Estate planning allows people to dictate how they’d like their assets to be distributed after death. Unfortunately, unless otherwise specified, your assets are likely to pass through probate—which can take months before it’s complete.
One of the most effective strategies in estate planning is to use a trust to avoid probate. However, simply creating a trust is not enough. Properly titling your assets to the trust is key.
How trusts avoid probate
A trust is a legal arrangement where one party (the trustee) holds and manages assets for the benefit of another party (the beneficiaries). By transferring ownership of your assets to a trust, you can avoid the probate process altogether.
When assets are titled in the name of a trust, they are considered part of the trust’s estate, rather than the individual. The trust’s terms dictate how and when the assets are distributed. Since the trust continues to exist after your death, there is no need for probate to determine asset distribution.
The importance of properly titling assets
Creating a trust alone does not ensure that your assets will be protected from probate. For the trust to effectively avoid probate, you need to transfer ownership of your assets into the trust. This process is known as “funding” the trust or “titling” assets to the trust.
Assets not titled in the name of the trust remain part of your individual estate. If these assets are not transferred to the trust before your death, they will likely go through probate, defeating the entire purpose of setting up the trust.
Transferring assets to the trust also ensures that your instructions are carried out as intended. If assets are not properly titled, they may be subject to conflicting claims or legal challenges. This can make the distribution process take longer.
How to title assets for a trust
The process of titling assets to a trust can vary, depending on the type of asset. It’s important to work with the estate planning attorneys at Dworken & Bernstein to ensure your trust is titled and funded properly.
For example, to transfer real estate into a trust, you must execute a new deed that names the trust as the owner. This deed must be filed with the county recorder’s office where the property is located. For valuable personal property, such as jewelry, artwork or collectibles, you may need to create a written assignment or bill of sale transferring ownership to the trust. Similarly, it might also be useful to update any relevant insurance policies.
Working Dworken & Bernstein makes trust creation and titling easy. Reach out to our firm today to get started.
