When you create your initial estate plan, it may consist of nothing more than a Last Will and Testament. As the years go by, however, and your estate grows, you will likely expand that initial plan. Consequently, you will probably choose to incorporate more sophisticated estate planning tools and strategies into your plan. One of the most common additions to a comprehensive estate plan is a trust agreement. You can fund that trust using a wide range of assets. You may wonder though about transferring out of state property into your trust. The Lincolnshire estate planning attorneys at Hedeker Law, Ltd. discuss transferring out o state property into a trust.
Trust Basics for the Beginner
A trust is a legal relationship where property is held by one party for the benefit of another party. The person who creates a trust is referred to as the “Settlor”, “Trustor” or “Grantor.” The Settlor transfers property to a Trustee, appointed by the Settlor. The Trustee holds that property for the trust’s beneficiaries as well as invests trust assets and administers the trust terms according to the terms created by the Settlor. Trusts all fall into one of two categories – testamentary or living trusts. A testamentary trust is activated by a provision in the Settlor’s Will at the time of death whereas a living trust activates once all formalities of creation are in place and the trust is funded. Living trusts can be further divided into revocable and irrevocable living trusts. Because a testamentary trust is activated by a provision in the Settlor’s Will, and a Will can always be revoked up to the time of the Testator’s death, a testamentary trust is also revocable up to that point.
There are a number of reasons why people frequently decide to use a trust as their primary estate distribution vehicle. If you have minor children, for example, those children cannot inherit directly from your estate but a trust can protect your children’s inheritance until they reach the age of majority and are able to inherit directly. Another huge benefit to using a trust to distribute an estate is that assets held in a trust are not required to go through probate.
Funding Your Trust
Another benefit to a trust is that t can be funded with almost any type of assets. Cash and securities are common trust assets as are real property and life insurance proceeds. Just about anything of value can be transferred into a trust. You may be wondering, however, how your vacation home in Florida can be transferred into your trust. The answer is very simple. Not only can you transfer out of state property into your trust but there is a very good estate planning reason to do so. If you do not transfer that Florida vacation property into your Illinois trust your surviving loved ones may need to open a probate case in Florida after your death. That would add considerable time, money, and stress to your loved ones after you are gone.
There are a couple of things to consider, however, when transferring property of any king into a trust. The first is the type of trust you create. If your trust is a revocable living trust, transferring your out of state property into the trust shouldn’t create a problem; however, if you created an irrevocable living trust you cannot get that property back once it has been transferred. The second consideration is the impact the transfer might have on your tax obligations. A transfer could impact capital gains taxes, for example. These are just two of the many reasons why you should always consult with an experienced estate planning attorney before transferring property into or out of a trust.
Contact Lincolnshire Estate Planning Attorneys
For more information, please join us for a FREE estate planning seminar. If you have additional questions or concerns regarding the transfer of out of state property into a trust, contact the experienced Lincolnshire estate planning attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.