets into a trust that doesn’t exist. Start by establishing a living trust with the help of a family attorney. The trust should include a list of the Fidelity assets the trust will be responsible for managing. Request a family attorney referral from your tax adviser or family friends or conduct an online search for "estate planning" or "trust" attorneys in your area.
Make a copy of your Fidelity Investments statement along with all other assets, such as bank account statements, property deeds and other brokerage accounts.
Obtaining Relevant Forms
It’s essential that you obtain the correct Fidelity transfer of assets forms for your needs. Call Fidelity Investments' "Inheritor Services" department at 800-544-0003 and request the documents to transfer the assets into the trust.
Below are the documents you will need:
- Fidelity new account form
- Fidelity transfer form
- Quitclaim form
- Fidelity statement
- Trust document
Completing Asset Transfer Forms
You must fill out the forms and sign them in front of a notary public. This is necessary for legitimizing the creation and funding of your trust. Ensure that the new account is titled and dated properly. The title of the account should reflect the name of the trustee for the trust and they should be cited as trustee.
Submit the forms to Fidelity Investments via certified mail to ensure confirmation that they were received. Include a copy of the trust, the Fidelity statement, and the new account forms with quitclaim. Mail them to:
Fidelity Investments Account Changes P.O. Box 770001 Cincinnati, OH 45277-0002
You can confirm that the changes have been properly made two to three weeks after all documents are sent. Notification by mail usually arrives within two weeks.
A Word of Caution
You won't easily be able to change the owner of a Fidelity 401(k) or IRA, so talk to your estate planner about how retirement accounts are best structured for estate planning purposes.
You could end up triggering the IRS 10% tax penalty for early withdrawals by transferring retirement assets into a living trust. The IRS considers it to be a complete withdrawal and the funds will be taxed at the end of the tax year if you change the ownership of an IRA. The 10% tax penalty will apply if you're younger than age 59½. It would be best to consult a tax expert before you implement the transfer process.
- You will not be able to change the owner of a Fidelity 401(k) or IRA. Talk to your estate planner about how retirement accounts are best structured for estate planning purposes.
With more than 15 years of professional writing experience, Kimberlee finds it fun to take technical mumbo-jumbo and make it fun! Her first career was in financial services and insurance.