1What To Look Out For
One problem that often arises when someone goes to set up a living trust is they often forget to adequately fund it. By that, I mean, transferring assets from your own name to the name of the trust you’ve created. I’ve spoken about this before, and you can transfer bonds, stocks, bank accounts, even real estate, even vehicles… you name it… into the trust. Often times, changing ownership of assets and renaming them so they can be transferred can be complicated. So it’s best when you’re doing this, work closely with an estate attorney and also with the bank or brokerage firm that currently has your assets titled.
Funding a living trust you set up in your own name can be a bit awkward. There’s new paperwork to fill out, and often times, you’ll assess fees for renaming the title or ownership of an asset, like a house, for example. That’s why with all of this, you’re going to need the services of a good business attorney, preferably an estate attorney, to help you draft the necessary documents. And keep in mind, when I talk about setting up a trust, I’m referring to you, as an individual and your personal assets. It would be pretty complicated to set up a trust for, say, your business.
What types of assets are good candidates for setting up a trust? How about personally owned out-of-state real estate? That’s a good one. It’s a real good candidate for a living trust because your estate can avoid out-of-state probate on the property. But keep in mind, you need to think about your personal circumstances before placing assets in your living trust. With real estate, if you are planning to re-mortgage or sell the property soon, then it’s probably not a good idea to place it in the trust. But if you’re planning on hanging on to it for life, it might be a good idea to put it in the living trust. Your attorney can offer you the best advice.
Check this out: a living trust offers lots of flexibility as far as what you choose to fund it with and when. This flexibility is one of the advantages of a living trust. If you are healthy and young, you might want to keep your assets in your own name. If you plan to move in six months, there’s not much point in putting your house in the trust, right? It’s likely better when you are older and bit more settled, because you’re allowed legally to rename assets to keep them away from estate taxes, or death taxes, when you die. A lot of people set up living trusts and don’t ever put any assets into it. They do this in case they ever need to put assets into it, in the future. Just remember if you set up a trust to put some assets in.
The creation of a living trust is something important when you own more than one piece of property. If you own two or more homes, for instance, each property will be subject to probate in the case of death. This is something which increases the amount of time in probate and legal proceedings, and also can result in the loss of value in your estate. By creating a living trust, this step can be minimized and often removed altogether. It’s also possible for you to nominate, or name, a legal guardian for any minor children in the case of your death. This can also allow you to specify any provisions for certain points in the life of your child, where they’ll be entitled to any cash or property assets which are held in trust.