A living trust can protect your assets by avoiding probate, ensuring an easy transfer to your beneficiaries. Most assets in a trust require a specific process to set them up properly, and some assets should be left out altogether. It is essential to understand how a trust works to help you decide if it is best for you.
A trust protects your assets and helps pass assets easily to beneficiaries, and there are two types of living trusts. A revocable living trust allows you to change your terms at any time. An irrevocable living trust is a trust that you cannot modify, and it is primarily used to settle financial problems.
One main reason to have a living trust is to avoid probate, a costly and lengthy process that requires the court’s approval before the dissemination of your property can be decided. A living trust will also help you determine how your assets will be distributed and under what terms. Some assets should be included in a revocable living trust.
Bank
A bank account is among the least problematic assets to set up and protect in a revocable living trust. You need to contact the bank and rename the trustee on the account. It may be beneficial for you to consider adding to your bank account a payable on death (POD) beneficiary instead of adding the account to your trust.
It is not a good idea to transfer retirement accounts into your trust. Upon withdrawal, they have to remain in an individual’s name and are subject to income tax. You can name the trust as a beneficiary of your account. This would allow the account funds to be transferred to the trust upon your death, ensuring that your assets meet the terms listed.
Real Estate
A house is the biggest asset for most people. Placing it in a living trust will help it move quickly and avoid probate. A simple deed to transfer ownership to the trust will often be sufficient. A mortgage may cause some problems with the lender, so contacting the lender is important.
Business Interests
Transferring your small business into a revocable living trust is beneficial, but there are differences in the procedure depending on what type of ownership applies. A sole proprietary might be the simplest, as the process is similar to your other transfers.
An LLC is not difficult if you do not have co-owners. If you do, you need approval from the majority of owners. You will keep your say in the business, but your ownership share belongs to the trust.
In a partnership, you can transfer your share of the business to the trust. If you hold a certificate of ownership, you will have to change it to name the trust as the shareowner. Some partnership agreements might not allow or limit any transfers into a living fund.
Chester County Wills and Estates Lawyers at Eckell Sparks Help Clients Protect Their Assets
Setting up a revocable living trust is a complicated but worthwhile endeavor. Our experienced Chester County wills and estates lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. are committed to helping you protect your assets. For help with an estate planning matter, call us at 610-565-3701 or contact us online to schedule an initial consultation. Located in Media and West Chester, Pennsylvania, we serve clients throughout Chester County, Delaware County, and Montgomery County.