What Assets Should be Placed in my Living Trust?
One of the most important steps you can take to ensure your legacy lives on is by engaging in estate planning. There are many ways to document your final wishes, be it a will or trust. If you decide that a trust is the right fit for you, there are still several types to choose from. Perhaps the most popular is a living trust, because it gives you the best of both worlds; access to and control over your assets while you are alive, and relative ease of administration for your trustee and beneficiaries after you are deceased. What assets should be placed in a living trust?
A living trust is a legal document that, as the name suggests, applies while you are alive. Once the trust is created, it becomes a living document that you can change or update while you are alive and have capacity. Living trusts are a great estate planning tool for those who want to possibly avoid the public process of probate and ensure that assets are distributed according to their wishes.
While living trusts are great for some situations, a probate proceeding will likely be necessary unless the creator of the trust fully funds the trust. To fund your living trust, you must re-title your assets into the name of the trust. For example, the title to your real estate property or car must be transferred to the trust’s name; without funding your trust, your assets will not fall under its umbrella. Assets that may be placed in a living trust either by re-titling or by naming the trust as a beneficiary include:
- Real estate. Your home, secondary residence, vacation home, rental property or investment property can all be placed in your trust. This makes it easier to transfer ownership of the property to your beneficiaries upon your death, without the need for probate. This is especially important if you have real estate in more than one state.
- Financial accounts. Typically, bank accounts and brokerage accounts can all be re-titled into the name of your trust. In some instances, it may be appropriate to name your trust as the payable on death beneficiary on these accounts.
- Retirement accounts. Retirement accounts have special considerations, and you should talk to your attorney before deciding the best way to handle these accounts. Generally, it is ill-advised to name your living trust as a beneficiary on your retirement accounts.
- Life insurance. You also may name your living trust as the beneficiary of your life insurance policies. If you do so, the living trust will receive the payout should you pass away. This could allow an injection of cash into the trust shortly after your death. The cash can be used to pay any outstanding debts or expenses.
Your businesses. If you own interests in a business, it may be possible to transfer your interests to your trust. You should consult with your business and estate planning lawyers before you do so.
What you include in your living trust depends on your specific circumstances and goals. A living trust can be a useful estate planning tool for managing your assets during your lifetime and beyond, but to ensure it is the right tool for you, it is important to speak to an estate planning attorney. To schedule a meeting with the estate planning lawyers at Brown Law Firm, call (303) 339-3750.