Suitable Property for Your Living Trust
Interests in Businesses
Stocks and Securities
Rule of Thumb
Not all assets are suitable to be transferred into a living trust. Some types of property are better suited to be included in the living trust than others.
Generally speaking all items of great value should be put into the living trust, because they are most likely to trigger probate proceedings. As avoiding probate is the main reason to set up a living trust, a living trust that is not used for the “big tickets” might as well be dispensable at all.
The number-one-asset for many people will be their own home. No matter if you live in a house or a condominium in most cases this will be the highest priced asset you have. Therefore its transfer into the living trust has absolute priority. Other kind of real estate to think about could be e.g. a marina dock space or a vacation house. If you share title of a real estate asset with somebody else, you can generally transfer your respective interest in the property to your living trust.
An exemption from the general rule is real estate that is owned in “joint tenancy” (sometimes joint tenancy with right of survivorship, abbreviated JTROS or JTWROS) or in “tenancy by entirely”. Besides the respective legal technicalities those types of concurrent estate share a crucial similarity: if one owner dies, that owner's interest in the property will pass to the surviving owner by operation of law. The deceased owner's interest in the cannot be inherited by his or her heirs. Therefore probate is not necessary and generally speaking, there is no need to put such an asset into your living trust.
It is easy to find out what sort of ownership you hold. All necessary information can be found in the respective deed to the property.
However there might be still a reason to transfer this sort of property into your living trust. I can’t go into detail here, but as living trust attorneys in San Francisco, Oakland, Fairfield, Walnut Creek and Sacramento we will know when it makes exceptionally sense to put your joint tenancy property into the living trust despite joint-tenancy-ownership.
Interests in Businesses
Another class of very important assets that should be transferred into a living trusts are small businesses respectively the interests in those. For an ongoing business it is important that it is not interrupted by long and costly probate procedures. If a living trust is used to transfer the business, those complications can be avoided so that the beneficiaries can keep the business running without court interference.
Ordinary checking, money market or similar bank accounts can usually be transferred to the living trust. They are than held by the trustee for the trust.
However it is not always necessary to include bank accounts in the living trust. Alternatively an arrangement with the respective bank can be made, that names a beneficiary for the account, who receives all the money upon death of the original account holder. No probate is necessary any more. These accounts are then called “Pay-on-Death-Account”, “Totten Trust” or “Revocable Trust Account”. They are restricted to certain type of accounts. For further reference consult your local bank.
Stocks and Securities
Quite often stocks and the according stock accounts are transferred to the living trust. Therefore the brokerage firms are familiar with the proceedings and they should be able to assist persons who would like to transfer their stock account into a living trust.
Once the stock account holder’s name is changed to the trustee, which is identical to the grantor in living trusts, stocks within this account can be traded for the trust without further paperwork.
Like ordinary bank accounts, stock accounts can usually be set up or changed to pay-on-death accounts. They then work in the way, already described above.
The living trust may further hold U.S. Treasury Notes or Bonds, but special forms are required to transfer government securities to a trust. Those forms can be obtained through the Federal Reserve Bank. Sometimes your local bank will be able to help as well.
Other assets like royalties, copyrights or patents can be put into the trust as well. However the transfer of these has to be conducted in the proper way.
Contractual rights are usually transferred by a notice of assignment. This might require some technical legal paperwork, with that generally only a lawyer can help you with. For some other assets like boats or airplanes, which require registration with an agency, special forms have to be filled out when transferred to a living trust. In any case the estate planning lawyers of Rinne Legal in San Francisco, Oakland, Walnut Creek, Fairfield and Sacramento will be able to assist you.