What Property Should I Include In A Living Trust?
A trust is a legal entity that can either hold your assets for you during your lifetime or hold your assets for your beneficiaries after you pass away. The following article will discuss some types of property you should consider including in a living trust.
What is a “living trust”?
A “living trust” is simply a trust that you establish during your lifetime, rather than one that is established under the provisions of your will (also known as a “testamentary trust”). Under this kind of trust, you will name beneficiaries who will receive whatever property you designate to them at the time of your death.
What property should I include in a living trust?
You should consider including some of the following property to a living trust:
- houses and other real estate (even if they’re mortgaged)
- stock, bond, and other security accounts held by brokerages
- small business interests (stock in a closely held corporation, partnership interests, or limited liability company shares)
- patents and copyrights
- precious metals
- valuable works of art, furniture, or antiques
- valuable collections of stamps, coins, or other objects
The following section will elaborate on the concept of adding some other types of property to a living trust.
- Bank accounts: In order to include your bank accounts in a living trust, you will have to change the paperwork held by the bank, savings and loan, or credit union. It is also recommended that you appoint a payable-on-death beneficiary to your account instead of using a living trust. This way, when you pass, whatever is left in those accounts will go directly to the beneficiary, without having to go through probate.
- Retirement accounts: You cannot assign individual retirement accounts or 401(k)s to a trust. However, you can name a trust as a beneficiary.
- Life insurance: If you own a life insurance policy at your death, the proceeds that the named beneficiary receives will not go through probate. This means that you probably won’t need to bother with naming your trust as the beneficiary of your life insurance policy. However, if a child is the beneficiary of your policy, you may want to take an additional step to make sure someone will manage the money for the child if necessary, such as by naming your living trust as the beneficiary. Then, you will need to specify in the trust document that the proceeds should be managed by an adult if the child is still young when you die. If you don’t arrange for management of the money, and the child receives the money while still a minor, a court will have to appoint a financial guardian to handle the money.
- Cash: Even though you cannot transfer actual cash to a living trust, you can transfer ownership of a cash account (for example, a savings account, money market account, or certificate of deposit) to the trust. Afterwards, you should name a beneficiary to receive the contents of the account.
Do You Have Questions about Establishing a Trust? Contact our Firm
When deciding to create a trust, it is important to consult an elder law attorney to ensure that all of your assets are properly disposed of and that all of your wishes are addressed. If you are considering creating a trust, the experienced Norwood elder law attorneys of Fisher Law LLC can thoroughly explain your options and help you throughout the process.