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Aug 21, 2024|Estate Planning

How Do You Put Investments into a Trust?

People discussing investments with pie charts by the Law Offices of Robert E. O’Connor

Putting your investments into a trust is a smart way to safeguard your assets and ensure they are distributed according to your wishes. Follow this step-by-step guide on how to move investments into a trust, including the benefits of doing so, and some considerations to keep in mind.

What is a Trust?

A trust is a legal arrangement where a trustee holds and manages assets for the benefit of the beneficiaries. There are various types of trusts, but revocable living trusts are commonly used for managing investments. These trusts can be altered or revoked during your lifetime, providing flexibility when managing your assets.

Steps to Move Investments into a Trust

Putting an investment into a trust is an effective estate planning strategy. Here are the steps to take:

  1. Consult professionals: Start by meeting with an estate planning attorney and financial planner. These professionals will help you understand the best type of trust for your needs and ensure legal and financial compliance.
  2. Create the trust document: Your attorney will draft the trust document, outlining how your investments should be managed and distributed. This document names the trustee, beneficiaries, and specific terms.
  3. Obtain a tax identification number (TIN): Depending on the type of trust, you may need to obtain a TIN from the IRS for tax reporting purposes.
  4. Retitle your investments: To fund the trust, you must transfer ownership of your investments into the trust’s name. This involves retitling your accounts, which can be done by contacting your financial institutions and completing the necessary paperwork.
  5. Update beneficiary designations: Name the trust as the beneficiary for your retirement accounts and life insurance policies. This way, these assets will flow into the trust upon your death.
  6. Review and manage: Regularly evaluate and update your trust to reflect any changes in your assets or wishes. Your financial planner can manage the investments within the trust.

Benefits of Putting Investments into a Trust

Trusts offer numerous benefits that make them a worthwhile estate planning tool:

  • Avoid probate: Trusts bypass the probate process, allowing for quicker and more private asset distribution.
  • Control the timing: Trusts can include provisions that dictate how and when assets are distributed, such as waiting until your children turn 18.
  • Tax planning opportunities: When set up properly, trusts reduce the tax burden on your estate.
  • Protection: A trust protects your assets from creditors and legal claims.

Considerations Before Moving Investments into a Trust

While trusts are excellent tools, setting up and maintaining one can be expensive and complex. Weigh these costs against the benefits before proceeding. It’s also important to choose the right trust for your needs. For instance, revocable trusts offer more flexibility, but irrevocable trusts provide more protection. Trust laws vary by state, so work with an attorney who can help you understand the regulations that apply to you.

Contact an Estate Planning Lawyer in Media, PA

The Law Offices of Robert E. O’Connor, P.C. can help you set up a trust. We have served Media, PA, and the surrounding areas since 1997, offering comprehensive estate planning services to meet your needs. Contact us at (610) 566-1110 for a free consultation to discuss your investments and protect your estate.

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