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Transferring assets into a living trust: Can you do it yourself? by Brette Sember, J.D.
Transferring assets into a living trust: Can you do it yourself?
You may have established a living trust, but it's not functional until you transfer ownership of your assets to it.
Ready to start your estate plan?
by Brette Sember, J.D. updated March 02, 2023 · 4 min read
Setting up a living trust is the first step to having your assets owned by your revocable living trust. Funding a living trust means that your assets are transferred to the trust and are officially owned by it so the trust can function as you intended it to.
Changing ownership of a trust
When you transfer assets to a living trust you are changing legal ownership of your assets from your name to that of the trust. Most people create a living trust with themselves as trustee, so you will still be able to use and control your assets, but they will technically be owned by the trust. Note that items in the trust will continue to be assigned to your social security number. To get started, you’ll want to make a complete list of the assets you want to transfer so that you are sure you don’t leave anything out.
Transferring real property to a trust
One of the largest assets most people own is their home, and this is likely an asset you want to transfer into your trust. You can transfer your home (or any real property) to the trust with a deed, a document that transfers ownership to the trust. A quitclaim deed is the most common and simplest method (and one you can do yourself). Alternatively, a warranty deed ensures you have good title when you transfer it and may make it easier for your trust beneficiaries to sell the home down the line.
You will want to check with an attorney about which type of deed is best in your situation. Some states require that all deeds be prepared by attorneys so you may not have a self-help option. Once the deed form is prepared, a real estate deed must be filed with your county and you will need to pay a filing fee.
A deed transfer should not affect your mortgage, even if you have a due on sale provision. You should check on your title insurance (if you have any) though . You may be able to simply transfer it to the trust, or your title insurance company may require that the trust buy a new policy.
Once the deed is transferred, you may need to change your homeowner’s insurance to indicate the trust as owner of the property. If you receive a real estate tax exemption, you will want to make sure that is properly applied by showing documentation of the trust to the taxing authority, such as a certificate of trust (a document your attorney can create that certifies the existence of the trust).
Transferring vehicles to a trust
If you would like to transfer ownership of your car or truck to your trust, you need to first determine if your state will allow a trust to hold ownership of a vehicle (check the DMV web site or consult your attorney). You also should call your insurance company to be certain they will continue coverage once the transfer is made. To transfer ownership, you will need to obtain a title change form from your DMV and complete it, naming the trustee (as trustee of your trust) as new owner. Sales tax should not apply to the transfer and if the clerk tries to apply it, you will need to speak to a supervisor. If you own a boat, you will need to follow a similar procedure to transfer title.
Transferring financial assets to a trust
To transfer assets such as investments, bank accounts, or stock to your real living trust, you will need to contact the institution and complete a form. You will likely need to provide a certificate of trust as well. You may want to keep your personal checking and savings account out of the trust for ease of use.
Transferring personal property to a trust
You likely own many things that you don’t have actual written titles or ownership documents for, such as jewelry, furniture, collectibles, and the miscellaneous things that fill your home. To place them in your living trust fund, you can name them in your trust document on a property schedule (basically a list you attach to the trust document that is referred to in the document) and indicate that their ownership is being transferred to the trust. If any of these items are insured, be sure to transfer the insurance to the name of the trust.
What cannot be placed in a trust?
There are some things that cannot or should not be placed in your trust. Individual Retirement Accounts (IRAs) cannot be owned by a trust , so these must remain in your own name, but you can name the trust as a primary or secondary beneficiary. Revocable living trusts are often named as beneficiaries of a life insurance policy. It's a good idea to talk to a lawyer or accountant to understand any tax implications of doing so.
If you purchase or inherit items after you create the trust, you may want to transfer those items to the trust as soon as possible. If possible, when you purchase items, purchase them as trustee of the trust so they are automatically placed in the trust.
Consider a pour-over will
To further protect yourself, you will want a pour-over will . This last will and testament can be prepared by your attorney and will indicate that any items left in your name are transferred to the trust upon your death, so that your trust will be complete and provide all the benefits you created it for.
Double-check your list of assets to be certain you have moved them to your trust. Ensuring that your living trust is properly funded will provide you with the protection you seek and the peace of mind that your affairs are in order.
About the Author
Brette Sember, J.D.
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Putting A House Into A Trust
The pros and cons explained, putting a house into a trust - is it a good idea.
Over the past decade at Rochester Law Center , we’ve helped 1,000s of clients estate plan. Some of the most common questions we get asked are about living trusts. In this article, we’re going to cover some of the pros and cons of putting a house into a trust . Additionally, we’re going to answer some common questions asked frequently about putting a house into trusts, who owns your home after putting a house into a trust, and what you can and can’t do with your property after it’s in your trust.
Putting A House Into A Trust Or Last Will And Testament?
Estate planning is about creating a custom plan to allow you to transfer your money, property, and assets to your family in the most efficient way possible. The two most common estate planning documents are the last will and testament and the revocable living trust .
Both of these documents let you specify which of your loved ones should receive your assets after you pass. However, with a last will and testament, your assets must go through probate court before your family can receive them. This can take months, sometimes even years if your will is contested in court.
On the other hand, a living trust avoids probate court. This means that your family can receive your money, property and assets in a matter of days or weeks after you pass instead of months or potentially years.
Putting A House Into A Trust - Why Do People Do It?
There are two main reasons why people put a house into a trust. The first reason is that they want their family to be able to inherit their home without having to go through the long, stressful, and expensive probate court process. Instead, their home can be transferred to their heirs in a private setting shortly after their death.
The second reason deals with planning for incapacity. It’s a common misconception that estate planning only plans for death, but comprehensive estate planning plans for incapacity as well. When you create a living trust, you will name a successor trustee. This person is responsible for distributing your assets to your heirs after you die. They are also responsible for stepping in and managing the assets in your trust if you become incapacitated and can no longer communicate. By putting a house into a trust, you can ensure that one of your most important assets will be managed and taken care of by someone you trust in the event you become incapacitated.
Putting A House Into A Trust - How Does It Work?
In order to avoid probate court, your assets need to be placed into a living trust. This called funding the trust. When you create a living trust, you are known as the settlor or grantor, depending on what state you live in. When you set up the living trust, you also assign yourself as the trustee. The trustee is the person who has the right to manage all of the money, property, and assets that are placed inside of the living trust. By naming yourself trustee while you are living, you maintain the ability to manage all of the assets in your trust just like you do now. For example, if you plan on putting your house into a trust, you can still sell it at any time in the future.
Additionally, you will name your beneficiaries in your revocable living trust. Your beneficiaries are your loved ones that you want to inherit your money and property after you die. Usually this is a spouse, children, grandchildren etc.
Lastly, you will designate your successor trustee. Your successor trustee is the person who will take over management of your living trust after you die or become incapacitated. They will be responsible for settling your estate and distributing your assets to your beneficiaries after you die. Additionally, if you are putting your house into a trust, the successor trustee is the person who will manage your home, and any other assets you placed in the name of your trust if you become incapacitated.
In the next section we will talk about all of the additional benefits of putting a house into a trust.
Putting A House Into A Trust - What Are The Benefits?
As mentioned earlier, one of the biggest advantages of putting a house into a trust is that, unlike a will, a living trust allows you to avoid probate court. There are three main reasons why this is important.
First, probate can be very expensive.
Probate is the legal process through which the court ensures that, when you die, your debts are paid and your assets are distributed according to the law. Legal fees, executor fees, inventory fees (county taxes), and other costs have to be paid before your assets can be fully distributed to your heirs.
If you own property in other states, your family could face multiple probates, each one according to the laws in that state. We usually expect about 10% of your estate to be eaten up in probate court through legal fees, inventory fees, court costs etc. For smaller estates, the percentage can be much larger – sometimes leaving little behind for your loved ones.
These costs can vary widely, but we’ve had clients who had to pay tens of thousands of dollars throughout the probate process. In general, probate is much, much more expensive than doing some simple estate planning in advance.
Second, probate can take a long time.
The standard probate process takes a minimum of 5 months to complete. However, over the past decade we’ve experienced that it generally takes 9 months to a year to resolve simple cases (and several years for contested cases). We once represented a client whose Probate lasted for 8 years.
Third, probate is public.
Your family has no privacy. Probate is a public process, so anyone can see the size of your estate (often what you actually owned), who you owed debts to, who will receive your assets, and when they will receive them. The process invites upset heirs to contest your will and can expose your family to greedy creditors and potential fraudsters.
Keep Your Financial Matters Private
Since there is no probate court process when you have a living trust, there is no need to make your assets public. On the other hand, if your house is only included in a will, the will’s contents are made public when it is entered in probate court. Since the trust avoids probate, the contents of the transfer stay private. In general, the only people who will ever see the living trust, are the beneficiaries that you name. And even then, only after you pass.
If you become incapacitated during your life, then a living trust can protect your family from undergoing a conservatorship. A conservatorship is when a court-appointed guardian is given the authority to manage an incapacitated person’s financial matters for them.
This feature of a living trust is especially comforting to families in times of difficulty since they do not have to worry about going to court and requesting access to the incapacitated person’s finances. A revocable living trust gives the family one less problem to face when someone becomes incapacitated.
If the trust is set up as an individual trust, then the trustee can take over and manage the assets. If the trust is owned by a married couple, then the second spouse will usually step in as the acting trustee.
It is also prudent to have a durable power of attorney for finances in addition to a living trust to grant the new acting trustee the power to manage any property and finances outside of the trust.
Putting A House Into A Trust - What Are The Disadvantages?
While the benefits of putting a house into a trust greatly outweigh the drawbacks, it does have some additional complexities…
In order to make your living trust effective, you need to make sure that the ownership of your house is legally transferred to you as the trustee. Since your house has a title, you need to change the title to show that the property is now owned by the trust. To do this you need to prepare and sign a new deed to transfer ownership to you as trustee of the trust. In the end, a little bit of additional paperwork and record keeping is worth much more than the time and money that will be lost in probate, not to mention the stress that your family will have to go through to access your assets after you pass.
Accurate Record Keeping
Once you create a living trust you don’t need separate income tax records if you are both the grantor and the trustee. Any income you receive from property that you are holding in the trust will simply be reported on your personal tax returns. However, if you transfer property in or out of the trust, you need to keep accurate written records. This isn’t difficult, but it’s easy to forget if it has been a few years since you created your trust. The advantages of putting a house into a Trust far outweigh the disadvantages. This is why it is one of the best, simplest, and most commonly used methods for avoiding financial disaster and your passing assets to your loved ones after you’re gone.
Now that we have talked about some of the major pros and cons of putting a house into a trust, we are going to answer some additional questions we get from clients about putting a house into a trust.
One of the main questions we get is…
Is Putting A House Into A Trust Difficult?
Putting a house into a trust is actually quite simple and your living trust attorney or financial planner can help. Since your house has a title, you need to change the title to show that the property is now owned by the trust. To do this you need to prepare and sign a new deed to transfer ownership to you as trustee of the trust.
Besides Putting A House Into A Trust, Are There Other Assets I Should Consider Putting Into A Trust?
Aside from putting a house into a trust, there are other assets you should consider titling in the name of the trust. Usually it’s best to include all real estate, stocks, CDs, bank accounts, investments, insurance and other assets with titles. Some people also include jewelry, clothes, art, furniture, or other assets in a one page assignment.
Will I Lose Control Of My Home When Putting A House Into A Trust?
Not at all, you keep full control of all of the assets in your trust. As Trustee of your trust, you can do anything you could do before – buy and sell assets, gift them away, mortgage them out, and you can still change or even cancel your trust altogether. That’s why it’s called a revocable living trust. You even file the same tax return. Nothing changes but the name on the titles.
How Do I Set Up A Living Trust?
If you need help putting a house into a trust and you’d like to set up a living trust , we can help. Over the past decade, we’ve helped 1,000s of clients set up all matters of living trusts, wills, powers of attorney, and estate plans. We’d be happy to answer any questions you have about whether a living trust is the right estate planning option for you. Just give us a call today at (248) 613-0007 to schedule your complimentary consultation.
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Schedule a free consultation with an experienced living trust attorney today call us now at (248) 613-0007, phone and web meetings available so you don't need to travel, reserve your free consultation today, written by chris atallah - founder, rochester law center, pllc.
Chris Atallah is a licensed Michigan Attorney and the author of “The Ultimate Guide to Wills & Trusts – Estate Planning for Michigan Families” . Over that past decade, Chris has helped 1,000s of Michigan families and businesses secure their futures in all matters of Wills, Trusts, and Estate Planning. He has taught dozens of seminars across the State of Michigan on such topics as avoiding the death tax, protecting minor children after the parents’ death, and preserving family wealth from the courts and accidental disinheritance. If you have any questions, Chris would be happy to answer them for you – just call at 248-613-0007 .
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Buying a Home in Trust
It can give you greater control over what happens after you die, including taxes
Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.
When you buy a home, you may have the option of buying it in a trust . Legally, that means the trust, rather than you, owns the home. However, you can be the trustee of the property and have significant control over it and what happens to it after you die. Buying a home in a trust can have tax and other advantages, but it's more complicated than buying one in the conventional way.
- Buying a home in trust can give you greater control over what happens to the property when you die and possibly avoid inheritance taxes.
- A revocable trust allows you to change the beneficiary and other terms at any time.
- An irrevocable trust is much harder to change but offers tax advantages.
- For either type of trust, make sure you enlist expert advisors who know the laws of your state.
Click Play to Learn How to Buy a Home in Trust
What does it mean to own a house in trust.
When you buy a home in trust, you can become the trustee (rather than the outright owner) of the property. Then, when you die, a person or financial institution you have designated becomes the trustee.
The trustee is essentially the administrator of the assets in a trust, in this case, a home. But as trustee, you'll also have certain powers over the property and what becomes of it, depending on the type of trust you choose and how it is written.
The first step to buying a home in trust is to establish a living trust . That is a trust created during a person's lifetime, and it allows the trustee to manage the assets for the benefit of a beneficiary, such as a child.
In setting up a trust, you can name your successor trustee, who may or not be the same as the trust's beneficiary. For example, you might choose to name your son as both your beneficiary and your successor trustee, or one but not the other.
The benefit of a trust is that the home won't go through the lengthy court process of probate , which reviews your will and approves the distribution of assets after your death. Also, by avoiding probate, the name of the person or other entity who inherits the home will not be a matter of public record as is the case with a will.
There are two types of trusts you can establish: a revocable trust or an irrevocable trust.
Buying a Home With a Revocable Trust
In a revocable trust , the owner or grantor of the trust has full control over it at all times and can change its terms whenever they please. The grantor can assign beneficiaries, or in some cases, be the beneficiary of the trust.
For example, let's say the son you appointed as your future beneficiary does not want the estate, or you've changed your mind and would now like to leave the home to your daughter. A revocable trust allows you to do that. You can also appoint multiple trustees or beneficiaries.
Note that revocable trusts do not have the inheritance tax or liability protection benefits of an irrevocable trust, as described in the next section.
Buying a Home With an Irrevocable Trust
Unlike a revocable trust, an irrevocable trust does not allow modification or termination of the trust without the permission of the beneficiary. The trustee acts as a fiduciary who is responsible for managing the assets on behalf of the beneficiary.
Families often use an irrevocable trust to avoid taxes on inheritances that are above the federal estate tax threshold, which in 2021, is $11.7 million. Irrevocable trusts can also be useful when you want to protect the estate from possible future financial liability.
For example, suppose you have built a sizable estate, but your children fall on hard financial times later in life. An irrevocable trust can protect their assets from creditors, given that the assets were put into the trust before the credit problems arose.
For obvious reasons, it's extremely important with an irrevocable trust to be careful in choosing your beneficiaries.
Revocable vs. Irrevocable Trust
You can change the beneficiaries and other terms at any time.
The home will bypass the probate process when you die.
Doesn't have the tax or liability protection advantages of an irrevocable trust.
Beneficiaries and other terms are very hard to change.
Trust assets are not included in your estate for inheritance tax purposes.
Can shield the assets from creditors.
How to Buy a House in Trust: The Steps
Both revocable and irrevocable trusts are estate planning tools, and there are some crucial steps to take when doing this type of estate planning.
Determine the level of control you want
The first step is to decide how much control you want to have over the assets in the trust. That can help you decide between a revocable or an irrevocable trust. You'll also want to consider questions such as whether the home can be sold upon your death and what happens if you become ill or incapacitated. In addition, look at the size of your estate (both your home and other assets) to see if inheritance taxes are likely to be an issue.
Call in the professionals
Find a financial advisor and an estate planning attorney who are familiar with the laws and inheritance tax rules of your state. Each has their own specialty, and you will need both of them to direct the dispersion of your assets appropriately. One of the biggest mistakes individuals make, experts say, is meeting separately with their financial advisor and attorney only to find out after the legal document is drafted that there are problems.
For example, by meeting with your advisor and attorney separately, you could lose out on possible tax advantages that the attorney wasn't aware of and that the financial advisor would better understand. Conversely, you could receive advice from the financial advisor that doesn't make legal sense. So it's crucial to be sure all three of you are communicating effectively.
Consider the costs
A lawyer might charge between $1,500 and $3,000 to establish a typical trust, whether it's revocable or irrevocable. Of course, costs can vary depending on the level of work involved. The financial advisor's fees will also depend on the time they expend as well as on their professional credentials.
Rather than serving as trustee yourself, you may decide to engage a bank or law firm to handle that role. If so, you'll typically pay maintenance fees equal to 1% or more of the trust's assets each year.
The Bottom Line
Buying and owning a home in trust is more complicated and expensive than buying one in the conventional manner. However, depending on the type of trust you choose, it can have its advantages. Those may include greater control of what happens to the home after your death, the minimization of estate taxes, and protection from financial liability in the event of a lawsuit. It's important to seek the help of knowledgeable professionals to ensure that the trust is established correctly and in accordance with your wishes.
Internal Revenue Service. " Estate Tax ."
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Transferring Property into Your Trust
After you sign your living trust document, you have a valid living trust. But the trust is of absolutely no use to you until the property you listed in the trust document is actually transferred into your name as trustee (or, in Colorado, to the name of the trust itself). Lawyers call this "funding" the trust.
Funding your living trust is crucial. It takes some time and paperwork, but it's not difficult. You should be able to do it yourself, without a lawyer.
Don't Put This Off
Failing to transfer property to the trustee's name is the most common and serious mistake people make when creating a living trust. If you don't get around to preparing and signing the transfer documents, the trust document will have no effect on what happens to your property after your death. Instead, the property will pass through your will, if you have one. If you don't have a will, the property will go to certain close relatives, according to state law. Either way, your probate- and tax-avoidance goals will not be met.
For property with a title – for example: real estate, cars, and securities—you must change the name of the title – from your name, to the name of the trust. The trust becomes the new owner.
Read details about Transferring Titled Property to the Trust .
If an item doesn't have an official title document, you can hold it in trust very easily, with a document called an Assignment of Property. WillMaker automatically assembles this document and print it with the trust document.
The Assignment of Property lists every item of trust property that you've indicated doesn't have a title document, plus ones you weren't sure about. It simply says that you're transferring all those items to you as the trustee of your trust. All you need to do is sign it and keep it with your trust document.
Examples of Items Without Title Documents:
Remember that the Assignment of Property works only for items that do not have their own specific title documents. If an item has a title document -- for example, the deed to a house or the title slip to a car -- you'll need to create a new one.
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How to Transfer Personal Property to a Trust
Curious about how to transfer your personal property to a Trust? We answer this question and more in this guide.
Staff Writer , @Trust&Will
Trust & Will
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Have you included everything in your Trust? When drafting a Trust, there are special considerations that must be made for certain types of assets. Keep reading to learn more about how to transfer Personal Property to a Trust.
Setting up a Trust online can be a responsible financial decision and can make Estate Planning a lot easier for you and your loved ones. Setting up a trust is usually pretty straightforward, but the different types of Trusts and the various assets you’re putting into a Trust will determine the type of Trust you’ll need to create, and any additional documents you’ll want to add on to the Trust.
Why a Trust?
A Trust is created anytime someone, known as the Trustor, wants to transfer their assets to another person or several other people, known as the Trustee "> Trustee or Trustees. Different types of Trusts can be created as part of Estate Planning, to distribute wealth among family members, to help manage a large windfall, to buy real estate, or any other time property is to be moved from one owner to another.
Often, a Trust will be created along with a Will, which stipulates how holdings of the Trustor are to be distributed. Trusts can cover assets like real estate, but there may be other valuables that need to be transferred too. These valuables are known as Personal Property.
What is Personal Property?
Personal Property refers to any asset that doesn’t have an official title or deed. In other words, everything you own, except for what’s known as Real Property (land and buildings), would be classified as your Personal Property. Personal Property can be broken down into two categories: Tangible Personal Property and Intangible Personal Property.
Tangible Personal Property refers to something you can physically touch. It may include anything, from the baseball cards you collected as a kid to the antique furniture in your guest room. Personal Property has value to its owner, but it often has monetary value, too. Commonly, Tangible Personal Property that is transferred in a Trust will include material possessions like:
Animals and Livestock
and any other item that isn’t permanently affixed to one place.
Intangible Personal Property transferred in a Trust are non-physical assets that the Trustor owns, and can include:
Transferring Personal Property to a Trust
In the matter of transferring Personal Property to your Trust, we will be referring to Tangible Personal Property. These items are often things that you, as the Trustor, wish to leave to family members or friends. Without formal deeds or titles, these items of Personal Property – while they may be worth quite a bit – may not have been mentioned in a Will or Trust you’ve made.
Whether you own a significant amount of Personal Property or you have a few treasured items you want to pass on, it’s important to make sure that your Personal Property is accounted for when making a Trust. Let’s take a step-by-step look at how to transfer this type of Property to a Trustee.
Create a Transfer Document
If you’ve created a Trust with one or more beneficiaries, to transfer your Personal Property to those Trustees you’ll need to first create a Transfer Document. This can be done at the same time you make a Trust, or added to the Trust you’ve already made.
Make a List of Personal Items
Here’s where you’ll itemize all of the possessions you want to Transfer in the Trust. Everyone’s list will be different and will depend on the number of beneficiaries and the items included. However, as a general rule, being specific here is good. General categories like “jewelry” or “furniture” will suffice, but – especially if the items are highly valuable – listing them individually is even better.
Name Beneficiaries of Your Personal Property
Once you’ve listed the Personal Property you want to transfer, you’ll name the Trustee or Trustees who will receive the property. This may be one person, two or three Trustees, or more. Specify who will be granted which item or items.
Sign the Document
Lastly, you’ll sign the Transfer Document to make it official. Treat your Transfer Document as you would any other important paper and keep it with your Trust records.
Why Transferring Personal Property in a Trust is a Good Idea
You might be wondering if this is necessary? Maybe you’ve told your children how you want to divide your jewelry, or you trust that your friend will get that watch to your grandson and the diamond bracelet to your granddaughter. Maybe you assume that when you transfer a house to your son, the appliances and furniture are included.
Creating a Transfer Document to go along with your Trust makes it all official. It puts it in writing. And it limits the possibility for confusion and infighting over inheritance and mementos that too often can happen among families.
Taking the time to allocate Personal Property to those you choose can make your wishes clear. There won’t be any room for the back-and-forth bickering of ‘he wanted me to have it’ ‘no, he wanted ME to have it.’ And transfer of ownership will be simple and official.
State Personal Property Taxes and Laws
Tax laws and other considerations regarding Personal Property can vary by state. Since Personal Tangible Property and other property bequeathed in a Trust or Will can often go from a person in one state to a person in another (for instance, a parent in Florida leaving an asset to a child in New York, or a sibling in California gifting an asset to a sibling in Arizona), or may be worth a sizable amount of money, taxes and financial considerations may come into play. An estate planning attorney can help you with your specific state laws and tax questions.
In just a few steps, you can transfer your Personal Property to a Trust. At Trust & Will, we can guide you through the process and make it truly simple. Reach out today and let us help you create your online, customized and state-specific estate planning documents.
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How Do I Put Property, Money, and Other Assets in a Living Trust?
By FindLaw Staff | Legally reviewed by Aisha Success, Esq. | Last updated June 30, 2022
A living trust is less expensive to create and less time-consuming to manage than many other types of trust. Its primary benefit is that trust assets need not go through the time-consuming probate process in order to be transferred to beneficiaries.
A trust has a number of other benefits as well:
- After death, it can reduce or eliminate state and federal estate taxes.
- If the decedent owned real estate in more than one state, it can all be placed into the trust to avoid ancillary probate in multiple states.
- It requires only one document to provide instruction for the distribution of all types of assets.
- It can be professionally managed for maximum income-earning potential.
- The trustor can specify who is a beneficiary, when they receive their inheritance, and even for what purposes. Assets held in the trust can sometimes be protected from the beneficiary's creditors, divorcing spouses, and even their own irresponsible spending.
- It provides privacy for heirs, which the probate process does not.
Most trusts of this kind are set up as revocable living trusts during the trust funder's lifetime. This type of trust does not act as a tax shelter and does not provide asset protection from creditors. However, the trust funder (called a grantor) is usually the trustee and retains control over the assets. The grantor can designate beneficiaries, can change the terms of the trust, and can even close the trust at any time.
Once the trust funder dies, the trust converts to an irrevocable trust, and those assets in the trust are no longer taxable.
Drafting a living trust document is only the first step. For the trust to be effective in distributing assets after death, money and other assets must first be transferred into the trust. This article provides basic instructions on how to fund a living trust with different types of assets. The method you use depends on the type of real estate, personal property, investment, business interest, or other assets you'd like to transfer. Methods include:
- Title transfer
- Assignment of ownership
- Opening new accounts
- Assignment of rights
- Incorporating a pour-over will
- Naming the trust as a beneficiary
Funding a Revocable Living Trust Now
You may or may not incur fees and taxes with the transfer of real estate into a living trust. It depends upon the laws in your state. Some states charge a nominal fee, while some states consider the transfer of a property into a living trust to be the same as a sale at full market value and assess significant taxes. Consult a tax advisor before you begin the process of transferring real estate so you understand the financial consequences.
Transferring property typically requires that the grantor file a quitclaim deed with their county clerk, giving up the individual's claim to the property and transferring it to the trust. You may need to file a copy of the trust document or a Memorandum of Trust or a Certificate of Trust with the quitclaim deed.
If the property is part of an HOA, you may need permission from the association. If there is a mortgage on the property, you may need the permission of the lender.
Title Transfer or Retitling
Vehicle ownership is held with a title document. There may be two options for transferring title (depending on the laws of your state):
- You may be able to retitle the vehicle to the living trust, listing it as the owner.
- You may be able to designate the trust as a beneficiary of the title after death.
Transferring vehicle title could result in substantial taxes and fees. It could raise your insurance premiums. It could require the approval of a lender if there is a lien on the vehicle. You may wish to talk to your insurer, your lender, and a tax advisor before you begin the process.
A brokerage account, investment account, or nonqualified annuity can be retitled. Ask your broker for advice on how to do this. Stocks and bond certificates can be reissued in the name of the trust, though this is complex.
Business partnership interests or limited liability company (LLC), and shares in a corporation can be retitled in the name of the trust. Check the partnership agreement or operating agreement or articles of incorporation for instructions on how to do so and any transfer restrictions.
Assignment of Property Interest
Most property does not come with proof of ownership. In some instances, you can transfer ownership of personal property like art, collectibles, antiques, jewelry, etc., with an Assignment of Property Interest document.
There is no standard form. You will need to create the form stating exactly what you are transferring to the (named) trustee of the (named) trust. Sign and date the form. You will need to sign it once as the person assigning the properties to the living trust and once as the trustee of the trust. Include the word “trustee" after that signature. You may wish to have the form notarized.
In addition to listing property on an Assignment of Property Interest form, you should also list all of this property on a page of the trust document called a Schedule A or Exhibit A. Describe property in sufficient detail that it will be clearly understood by the successor trustee upon the death of the grantor.
In addition to personal property, royalties, copyrights, patents, and trademarks can be assigned to a living trust in this manner. You may want to include identification numbers where relevant. Notify the royalty company of the transfer of ownership.
Transfer of Ownership
A living trust can be named as the owner of a life insurance policy, or as a beneficiary. However, in some states, the cash value of a life insurance policy is only protected from creditors if the policy is owned by a person. Transferring ownership of the policy to the trust could cause that protection to be lost. Ask your insurance agent.
Open New Accounts
For bank accounts — savings accounts, checking accounts, money market accounts, CDs — ask your bank how to proceed. You may be told to close the account and reopen a new account in the name of the trust. It may be advisable to wait for any CDs to mature. Then the cash in the CD can be used to open a new CD in the trust's account.
Assignment of Rights
An Assignment of Rights is a legal document that can be used to make your trust the recipient of payments from oil, gas, and mineral rights you have for a property you do not own. If you own the property, it may be easier to change the deed. An Assignment of Rights document can also direct payments for outstanding loans owed to the grantor into the trust fund.
Funding an Irrevocable Living Trust After Death
The most important tool to transfer remaining property into a living trust upon the death of the trustor is by setting up a pour-over will before death. Any assets that aren't distributed to an heir by title or deed, and haven't yet been transferred into the living trust, will "pour over" into the trust.
For some assets, it's disadvantageous to put them into a trust. For example:
- Some car insurance companies will charge higher premiums for trust-owned cars.
- If a car, truck, boat, etc., is involved in an accident and the owner is found liable for damages above the insurance policy limit, creditors could attach a judgment to the trust.
- Some financial institutions may not want to finance or refinance a trust-owned property, or may not consent to the transfer of a mortgaged property into a trust.
Some assets may have been unintentionally left out of a will while other assets may be unknown at the time of death. For example, the deceased may be owed money or may have inherited some property of which they are not aware. These assets transfer with a pour-over will.
The downside to this approach is that a will must go through the probate process which takes time and leaves that part of the estate vulnerable to estate taxes.
The following types of assets should list the trust as the primary or secondary named beneficiary of funds. This must be done while the grantor is alive and payouts will be made to the trust after death. Talk to your tax advisor or estate planning attorney to determine whether a primary or secondary designation is most appropriate.
- Retirement accounts: The deceased will no longer be using the money in their IRA, 401(k), 403(b), pension plans, and qualified annuities
- Health Savings Accounts (HSA) and Medical Savings Accounts (MSA)
- Life insurance policies
- As noted above, a car title can list the trust as a beneficiary
Interested in Using a Living Trust as Part of Your Estate Plan? Talk to an Attorney
Whether you want help setting up a living trust or you have questions about how the transfer of certain property would work in your specific situation, get answers to your legal questions by contacting a local estate planning attorney today.
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A General Assignment of Assets to one’s Living Trust can help avoid a Probate.
Re-titling assets, like stock and bonds, from one’s name into one’s living trust is necessary to avoiding an unnecessary probate of such assets if held outside of the trust. Sometimes people fail to transfer some or all of their intended trust assets into their trust. A general assignment of assets to one’s living trust provides an important safeguard. Let’s examine what a general assignment is and how it helps to fund one’s trust and avoid a probate with the help of a Lake County probate attorney:
A general assignment of assets transfers ownership on a wide variety of assets as the name implies. An all encompassing general assignment is regularly used by estate planners to transfer all types of financial assets (excluding tax deferred retirement accounts) and personal property (such as the contents of one’s home) into the trust. It is a half-step towards actually re-titling the securities and the financial accounts into the name of the trustee. Nevertheless, the settlor should still proceed to contact the banks, brokerages, and stock transfer agents (as relevant) to formally transfer legal title into the name of the trustee. But, in the event that the formal legal title is not transferred prior to death, the general assignment can be used to obtain a court order to transfer legal title into the trust.
In Kucker v. Kucker , (2011), 192 CA 4 th , 90, the Court of Appeal reversed a trial court decision wherein the trial court disallowed a petition to transfer stocks into a trust based on a general assignment of all assets by the settlor to the trustee. The Court of Appeal agreed with the petitioner that a general assignment of all or substantially all of the settlor’s assets into one’s trust does cause the stocks to be owned by the trustee. An otherwise unnecessary probate was thus avoided thanks to a general assignment by the settlor.
Similarly, a declaration of trust by a settlor to hold certain assets listed on a schedule of pledged assets attached to a trust document can likewise be used to accomplish the same result. Most attorneys use a schedule of initial trust assets and a general assignment to reinforce one-another. Moreover, unlike the general assignment, the schedule of trust assets will also include the real estate – together with a full legal description — for the same reason. That is, if a trust transfer deed is not properly executed prior to the settlor’s death, then the schedule of initial trust assets to a declaration of trust can be used to petition the court to transfer legal title into the trust without a probate.
While the general assignment and the declaration of trust are important safeguards against the failure to formally transfer title to trust assets while the settlor is still alive and competent, such safeguards are just safeguards. The better course of action is to see that one’s real estate, stocks and bonds, and financial accounts (and other trust assets) are properly titled in the name of the trustee of one’s trust. After all, filing a court petition entails further expenses and delay in the administration of the trust that can be avoided.
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Transferring Assets to Your Trust - Funding Instructions
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The Illinois Appellate Court enforces an arbitration agreement referencing the American Arbitration Association’s rules after a woman attempted to sue her nursing home for negligence. In Rotan v. Unlimited Development (Ill. App. Ct., NO. 5-22-0182, February 22, 2023).
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Transferring Real Estate Held in a Trust
If a trust holds real estate, the trustee will need to sign a new deed, transferring the property to the new owner - the trust beneficiary..
When you're ready to transfer trust real estate to the beneficiary who is named in the trust document to receive it, you'll need to prepare, sign, and record a deed. That's the document that transfers title to the property from you, the trustee, to the new owner.
What Kind of Deed?
There are lots of kinds of deeds. You need one that is called a "quitclaim" or "grant" deed. Don't use a "trust deed," even though that probably sounds like just the form you need—it's used when someone is mortgaging property, not transferring it to a new owner.
Every state has rules about deeds—what language they must contain and how they must be notarized or witnessed. There are even rules about how much blank space must be left at the top of the page. So be sure to get a deed form that's valid in your state. If you've been working with a lawyer , the lawyer will probably prepare the deed; if not, you can find forms online , at office supply stores, or at title companies.
Information on the Deed
You'll need to supply certain information on the deed:
The fact that the transfer is not a sale. This is to show that no transfer tax (based on the price paid when real estate is sold) will be due.
How the new owner(s) want to take title. If more than one person is inheriting the property, they'll have to decide how they want to hold title. The options depend on state law: joint tenancy, community property or tenancy by the entirety (for married couples only), and tenancy in common are the most common. Each has advantages and drawbacks.
You sign the deed, in your capacity as trustee: for example, "John C. Sutcliffe, trustee of the Anthony Ramirez Living Trust dated December 21, 2012."
If money is still owed on the real estate, the debt goes with the property unless the trust explicitly directs that mortgages and other encumbrances (property tax, for example) be paid with trust assets before the real estate is transferred out of the trust. In the usual case, where the debt stays with the property, the new owner will need to talk to the mortgage-holder and see whether the existing mortgage can be assumed or must be refinanced.
Recording the Deed
Once the deed is signed and notarized, it must be filed (recorded) with the local land records office in the county where the real estate is situated. This office is called different things in different states: the county recorder, register of deeds, or some similar name. There's a small fee ($10 to $20 is typical) for recording; you can call (or check the county's website) and find out the exact amount before you take the deed in.
Other Documents the New Owner May Need to File
In some states, you must file other documents when you record a deed. In California, for example, many real estate transfers trigger a reassessment of the property for property tax purposes. But transfers from parent to child (and other intra-family transfers) are exempt from the reassessment. All this is stated on a form called a preliminary Change of Ownership Report, which must be filed along with the deed.
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