Advanced Underwriting Consultants

Question of the Day – May 20

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My client has created a living trust, and it owns a mutual fund.  The client wants to sell the mutual fund shares, and re-deposit the proceeds into a deferred annuity.  Can she do that?

Answer: Probably yes.

Most people who create living trusts make such trusts revocable and accessible during their lifetimes.  The reason the trust is used is to avoid probate.  To effectively avoid probate, the grantor titles the assets that would otherwise be subject to probate into the name of the trust.

In most cases, the grantor is both the trustee and the beneficiary of the living trust during the grantor’s lifetime.  If that’s the case, and if the grantor wants to get money out of the trust, she can simply write a check from the trust account and deposit it into her personal account.

However, not all trusts are alike.  Read the trust words to make sure that the trustee is following the rules.  If there is any doubt, consult with an attorney.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.