Today we will uncover what assets can be transferred into a trust. First, let’s understand the entire context. As you or your loved ones get older, it becomes time for you to consider creating or updating your estate plan. An estate plan is highly beneficial to anyone, because it allows you to dictate you or your loved ones interests and wishes concerning the future. There are many different documents that you could choose to draft and execute for your estate plan. One of those documents is a trust. One of the greatest benefits of any trust is you’re able to bypass the probate process. The Probate process in New York state is an extremely lengthy and costly process that should be avoided at all costs in order ro save both time and money. Probate is the process of proving the validity of a decedent's Last Will and Testament in the Surrogate Court, which only begins to take place after the decedent passes away. Executing a trust allows for a faster distribution of assets to your heirs without having to add any additional expenses to the estate. There are many different types of trusts, and it is important to know the difference when choosing, which one is right for you. This is because some assets are only allowed to be transferred into a specific type of trust.
Revocable Trust & Irrevocable Trust:
There are two main types of trusts: a revocable living trust, and an irrevocable trust. While there are many different types of trusts, these are two of the most common trusts that are drafted.
- Revocable trust, also known as living trust, positions your assets into one legal document for you to use throughout your lifetime. If you name yourself as a trustee, you will be able to manage your trust and make revisions, known as amendments that may be necessary at some point. For example, if you have new properties that you want to transfer to your trust, or change/add beneficiaries to your trust, you are able to do so with the help of an Estate planning attorney. Lastly, the grantor, or donor has the ability to revoke a living trust if necessary.
- Irrevocable Trusts, on the other hand, can be created during life or included in a will. In this case, the trust only activates upon the death of the grantor. The main difference between a revocable trust and an irrevocable trust is that you are not able to make revisions nor are you able to revoke an irrevocable trust.
In order to understand which trust may be more beneficial to you, it is important to consult with a trust and estate attorney, who can explain more specifically the benefits of each of these trusts, in your unique situation.
Changing Ownership of Assets To Living Trust:
When transferring assets into a living trust, the legal ownership of your assets changes from your name to that of the trust. In most circumstances, the creator(s), or grantors of the trust, designate themselves as a trustee, in order to continue to have control of your assets, even though legally, your assets are then owned by a trust. It is important to understand that all assets in the trust will continue to be assigned to the donor’s social security number. For better clarity on which assets go into a trust and to ensure no assets are forgotten, you should begin by drafting a complete list of assets you own and would like to transfer.
Assets That Can Be Transferred Into A Trust:
Once your trust is created and executed with an Estate Planning Attorney, here are the assets that you can begin to transfer into your trust:
- Real Property: One of the most common assets people own are their homes, and most of the time, this is an asset that you would transfer into a trust. You are able to transfer your home, condo, or any other real property to the trust with the re-recording of your property deed, a document which transfers ownership of a home from one party to another. In this case, the current owners of the home would transfer ownership of the home to the trust. Some of the most common deeds that are created are the quitclaim deed and a warranty deed. A quitclaim deed is the most common and simplest way of transferring your deed, but a warranty deed makes sure that you have a good title when you transfer your property into a trust. Aside from the deed, specific transfer forms from the county of your property must be properly completed and sent to the county electronically or by mail (depending on the county). Any mistake will cause the new deed to be rejected, thus creating a set back. While it is possible to prepare these documents on your own, this process is tedious and some states mandate that all deeds and transfer forms be prepared by an attorney. Once documents are prepared, a filing fee must be paid when submitting all documents for recording.
- Vehicles: If you are looking to transfer ownership of your vehicle to your trust, one of the first things that you need to do is ensure that the state you reside in will allow a trust to hold ownership of a car or truck. This can be verified by going to the DMV website or simply by consulting with your attorney. If you want to take an additional step in verifying if this is possible in your state, call your insurance company as well to ensure that it will continue to provide you with coverage after the transfer is initiated and completed. If transferring a vehicle is in fact possible, you will need to obtain a title change from your DMV and complete it. When completing the form, you must name the trustee of your trust as the new owner. One thing to remember is sales tax isn’t applicable to the transfer, so if the DMV attempts to apply it, ask to speak with a supervisor.
- Financial Assets: In order to transfer assets including bank accounts, stock, or investments to a living trust, you will need to speak with a representative from the institution and complete a form. To verify that your trust is executed properly, you will most likely need to provide a certificate of trust. Speak with your attorney to see if your personal checking and savings account should be kept out of the trust.
- Personal Property: If you possess legitimate written titles or ownership documents for personal property such as jewelry, collectibles, furniture, or other items that are in your home, you are able to place them into a trust. In order to do so, you will need to name them in your trust document on a property schedule, which is a list of personal property that must be attached to the trust, and the trust must indicate that ownership of these belongings are being transferred in the name of the trust. If any of your belongings are insured, be sure to transfer the insurance to the name of the trust.
Items Not Able To Be Transferred Into A Trust:
There are some things that can’t or shouldn’t be placed in your trust. Individual Retirement Accounts (IRAs) cannot be transferred into a trust, so these must remain in your own name, but the trust can be named as a primary or secondary beneficiary on your IRA. This also occurs when living trusts are named as a beneficiary of a life insurance policy. Speak with an experienced NYC Estate Planning attorney or an accountant to understand the tax implications of taking these steps.
As mentioned earlier, a revocable living trust gives the ability for the designated trustee(s) to make amendments or changes to your trust. If you happen to purchase or inherit assets after creating your trust, speak with a trust and estate attorney to transfer those items as soon as possible. If you purchase items as a trustee of the trust, they will be automatically placed into a trust, and an amendment may not be necessary.
For further Estate Planning inquiries please contact the Law Office of Inna Fershteyn at 718-333-2394 to best prepare for your future in selecting an attorney that works best for your trust and estate needs.