How to transfer property to a living trust
A living trust is a legal entity that is used to hold title to your assets while you are alive. Upon your death, the assets are then transferred to the beneficiaries named in the trust. You can transfer such assets as bank accounts, stocks, bonds and certificates to the trust. You may also wish to change the beneficiary on your life insurance policy and retirement accounts, and establish a pour-over will that distributes any assets obtained after the creation of the living trust (but prior to your death) to the trust upon your death.
You can also transfer tangible personal property to a living trust. This type of property includes jewelry, furniture, books, artwork, clothing, automobiles and other such items. Personal property does not include real property and intangible property, including money, stocks or bonds.
The transfer of an automobile or other vehicle to a living trust is very similar to transferring it to a third party. You sign the title over to the trustee, who then registers the vehicle. Registration of a vehicle held in trust has the same requirements as does registration of a vehicle held in your own name. You are also required to have an insurance card that shows that the insurance on the vehicle is in the name of the trustee. And if you are behind in the payment of any property taxes, you will be required pay the delinquent tax prior completing registration.
Moreover, most states will require you to have either a duplicate of the trust instrument or a letter from the attorney confirming the name of the trust and the trustee. The letter must also corroborate that the trust is in effect. There are some states that will levy a sales tax on the transfer of a vehicle to a revocable living trust on the basis of the sale price paid by the trustee or the vehicle’s book value, whichever is greater. However, a sales tax is inapplicable when the transferor is the same as the transferee. If your state is insistent, contact your state tax department, and speak with one of its lawyers.
One advantage of a living trust is the avoidance of probate, which can be costly and time-consuming. Another benefit is that a living trust ensures the privacy of your distributions whereas a will is public record. In addition, if you become ill or lose capacity, your trustee can make decisions on your behalf. But if you have a will without a durable power of attorney, the court will designate an individual to manage your financial matters. If you create a durable power of attorney, including one for health care decisions, the court will not select a conservator to handle your affairs.
The elder law attorneys at Hook Law Center assist Virginia families with will preparation, trust & estate administration, guardianships and conservatorships, long-term care planning, special needs planning, veterans benefits, and more. To learn more, visit https://www.hooklawcenter.com/ or call 757-399-7506.