Creating a living trust is not enough. You will need to fund it by transferring assets and property into it to make it effective. A living trust document has no value unless you transfer property to it. This article talks about the type of assets, you can transfer into a Living Trust.
Meaning of Living Trust
Just Like a Last Will and Testament, Living Trusts are documents created by a person known as a “Grantor/Initial Trustee” who puts property into a Trust and enjoys the benefits of it during their lifetime. Upon the death of the person, the property is managed by another person appointed by the Grantor called a “Successor Trustee”.
The people who inherit the Trust property upon the death of the Grantor are the “Beneficiaries”.
In Living Trust, Grantor has full control over the property and can enjoy the property till he dies by naming himself/herself as the Initial Trustee. After the death of the Grantor, the administration of Trust Property is dealt by the Successor Trustee; in this way, the Successor Trustee works similar to that of an Executor of a Will.
What type of assets can be transferred into a Living Trust?
Following are the properties which can be transferred to a Living Trust.
1. Real estate property
Putting a real estate property into the trust is beneficial if you want to avoid Probate and Estate Taxes. If you own a land or house, you may consider putting it into a Living trust.
You will need to register a new deed for the property you are transferring into the Trust.
You can read here for more information about funding a Trust with real estate property.
2. Bank Accounts
You can transfer a number of bank accounts and financial accounts to a Living Trust.
List of bank accounts that can be transferred to a Living Trust:
- Savings Account
- Certificate of Deposits (CDs)
- Checking Accounts
- Non-retirement investment accounts, etc.
Every bank or financial institution has different processes and policies for transferring accounts to a Trust. For more information, it is advised to contact your bank or financial institution first.
3. Personal Property
A person may have a number of belongings that do not have a title or deed but are valuable and are part of that person’s Estate. These may include :
-Jewelry
-Art
-Antiques
-Clothes
-Furniture
-Electronics, etc.
These can be transferred to a trust in two ways:
- By way of Pour-over Will
- By signing a general transfer document.
4. Investment Assets
Investment Assets like Stocks, Bonds, and Mutual Funds can be transferred to a Trust by completing a transfer document or by reissuing the certificates of these assets in the name of the Trustee appointed by the Grantor.
It is advised to discuss with an Estate Planning attorney if you want to transfer any of your investment assets into a Trust.
5. Insurance policies
The death benefits provided by insurance policies make them an essential part of Estate Planning.
Insurance policies can be put into a Trust in two ways:
- Trust as a beneficiary of the Insurance Policy - When the owner of the insurance policy passes away, the proceeds of the policy will be transferred to the Trust.
- Trust as the owner of the Insurance Policy - People can create a Special Trust for their life insurance policy known as an irrevocable life insurance trust (ILIT).
6. Limited liability companies (LLCs)
If you have a membership interest in a Limited Liability Partnership, you can transfer your stock and stakeholder shares into a Trust. The ownership may be transferred to the Trust while you can still have a few rights associated with the share in your hand like the right to vote, etc.
7. Cryptocurrency
Cryptocurrencies like Bitcoin can be transferred to Trust. They will avoid probate after your death after becoming a part of the Trust. Trustees appointed by the grantor should be provided with concise information about how to access your cryptocurrencies so they can be distributed among the beneficiaries.
Do I need a Living Trust?
Making a Living Trust as part of your Estate Planning provides a hassle-free and simple method for the distribution of assets among the loved ones of a person after death. A Living Trust also allows people to enjoy the benefit from the trust property during their lifetime.
Apart from this, there are many other benefits offered by a Living Trust. These include:
- Avoids Probate
- Protects your privacy
- Protection of Minor Children
- Ensures the Privacy of your Document
- Protects you in case of Illness or Incapacity
Read more about Living Trust and its benefits.
If you are still confused as to what will suit you best as per your needs; you can connect with an attorney on TrulyWill for support and guidance and discuss your requirements.
