How To Transfer Property Into A Trust

Best Practices For Funding A Trust

Funding A Trust

One of the major benefits of a Living Trust is that it helps you avoid Probate and it keeps the contents that you put into the Trust private. This is a key distinction between a Living Trust and a Last Will and Testament. 

In order for a Living Trust to work properly so that you can enjoy the protection and benefits that come along with avoiding Probate, you need to transfer property into a Trust. This is what is commonly referred to as funding a Trust.

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When you fund a Living Trust, you take the assets that are titled in your name, or in joint names, and re-title them into the name of the Living Trust. 

Legally you no longer own anything, everything now belongs to your Trust, so there is nothing for the courts to control when you die or become incapacitated.

The concept is simple, but this is what keeps you and your family out of the courts. 

Everyone’s situation is and asset portfolios are unique, so it’s usually best to consult with an experienced Trust Attorney to help you through the process of how to transfer property into a trust. 

What Assets Should I Put In A Trust?

Usually it’s best to include real estate, stocks, CDs, bank accounts, investments, insurance and other assets with titles. 

Most Living Trusts also include jewelry, clothes, art, furniture and other assets that do not have titles – don’t worry the lawyer will take care of these – we usually use a one page “assignment”. 

Some beneficiary designations may also be changed to your Trust (for example, insurance policies – IRA, 401(k), etc. can be exceptions).

Do I Lose Control Of The Assets In My Trust?

You keep full control of all of the assets in your Trust. 

As Trustee of your Trust, you can do anything you could do before – buy and sell assets, gift them away, mortgage them out, and you can still change or even cancel your Trust altogether. 

That’s why it’s called a Revocable Living Trust. 

You even file the same tax return. Nothing changes but the name on the titles.

What Assets Should Not Be Included In A Living Trust?

When analyzing how to transfer property into a Trust, there are certain circumstances where assets shouldn’t be put into your Living Trust mostly due to tax ramifications. 

For example, retirement accounts like 401k, 403(b), IRAs, and qualified annuities should be left out. 

This is because the transfer would be treated as a complete withdrawal of funds from your account which would make 100% of the value of the assets subject to income tax in the year that they are transferred. 

Life insurance policies are also subject to potential tax ramifications if they aren’t planned for properly. 

Conclusion

When planning for whether or not you should put certain assets into your Living Trust, it’s usually best to consult a Trust Attorney. Everyone’s situation is unique and what works for one situation may not be the best for another. 

If you have additional questions about what you should or shouldn’t put in your Trust, we can help. 

Over the past decade, we’ve helped 1,000s of clients set up all manners of Living Trusts, Wills, Powers of Attorney, and Estate Plans.

We’d be happy to answer any questions you have about Living Trusts. 

Just give us a call at (248) 613-0007 to schedule your complimentary consultation.

Schedule a free consultation with an experienced Living Trust Attorney today! Call us now at (248) 613-0007

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Written By Chris Atallah - Founder, Rochester Law Center, PLLC

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Written By Chris Atallah - Founder, Rochester Law Center, PLLC

Chris Atallah is a licensed Michigan Attorney and the author of “The Ultimate Guide to Wills & Trusts – Estate Planning for Michigan Families”. Over that past decade, Chris has helped 1,000s of Michigan families and businesses secure their futures in all matters of Wills, Trusts, and Estate Planning. He has taught dozens of seminars across the State of Michigan on such topics as avoiding the death tax, protecting minor children after the parents’ death, and preserving family wealth from the courts and accidental disinheritance. If you have any questions, Chris would be happy to answer them for you – just call at 248-613-0007.