Which Property to Put in Your Living Trust

Once you have created a living trust, the real work begins. With a trust, you do most work up front so that your loved ones will not need to do as much after you pass away.

Since a trust can only dictate the distribution of assets that it owns, in order for your trust to work, you will need to transfer assets into the trust.

There are two main ways to transfer assets into a trust:

1. Name the trust the owner of an asset; or
2. Name the trust as a primary or secondary beneficiary of an asset.

Here is a list of common assets that should fund your trust, along with how best to transfer them to your living trust:

Bank Accounts

For savings accounts, checking accounts, safe deposit boxes, and certificates of deposit (CDs), it is best to name the trust as the owner of the account. To do this you will need to contact your bank for the proper paperwork.

It is not uncommon for a bank to ask you to close your old account and open a completely new account in the name of the trust. This is especially true of credit unions. For CDs, you may wish to wait until the certificate matures before naming your trust as the owner. This will help to avoid penalties.

If your account has a Pay on Death (POD) or Transfer on Death (TOD) provision, you can name your trust the primary or secondary beneficiary of the account rather than changing its ownership. In this case, married individuals should name their spouse the primary beneficiary and the trust should be named the secondary beneficiary. Single persons should be named the trust the primary beneficiary.

Business Interest

Business interest refers to shares in closely held corporations, interest in general and limited partnerships, and membership interests in limited liability companies (LLCs). Your trust should be named the owner of any business interest you have.

But, before transferring business interests into your trust, you will generally need to consult any operating agreement, partnership agreement, or shareholders’ agreement that governs ownership interest in the business. There may be limitations on transfers, as well as, certain procedures that must be followed to retitle your interests in the name of your trust.

Securities

Stocks, bonds, mutual funds, and brokerage accounts work in much the same way as bank accounts. It is best to have the trust as the owner of these accounts. For this, you will need to contact your broker to find out what is necessary to change ownership.

Retirement Accounts

Due to tax concerns, you should never make your trust the owner of an IRA, pension, 401K, 403B, or any other retirement account. However, married persons may want to name their spouse as the primary beneficiary of their retirement account and the trust as the secondary beneficiary. Single persons may name their trust as the primary beneficiary of their retirement account.

Life Insurance

Rather than changing the ownership of a life insurance policy, married couples will want to name their spouse as the primary beneficiary and the trust as the secondary beneficiary. Single persons will want to name the trust as the primary beneficiary. Your insurance agent should have the necessary forms to help you with this change.

Real Estate

Real estate will need to be deeded to your trust with the help of a qualified Virginia attorney. Once signed and notarized, the deed must be recorded in the county where the real estate is located.

If there is a mortgage on the property, you should inform the mortgage company that your trust now owns the property. Likewise, you should inform any title insurance or homeowner’s insurance provider and make certain that your trust is added as an insured party.

Household Items

You should transfer ownership of your household items to your trust. If your household items are insured, you should inform your insurance provider and make certain that your trust is added as an insured party.

Motor Vehicles

Automobiles, motor homes, mobile homes, trailers, and the like have certificates of title. You will want the trust to be listed on the title as the owner. If you own a low-cost or high-debt vehicle, or if you change vehicles often, you may wish to wait until you purchase the next vehicle before you list the trust as the owner. You will also need to inform your auto insurance provider that your trust is now the owner of the vehicle and ensure that coverage will continue.

Pour-Over-Will

If you are concerned about forgetting to put an asset into the trust, don’t worry. Your attorney should also prepare for you a special type of will referred to as a pour-over-will. This type of will transfers ownership of forgotten assets to your trust after you pass away.

However, these forgotten assets will have to go through probate along with the will. So, because one of the main reasons for creating a trust is to avoid probate, it is best to be proactive and transfer all of your probatable assets into your trust during your lifetime.

Consult With a Knowledgeable and Experienced Virginia Estate Planning Attorney

This article includes general instructions regarding the most typically owned assets. However, each person’s situation is unique. If you have a question about your particular situation, do not hesitate to contact an experienced Virginia estate planning attorney. Call us today at (703) 553-2577 or use the contact form on our website to arrange a consultation.

The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.