Which Assets to Place in a Living Trust
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How Do I Know Which Assets to Place in a Living Trust?
Avoiding probate through a living trust is commonly done by transferring the property items to a trust, to be distributed according to the trust terms. A trustee will hold the property until it needs to be distributed to the appropriate beneficiaries. In this way, the estate holder can avoid the costs and time associated with probate distribution of the property.
However, it can often be difficult to know which assets to place in a living trust. In general, the more expensive the item is, the more likely it will be that it will consume large amounts of time and money in the probate process. Therefore you’ll want to include most of your valuable assets in your revocable living trust.
On the other hand, you should avoid placing assets that are subject to frequent sales or transfers- you don’t want to deal with assets constantly going back and forth from your trust.
You should consider placing the following items in a living trust:
- Valuables such as furniture, works of arts, antiques
- Valuable collections, such as coin collections, stamps etc.
- Precious metals and jewelry
- Intellectual properties like copyrights and patents
- Small business interests (such as stocks held in a partnership or LLC)
- Other types of securities, such as bonds
- Homes and other types of real estate
Which Assets Might Not Work in a Living Trust?
There are some items that you simply can’t transfer through a living trust. Some examples of these are: cash, most life insurance policies, and certain types of retirement benefits. These types of assets can be transferred through alternative means, like a payable-on-death or transfer-on-death account.
Other assets can be placed in a living trust, but they might present some extra difficulties in doing so. Examples of these are:
- Vehicles: Vehicles can be placed in a living trust, but you might not want to do so- it can be impractical to have insurance and registration placed in another person’s name (the trustee)
- Business interests in larger entities: There are many differences between smaller business formations (like a partnership) as opposed to more complex ones (like a corporation). You may wish to only place smaller business interest in your trust
- Real estate- Real estate can be placed in a living trust; but in some instances it might not be necessary to do so. For example, if you are a co-owner of property with someone else, they may already have automatic survivorship rights
Remember, if your decision to place an item in trust later turns out to be impractical, you can still take action. You usually have the option of amending your living trust as conditions change in the future.
Do I Need a Lawyer for Assistance With a Living Trust?
As you can see, creating a living trust is simple but it does involve much planning and foresight. Own your own, you might not be able to tell which assets to place in a living trust, and so it may be necessary to hire an estate planning lawyer to guide you through the process. Your attorney can tell which assets can or cannot be placed in trust, and which types of transactions will be most beneficial for you. Your lawyer can also represent you in court there is a dispute over your assets.
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Last Modified: 04-12-2012 01:43 PM PDT
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