Investment accounts, or brokerage accounts, are accounts held by an institution that contain mutual funds, stocks, ETFs, cash accounts, etc. Additionally, as used in this article, investment accounts are non-qualified accounts. In other words, investment accounts are distinguished from IRAs, 401k’s, 403b’s, etc. in that the assets inside of an investment account receive no special tax deferred status.
Funding investment accounts is accomplished by changing title of the account to your revocable living trust. The process of changing title varies from institution to institution, but it is in essence a paperwork drill.
The paperwork will reflect a transfer of ownership from the individual to the trust (more specifically, the Trustee of the trust). However, in this situation where the owner of the account is transferring the account to a Grantor trust (i.e. a trust the owner has created, for his benefit), there are no taxes due on transfer. Similarly, the assets maintain their cost basis. Bottom line is there is zero tax effect to change title of an investment account to a Grantor trust.
One can expect in changing title of an investment account that the change form will require your signature to be witnessed, notarized or Medallion signature guaranteed. While witnessing and notarizing a document are common place, the Medallion signature guarantee often proves to be a bit of a hurdle for the account holder. Medallion guarantees are provided by financial institutions, banks, etc. as a safeguard in verifying the identification of the individual signing the document. Not all institutions or offices offer this service. If the service is offered, note that only certain personnel are able to provide the Medallion guarantee.