Properties That Are Commonly Held in Trust
April 10, 2023
When people hear the term estate planning, probably the most common thought that comes to mind is drafting a will to designate who gets what once you’re gone. While a last will and testament is certainly the building block of estate planning, it also subjects your loved ones and beneficiaries to the nuisances and lengthy proceedings of probate court. Going through probate can also alter the costs associated with distributing assets since there will be administrative and even legal fees that may arise.
The better option is to create a living trust. You may still want to have a will, especially if you have minor children so you can designate a guardian, or even in the event you’ve forgotten to place an asset or two in your trust. A pour-over will can designate that any asset not in your living trust will be placed inside the trust.
A living trust’s chief benefit is that it does not have to go through probate proceedings. Instead, the successor trustee you name in your trust document will be able to transfer your assets outside of probate court, which not only accelerates the process but eliminates many administrative requirements of the probate court, which consume time and money.
If you’re in or around Englewood, Colorado, or Tustin, California, and looking to set up a trust or discuss your estate planning needs and options, contact The Law Offices of Bruce Peotter. For nearly two decades, we have been helping individuals, families, and businesses plan for the future to give everyone involved ultimate peace of mind moving forward.
With two offices, we serve clients in communities in and around Denver and the Orange County area of California, including Irvine, Costa Mesa, and Santa Ana.
Benefits of a Trust
As mentioned above, the primary benefit of a living trust is avoiding probate proceedings. Establishing a living trust also gives you consolidated control over your assets. You, as the settlor – the person with the assets establishing the trust – become the trustee with authority to manage those assets so long as you are alive and not incapacitated. If you do become incapacitated or when you pass away, the person you name as your successor trustee takes over.
The successor trustee is often a family member or trusted friend or associate, but sometimes for large estates, a financial institution or attorney may be named to the role. If you’re incapacitated, the trustee will oversee and manage your assets. When you’re gone, the trustee will distribute your assets as provided for in your trust document.
Properties Commonly Held in Trust
Just about any individual asset can be placed in a living trust: real property, vehicles, art collections, banking and investment accounts, and even your business interests. If you wish to put real property into your trust, you will have to change the deed to reflect that. The same goes for vehicles, banking, and investment accounts – the title must be changed.
As for business interests, this can get a bit tricky. If you own a sole proprietorship, no problem – just add it to the trust. If it’s a partnership, you can often transfer your share to a trust if the partnership agreement doesn’t forbid it. Your shares in a corporation can also be transferred in most cases. In a Limited Liability Company (LLC), however, you will have to get the agreement of the other members of the LLC.
Assets That Transfer Outside of Probate
Some assets don’t have to go through probate, so there is usually no reason to place them in a trust. For instance, if you own property jointly with your spouse and both are on title, the property will pass to the living spouse upon your death without any probate oversight.
The same is true for anything with a named beneficiary. If you have a retirement account with your spouse or someone else named as the beneficiary, the account transfers automatically. The same holds true for life insurance policies. Joint bank accounts also don’t have to go through probate and thus don’t need to be protected in a living trust.
Rely on Dependable Legal Advice
In many cases, your living trust may need to be supported by powers of attorney or a health care advance directive should you become incapacitated. To conduct a comprehensive assessment of your estate planning needs – including a living trust – contact our knowledgeable team at The Law Offices of Bruce Peotter. We proudly serve clients near Denver, Colorado, and Orange County, California.