There is, however, one more essential step to making a living trust effective: You must make sure that ownership of all the property you listed in the trust document is legally transferred to you as trustee of the trust.
If an item of property doesn't have a title ownership document, you can simply list it on a document called an Assignment of Property. N olo's Living Trust generates this document automatically. Most books, furniture, electronics, jewelry, appliances, musical instruments and many other kinds of property can be handled this way.
But if an item has a title document -- real estate, stocks, mutual funds, bonds, money market accounts or vehicles, for example -- you must change the title document to show that the property is held in trust. For example, if you want to put your house into your living trust, you must prepare and sign a new deed, transferring ownership to you as trustee of the trust or, in Colorado, to the trust itself.
Transferring Titled Property to the Trust explains how. In the real estate contract and deed transferring ownership to the new owners, Monica and David sign their names "as trustees of the Monica and David Fielding Revocable Living Trust.
After a revocable living trust is created, little day-to-day record keeping is required. No separate income tax records or returns are necessary as long as you are both the grantor and the trustee. IRS Reg. Income from property held in the living trust is reported on your personal income tax return. You must keep written records whenever you transfer property to or from the trust, which isn't difficult unless you transfer a lot of property in and out of the trust. In most states, transfers of real estate to revocable living trusts are exempt from transfer taxes that are usually imposed on real estate transfers.
But in a few states, transferring real estate to your living trust could trigger a tax. Consequently, when circumstances change, the grantor must be sure to make the necessary amendments to the provisions of a revocable trust. Myth: Revocable Trusts Save Taxes. No, revocable trusts do not save income taxes, nor do they save estate taxes.
Revocable trusts, like wills, can be attacked by dissatisfied heirs. In fact, in those jurisdictions where it is easier to create a will than a revocable trust, a trust agreement may be more vulnerable to objections than a will. This is incorrect. Upon death, beneficiaries do not receive property more rapidly from a revocable trust than from a will. And, in some jurisdictions, the rule requiring a notice period for creditors applies to revocable trusts as well as estates. Generally revocable trusts do not lower commissions or legal fees.
Most legal fees are incurred in connection with post-mortem estate and income tax planning and the distribution of assets—fees that apply to both revocable trusts and estates. In addition, revocable trusts normally do not incur court filing fees.
The primary benefit of creating a revocable trust is that it provides a prearranged mechanism that will ensure the continued management and preservation of your assets, should you become disabled. It can also set forth all of the dispositive provisions of your estate plan. Consequently, a revocable trust is now afforded certain post-mortem tax advantages that are enjoyed by an estate, including the ability to report its income on a fiscal year basis, rather than a calendar year basis.
Revocable trusts are not for everyone. Whether a revocable trust is appropriate for you and your beneficiaries depends greatly on your specific needs and circumstances. Although the advantages of creating a revocable trust usually outweigh the disadvantages, the decision to create a revocable trust is complicated and requires a thorough legal analysis considering all of the above factors as they affect each individual and family.
Toggle Navigation. Search FiduciaryTrust. How Revocable Trusts Work A revocable trust is created when an individual the grantor signs a trust agreement naming a person s , a corporation trust company or bank or both as trustee to administer the trust.
Advantages of Revocable Trusts Continuity of Management During Disability Creating a revocable trust is probably the best way to ensure that your property remains available to be used for your benefit, should you become physically or mentally incapable of managing your own affairs. Flexibility Using a funded revocable trust may allow you to name unrelated, out-of-state individuals and out-of-state trust companies to act as the primary administrator of your property at death.
Avoidance of Probate Probate is the legal process required to determine that a will is valid. Lost or Destroyed Originals When offering a will for probate, all original wills must be provided to avoid a presumption that the will was revoked. Should I have a revocable trust? Additional reasons one might consider a revocable trust include: If you have assets in more than one state: Without a revocable trust, assets, including real estate, that are held in more than one state would be subject to a separate probate process for each state.
If you have a complex collection of investments: including real estate, artwork, and other assets that would be difficult for beneficiaries to distribute. Planning for future health concerns: Assets held in the name of a Revocable Living Trust at the time a person becomes mentally incapacitated can be managed by their Disability Trustee instead of a court-supervised guardian or conservator. Your GWS Advisor will work with your estate planning attorney to determine if a revocable trust is right for you.
Author Recent Posts. Travis employs many of the disciplines of success that he learned as a Division 1 hockey player — namely, persistence, practice, and a having passion for what you do — to his role as Principal and Client Advisor. Related Posts. Posted in Homepage , News.
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