In addition to estate planning basics such as a will and advance health care directives, you may want to look into adding a trust or two as well. Trusts can vary in scope and purpose, but can come with a number of benefits when properly executed. In order to establish a trust, a trustee must be appointed who is tasked with managing the trust for the benefit of trust beneficiaries. Also, the trust must be funded. This means that property must be transferred into the ownership of the trust itself. The kind of property you can hold in trust runs a wide variety. You can have financial accounts, securities, real property, and more held in a trust. You can even fund your trust with property that is out of state. In fact, there are big benefits to doing so.
The Benefits of Funding a Trust with Out of State Property
A trust can offer a number of benefits that will vary with the type of trust established. Generally speaking, however, a trust can be a great way to avoid the expensive and time intensive probate process. By circumventing the probate process, beneficiaries are often granted swifter access to an inheritance without having to wait through the completion of an arduous, court monitored process. It cannot be stressed enough, however, that a trust must be properly funded in order for the intended benefits to be realized.
Out-of-state property can be used to fund a trust and will require a different transfer process than other property types in order to fund a trust. Real property, which includes both and homes, will require the deed to be transferred into the name of the trust. This transfer can occur through a quitclaim deed or a warranty deed. A warranty deed comes along with a guarantee that the property seller has clear title to the property subject to the transaction. Clear title means that it is free of liens or encumbrances.
As it is not uncommon for a person to own property in multiple states, considering the transfer of out-of-state property into a trust can be a great idea. Every state will recognize the validity of a properly executed trust regardless of which state the trust was established in. One of the biggest reasons that you will want to consider holding your out of state property in your trust is that it will avoid out-of-state probate. When a person dies with property held in other states, that property is likely to have to go through an ancillary probate. This means, essentially, that the person’s estate will have to go through multiple probate processes occurring in multiple states. The expense and time can be much greater than is required of just one probate process.