A revocable trust has many advantages for people who not only want to keep their assets safe for heirs, but who also want to have a certain amount of coverage for themselves while they are still alive. The law is precise as to when possessions should be placed into this kind of financial vehicle.
Assets and the revocable trust
A revocable trust can hold the majority of your assets. Once you have signed the trust document, you will need to fund it with your assets. In addition, you will have to create what is called a pour-over will, something to hold any of your holdings or possessions that might exist outside the trust in the event you pass away unexpectedly. This type of will directs that any such assets be added into the trust when you die so that they can be distributed properly to the heirs you select.
Assets to include
Your revocable living trust can be funded with assets such as cash accounts, which would include your checking and savings accounts, money markets and CDs. Also included would be the funds you have in nonretirement investment and brokerage accounts. Next comes tangible personal property, such as clothing and jewelry, books, personal papers, your computer, household furnishings, artwork, photos, cars, tools, and even your pets and farm animals. You can also transfer your real estate holdings into the revocable trust. This will require recording a new deed in the town or municipality where the property is located.
Your revocable trust can be funded with your business interests, such as shares of stock in a closely held corporation or your membership interest in a limited liability company. Review shareholder or partnership agreements for any transfer restrictions as well as procedures that must be followed in the process of retitling your interests into the name of your trust. Copyrights, trademarks, royalties and patents can also be taken into the trust. Check with the appropriate government offices for information on making proper assignment.
Taking care of you in life
Keeping your assets in a revocable living trust helps you dodge probate proceedings when you die, and the people you designate will receive their inheritance in a timely manner. In addition, your revocable trust will contain an incapacity clause that names the person you want to sign on your behalf and handle your affairs if you should become incapacitated or mentally unfit to manage them yourself. If you have questions about this kind of trust and whether it is a good fit for you, look for an attorney experienced with estate law to assist.