Estate Planning: What Assets To Transfer Into A Revocable Trust?

As you make your estate plan in Manassas, Virginia, one of the critical decisions you must make is creating a revocable trust. It is a flexible and versatile estate planning tool that allows you to transfer assets to a trust while retaining control over them during your lifetime. 

A revocable trust can be particularly useful to avoid probate, minimize taxes, and ensure that your assets are distributed according to your wishes. However, not all assets should be funded or transferred into your revocable trust. 

This blog post will examine what assets you should consider funding or transferring into your revocable trust.

Understanding A Revocable Trust 

A revocable trust, also known as a living trust, is a legal entity that holds title to your assets. You can be the trustee and the beneficiary of the trust during your lifetime, giving you complete control over the trust assets. When you pass away, the trust assets are distributed to your named beneficiaries according to your instructions without going through probate.

Funding Your Revocable Trust 

For your revocable trust to be valid, you must transfer ownership of your assets to the trust. This process is known as “funding” the trust. Assets not funded or transferred into the trust will not be covered by the trust’s provisions and will be subject to probate.

Assets That Should Be Transferred Into Your Revocable Trust 

For your estate planning, any asset with a title can be transferred into your revocable trust. This includes the following.

• Real estate: Your primary residence in Manassas, Virginia, vacation home, rental properties, and undeveloped land can all be transferred into your revocable trust.
• Bank accounts: Checking accounts, savings accounts, money market accounts, and certificates of deposit can all be transferred into your revocable trust.
• Investment accounts: Brokerage accounts, mutual funds, stocks, and bonds can all be transferred into your revocable trust.
• Personal property: Jewelry, artwork, collectibles, and other valuable personal property can be transferred into your revocable trust.

Assets That Should Not Be Transferred Into Your Revocable Trust 

Not all assets should be transferred into your revocable trust. For example, assets with beneficiary designations should not be transferred into your trust. This includes the following.

• Retirement accounts: IRAs, 401(k)s, and other retirement accounts should have designated beneficiaries.
• Life insurance policies: Life insurance policies should have designated beneficiaries.
• Annuities: Annuities should have designated beneficiaries.

By designating beneficiaries for these types of assets, you can ensure that they pass directly to your heirs without going through probate upon your death.

Exceptions To The Rule 

There are some exceptions to the rule of what assets should be funded or transferred into your revocable trust. For example, you may not want to put your primary house into your trust if you are still paying a mortgage. Transferring it into your trust could trigger the due-on-sale clause in your mortgage, requiring you to pay off the mortgage in full. Additionally, if you have assets worth less than the cost of transferring them into your trust, it may not make sense to do so.

If you are unsure which assets should be transferred into your revocable trust, consulting with an estate planning attorney who can help you develop a comprehensive plan that meets your unique needs and goals is best. They can also guide you through the funding process and ensure your assets are correctly titled and transferred into your trust.

The Irving Law Firm & Revocable Trusts

The Irving Law Firm is an award-winning team of experienced attorneys handling estate planning, probate, and trust administration. They understand the complexities of these areas of law and are committed to helping their clients navigate them easily. 

With a personalized approach and a focus on clear communication, the team at The Irving Law Firm can help you develop a comprehensive estate plan that reflects your unique needs and goals. Whether you are just starting to think about estate planning or need assistance with trust administration, The Irving Law Firm is here to provide Manassas, Virginia, clients with the guidance and support they need.

Summary

Your revocable trust can be an essential part of your estate plan, and it’s important to understand which assets should be funded or transferred into it. By planning carefully and seeking professional guidance from an estate planning lawyer at The Irving Law Firm, you can help ensure that your estate is distributed according to your wishes and minimize the stress and expense of probate for your loved ones.

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