A trust is one of the most versatile estate planning tools. Offering a variety of structures and benefits, a trust may be just the thing you need to round out your estate plan. There is more good news! You can fund your trust with pretty much any kind of asset. Have cash you want to hold in trust? You can do this! Have stocks and bonds to fund your trust? You can do this too! Trusts can also be funded with real estate. Can you fund a trust with out-of-state property? Yes!
Is It Possible to Fund a Trust With Out of State Property?
As the settlor of the trust, it is your responsibility to establish the trust, select a trustee to manage the trust, name the beneficiaries, set the terms by which the trust should be administered and distributed in accordance with, and to fund the trust. The trustee will manage the trust according to the terms set forth in the trust document for the benefit of the named trust beneficiaries.
Every state recognizes the validity of a trust properly established in another state. Transferring out-of-state property into your trust can be fairly easily accomplished, but it is of the utmost importance that the transfer be properly conducted. You see, to effectively transfer property into a trust, title to the property must be held in the trust’s name as opposed to your name individually. Property held in trust will avoid probate, a major benefit of establishing a trust. Out-of-state property will also avoid ancillary probate. Ancillary probate is the probate process that out-of-state property most likely will have to go through unless it is removed from the probate estate through something like establishing a trust.
So, transferring out of state property is not only permissible but also advisable. So many plan to avoid probate because of the lack of privacy involved in this matter of public record, the expense of the process, and the time-consuming nature of the process itself. Ancillary probate can be insult to injury. Can you imagine an estate having to go through multiple probate processes? It can easily be predicted as frustrating, to say the least.
The many benefits of establishing a trust and funding it with assets, including out-of-state property, make it an appealing tool to include in an estate plan. Be mindful, however, of the potential tax consequences that may be associated with transferring property into a trust. There may be, for instance, capital gains taxes may be triggered by the transaction. Furthermore, if you are transferring the property into an irrevocable trust, the transaction will be, for all intents and purposes, irreversible. The finality of such a transaction means that it should be carefully thought about beforehand.
Pittsburgh Estate Planning Attorneys
To help ensure that you are maximizing the many benefits a solid estate plan has to offer, consult with the knowledgeable team at Jones, Gregg, Creehan & Gerace. Contact us today.