For most people, creating a comprehensive estate plan involves drafting and executing a compilation of documents above and beyond just a Last Will and Testament. Over the last several decades, trust agreements have become one of the most popular additions to an estate plan, due in large part to the flexibility offered by a trust agreement. If you are considering the addition of a trust to your estate plan you may have several questions about how a trust is created and how one functions once established. For example, you may wonder “ How is out of state property funded into a trust? ”
Trusts all fall into one of two categories – testamentary or living trusts. A testamentary trust is one that does not take effect until after your death while a living trust becomes effective as soon as all the formalities of creation are complete. If you create a living trust, one of the formalities is to sufficiently fund he trust. A trust can be funded with just about any type of asset, including cash, securities, life insurance, and real property.
If you plan to use real property to fund your trust the property must be legally transferred into the trust. This typically requires actually completing a title transfer from your name into the name of the trust as the property will legally be owned by the trust once you complete the transfer. If the property you plan to transfer into the trust is out of state the process is essentially the same as for in state property, although there may be an extra step or two required along the way. Just as you can own property that is located in another state, so can a trust.
One of the many benefits to transferring out of state property into a living trust before you die is that by doing so you avoid the necessity of opening a probate in the state where the property is located. Typically, any time property of a decedent is located in a state the law requires a separate probate to be opened in that state in order to distribute that property after the death of the owner. By transferring the property into a trust now you avoid the possibility of the need for probate in that state when you die.
If you have additional questions or concerns relating to trust agreements, please be sure to contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.
- Common Mistakes in Estate Planning – IV - June 14, 2023
- Common Mistakes in Estate Planning – Part III - June 7, 2023
- The Not-So Transparent Corporate Transparency Act - May 30, 2023
