Home » Business & Finance » Estate Planning » How to transfer Assets To Your Trust-Part II

How to transfer Assets To Your Trust-Part II

© Susan M. Weschler

Once you’ve set up your trust and decided which assets to transfer, you and your attorney must implement the necessary legal steps and documentation for the assets involved. Since laws can vary from state to state, it is important to consult with an attorney in your area, as to the particular practices and customs that may apply.

Transferring Real Estate To Your Trust

Real estate can be transferred to your trust by properly completing a “quit claim” or gift deed from the current owners to the trust. It is very important to review your prior deed to verify the present owners and how their names appear. If you are not the sole owner, you will have to obtain the consent and signature of the other owners. Also, if there are other owners, than your trust, you need to carefully consider how this will affect the management or use of the property.

As an example, let’s suppose that you own 25 percent of a rental property. Three other people each own the remaining 25 percent interests. You gift this property interest to a trust for your partner. This trust will now own 25 percent of the property while your three friends will continue to own the remaining interests. There should be a partnership agreement between the four owners governing the ownership, use, financing, sale, and other aspects of the property.

There are several important ancillary considerations when transferring real estate:

You may require a new title insurance policy in the name of the trust to retain coverage. The liability and fire insurance policies must be properly amended to reflect the names of the new owner, your trust. Mortgage recording fees and taxes, real estate transfer taxes, and recording fees for the deed should all be considered. In some situations, the costs will be so significant that your planning may change. If there is also a mortgage on the property, you should have your lawyer review the mortgage and note that were signed. You should also review any potential tax consequences with your accountant prior to the transfer. If you are using the property personally, you must sign lease with the trust to retain the legal right to use the premises. You must pay a fair market rental for this use. Where the trust is a revocable living trust for your own benefit, a lease won’t necessary since for tax trust for own benefit, a lease won’t be necessary since for tax purposes you will continue to be treated as the owner of the property.

The copyright of the article How to transfer Assets To Your Trust-Part II in Estate Planning is owned by . Permission to republish How to transfer Assets To Your Trust-Part II in print or online must be granted by the author in writing.