Have you included everything in your Trust? When drafting a Trust, there are special considerations that must be made for certain types of assets. Keep reading to learn more about how to transfer Personal Property to a Trust.
Setting up a Trust online can be a responsible financial decision and can make Estate Planning a lot easier for you and your loved ones. Setting up a trust is usually pretty straightforward, but the different types of Trusts and the various assets you’re putting into a Trust will determine the type of Trust you’ll need to create, and any additional documents you’ll want to add on to the Trust.
Why a Trust?
A Trust is created anytime someone, known as the Trustor, wants to transfer their assets to another person or several other people, known as the Trustee or Trustees. Different types of Trusts can be created as part of Estate Planning, to distribute wealth among family members, to help manage a large windfall, to buy real estate, or any other time property is to be moved from one owner to another.
Often, a Trust will be created along with a Will, which stipulates how holdings of the Trustor are to be distributed. Trusts can cover assets like real estate, but there may be other valuables that need to be transferred too. These valuables are known as Personal Property.
What is Personal Property?
Personal Property refers to any asset that doesn’t have an official title or deed. In other words, everything you own, except for what’s known as Real Property (land and buildings), would be classified as your Personal Property. Personal Property can be broken down into two categories: Tangible Personal Property and Intangible Personal Property.
Tangible Personal Property refers to something you can physically touch. It may include anything, from the baseball cards you collected as a kid to the antique furniture in your guest room. Personal Property has value to its owner, but it often has monetary value, too. Commonly, Tangible Personal Property that is transferred in a Trust will include material possessions like:
Animals and Livestock
and any other item that isn’t permanently affixed to one place.
Intangible Personal Property transferred in a Trust are non-physical assets that the Trustor owns, and can include:
Transferring Personal Property to a Trust
In the matter of transferring Personal Property to your Trust, we will be referring to Tangible Personal Property. These items are often things that you, as the Trustor, wish to leave to family members or friends. Without formal deeds or titles, these items of Personal Property – while they may be worth quite a bit – may not have been mentioned in a Will or Trust you’ve made.
Whether you own a significant amount of Personal Property or you have a few treasured items you want to pass on, it’s important to make sure that your Personal Property is accounted for when making a Trust. Let’s take a step-by-step look at how to transfer this type of Property to a Trustee.
Create a Transfer Document
If you’ve created a Trust with one or more beneficiaries, to transfer your Personal Property to those Trustees you’ll need to first create a Transfer Document. This can be done at the same time you make a Trust, or added to the Trust you’ve already made.
Make a List of Personal Items
Here’s where you’ll itemize all of the possessions you want to Transfer in the Trust. Everyone’s list will be different and will depend on the number of beneficiaries and the items included. However, as a general rule, being specific here is good. General categories like “jewelry” or “furniture” will suffice, but – especially if the items are highly valuable – listing them individually is even better.
Name Beneficiaries of Your Personal Property
Once you’ve listed the Personal Property you want to transfer, you’ll name the Trustee or Trustees who will receive the property. This may be one person, two or three Trustees, or more. Specify who will be granted which item or items.
Sign the Document
Lastly, you’ll sign the Transfer Document to make it official. Treat your Transfer Document as you would any other important paper and keep it with your Trust records.
Why Transferring Personal Property in a Trust is a Good Idea
You might be wondering if this is necessary? Maybe you’ve told your children how you want to divide your jewelry, or you trust that your friend will get that watch to your grandson and the diamond bracelet to your granddaughter. Maybe you assume that when you transfer a house to your son, the appliances and furniture are included.
Creating a Transfer Document to go along with your Trust makes it all official. It puts it in writing. And it limits the possibility for confusion and infighting over inheritance and mementos that too often can happen among families.
Taking the time to allocate Personal Property to those you choose can make your wishes clear. There won’t be any room for the back-and-forth bickering of ‘he wanted me to have it’ ‘no, he wanted ME to have it.’ And transfer of ownership will be simple and official.
State Personal Property Taxes and Laws
Tax laws and other considerations regarding Personal Property can vary by state. Since Personal Tangible Property and other property bequeathed in a Trust or Will can often go from a person in one state to a person in another (for instance, a parent in Florida leaving an asset to a child in New York, or a sibling in California gifting an asset to a sibling in Arizona), or may be worth a sizable amount of money, taxes and financial considerations may come into play. An estate planning attorney can help you with your specific state laws and tax questions.
In just a few steps, you can transfer your Personal Property to a Trust. At Trust & Will, we can guide you through the process and make it truly simple. Reach out today and let us help you create your online, customized and state-specific estate planning documents.