Trusts are entities that are created for a variety of reasons, a trust is first and foremost an entity that is governed by the Trust Agreement, which is in essence a contract between parties as to how the entity will hold and distribute assets over time. However, the trust can only govern the assets it has control over. Putting assets into trust is a process that people too often forget to complete. This omission can create inefficiencies and unnecessary cost which can be easily avoided.
I just set up my trust so I’m all set, right?
No. Setting up a trust just involves the actual drafting of the trust instrument. Most times, you execute a “Pour Over Will” when you form your trust. That document serves to transfer your assets into your trust when you die, ideally it is to be used as a safety mechanism designed to catch any small items that have been left outside of the trust. However, to effectuate the will, your estate will have to go through the probate process. Avoiding the delays and fees associated with probate is usually at least part of the reason that individuals choose to set up trust. In fact, if all necessary steps are done properly, having a trust in place will allow you to entirely avoid the probate process.
How do I transfer assets into my trust?
Transferring assets into your trust can be accomplished in a variety of ways. The manner of transfer is usually determined by the type of asset that you are attempting to transfer into the Trust. You can generally effectuate some transfers on your own. For example, checking, brokerage, savings, and money market accounts can all generally be transferred or retitled by simply going to your financial institution or contacting your financial advisor. You will most likely be able to keep the same account, additionally, as long as you are alive, the Trust should not require an EIN, as you can use your Social Security Number as the Trusts’ tax identification number.
Transferring real property
While you should be able to transfer some interests on your own, you may require help transferring some other types of property. Transferring real property is usually straight forward, it is transferred via quit-claim deed, these deeds may be either recorded or unrecorded depending on your scenario.
Transferring business interests
Business interests can range in everything from stock in a company to ownership interests in an LLC. To transfer these types of assets, you will generally require the consent of the LLCs manager, or either the board of the corporation or an executive. Drafting a transfer document can be accomplished by our team, however, it will be up to you to talk to the appropriate manager or company executive. Most individuals in leadership roles are familiar with trusts and will have no objection to you transferring your interests into a trust. However, on occasion they may require you to provide their attorney a proposed document. This may delay the process, which is why it is important to get working on transferring your assets as quickly as possible.
Contract and other rights
Contract rights are usually non-transferable by the terms of the contract. Additionally, it may be unnecessary to transfer your contract to the trust. However, if your contract allows you to transfer your rights, or you are able to get the general consent of the other parties, you may be able to transfer your contract rights into your trust. You can also transfer intellectual property, or other similar rights to your trust.
Individuals often wonder what other assets they can transfer into their trust. The answer is of course, just about everything, however, just because you can, does not mean you should. Motor vehicles are a prime example of what should, generally, not be transferred into a trust. These vehicles can be transferred via a portion of your will. Generally, the transfer of tangible personal property does not require you start a probate.