Many people create living trusts for the purpose of avoiding probate after death and planning for mental disability during old age. But creating a living trust doesn’t end with its creation, but its funding. Funding a living trust means transferring assets into the trust, and only after a trust is funded does it become active. When you put an asset in a trust, you are technically changing legal ownership of the asset from your name to that of the trust, meaning the trust becomes the owner of the asset. You can hire the services of an estate planning law firm NJ for help creating and funding your living trust in New Jersey.
What assets should I fund into my living trust?
The cost of probate increases with the value of the asset being probated, so if you’re creating a trust because you want to avoid the cost of probate, then you should consider placing your most valuable assets in the trust. Note that you can always remove and add property to your living trust at any time, and they are still yours to use (so long you are the trustee) despite taking the name of the trust. Howbeit, here is a list of assets that are more appropriate to fund into a living trust.
Financial accounts
Any bank account of yours without a payable-on-death clause will be probated when you die, unless the account becomes a property of the trust. You can easily fund your bank account into your living trust. All you need to do is file some paperwork with your bank.
Stocks, bonds and other investments
Funding stocks and bonds into a living trust can be really complicated and tiresome. To avoid all the paperwork and headache, simply deposit the certificate of the stocks and bonds into a brokerage account held in the name of the trust.
Retirement accounts
Note that IRAs and 401(k) accounts cannot be funded into a trust. You must be the owner of your own retirement account. If you must attach the account to a trust, then consider making the trust its beneficiary.
Automobiles
Automobiles such as vehicles which you still use frequently are generally not advised to be placed in the trust. When the time comes for renewing vehicle insurance, most insurance companies will fume at a vehicle having a trust as its owner. However, if you have antique cars which you no longer use, then it is alright to transfer ownership to the trust.
Houses
For most people, real property is their most expensive asset. Probating a real estate can cost so much because of its value, and so is better to fund it into a living trust.
Credits
If you are owed money in form of loans, mortgages, etc. and you want the sum to be paid to a named beneficiary at your death, simply redraft the agreement form and replace your name with that of your living trust. That way, the trust becomes the lender.
Sole proprietor companies or businesses
If you have one or more businesses running, then these will have to be probated when you die. Probating businesses can be very tasking and demanding, and the court must supervise while your executor runs the business. To ensure the business goes straight to your beneficiary, add it to your living trust. Each type of business in New Jersey presents different challenges when funding into a trust and this is why you should contact an estate planning law firm NJ for assistance adding your business to your trust.
Insurance proceeds
The proceeds from insurance will definitely go to the assigned beneficiary at your death without passing through probate. However, if your beneficiary is a minor, then you may need to plan so that the proceeds will be managed by an adult for the minor. To do this, simply name the trust as the beneficiary of the insurance (insurance cannot be funded into a living trust), and then specify instructions on how the proceeds will be managed at your death.
Consult an estate planning law firm NJ
In funding assets into a trust, you likely will be faced with challenges especially when you have complex assets and you don’t know how best to hold them, whether in a trust or a will. This is where hiring an estate planning attorney becomes highly important. At our estate planning law firm NJ, we have competent estate planning lawyers offering professional advice and insight to New Jersey residents. Seeing our clients satisfied and their best interests protected is our goal. Kindly put a call through to our estate planning law firm today for the best estate planning services.
