What Assets Should Be Included in a Trust?

There are a variety of tools that can be used for estate planning. Trusts are some of the most powerful and flexible instruments that can protect the assets you own and make sure they will be used properly both before and after your death. When assets are held in a trust, you will technically no longer own them, since ownership will be transferred to the trust itself. Depending on the type of trust you use, you may be able to maintain control over your assets by serving as the trustee. You can name a successor trustee who will take over control of the assets upon your death or in other circumstances. You will also provide instructions for how assets in the trust will be transferred to beneficiaries, and with a revocable living trust, you can be a beneficiary, ensuring that you will be able to use your assets to support yourself. 

By understanding the types of assets that you can include in a trust, you can make plans for how to protect and use different assets throughout your life while making arrangements to pass them to your beneficiaries at the time you wish. Trusts can be used to transfer many different types of assets, including financial accounts, business interests, real estate, life insurance, and physical property.

Funding Your Trust

After initially creating a trust, it will need to be funded by transferring assets into the control of the trust. Multiple different types of assets may be transferred to a trust, including:

• Financial accounts and instruments – Cash accounts such as checking, savings, or money market accounts may be included in a trust. However, if these accounts are used regularly to pay bills or for other purposes, it may be easier to keep them separate from your trust unless you have full control over the trust’s assets as the trustee. You can also transfer investment or brokerage accounts into a trust by providing authorization to retitle these assets. Physical stock or bond certificates may be transferred to a trust, but in these cases, new certificates will need to be issued. Qualified annuities or retirement accounts such as a 401(k) or IRA generally cannot be transferred to a trust.
• Real estate – Holding your home or other property you own in a trust may be beneficial, since this will allow for a simpler transfer of ownership when necessary. This may make probate proceedings much easier, especially if you own real estate in multiple states or countries.
• Life insurance – A trust may be named as the beneficiary of a life insurance policy, allowing the trust’s beneficiaries to access these benefits without the need for probate. If you use a revocable trust, life insurance proceeds that exceed a certain amount may be subject to estate taxes. However, this can be avoided by creating an irrevocable life insurance trust (ILIT).
• Physical property – Valuable assets that you own, such as jewelry, artwork, or vintage vehicles, may be placed in a trust so that they may be more easily passed to your beneficiaries.
• Business interests – If you are the sole owner or partner of a business, you may transfer your share of ownership of the business to a trust. Your business’s partnership, shareholder, or operating agreement may detail the procedures you will need to follow when doing so, and you may also need to receive approval from other partners or members of an LLC.

Contact Our Naperville Trusts Lawyer

At the Gierach Law Firm, we can advise you on the most beneficial ways to use trusts in your estate plan, and we can help you follow the correct steps when transferring assets into a trust. To learn more about our services and make sure you are prepared for the future, contact our DuPage County estate planning attorney at 630-228-9413.

Sources:

Kiplinger

The Balance

Investopedia