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Who Owns the Property in a Trust?

Posted on September 15, 2022 in asset protection,trust,trust funds

Planning for your family’s future is important, regardless of your assets. Establishing a trust can be a great way to protect assets and ensure your family is taken care of, but it can also be a confusing process. There are many options when it comes to establishing a trust, such as a family trust or a life insurance trust, so it is important to know what would best meet your needs. The experienced team at Ken R. Ashworth & Associates can walk you through this process and help you establish the ideal trust.

Who owns the property in a trust?

What Is a Trust?

Protecting your assets and ensuring a secure future for your loved ones is essential and establishing a trust provides you an avenue to do that. Trusts are legal agreements that designate a third party to maintain and distribute assets for another individual. These agreements involve three different parties: the grantor, the beneficiaries, and the trustee.

The grantor of a trust is the person who establishes the trust. They are responsible for determining the type of trust, what assets will be included in the trust, how those assets will be divided, and who will hold the assets. Beneficiaries are the individuals, often family members, who will receive the assets in the trust at a designated time. They have no control over the trust other than the receipt of assets. Finally, the trustee is the person designated to hold and distribute the assets in the trust. In some cases, this can also be the grantor, who will choose a successor in the event of their death.

Revocable Versus Irrevocable Trusts

Every trust will include a grantor, a trustee, and beneficiaries, but not all trusts are the same. For example, some trusts are specifically for family, while others have assets designated specifically for charity. Regardless of the specific details of a trust, it will always be designated as either revocable or irrevocable.

A revocable trust, which is also referred to as a living trust, is established and maintained during an individual’s lifetime. This provides flexibility for the grantor because they are able to change the terms of the trust as circumstances in their life change. For example, in some cases, a living trust is created to ensure that you can maintain some decision-making if you are incapacitated by illness or other circumstances. Revocable trusts allow you to avoid costly court fees but do not typically offer any tax breaks.

Irrevocable trusts are also created during an individual’s life but do not offer the same flexibility. Once an irrevocable trust has been established, it cannot be changed at all. This type of trust removes the assets from your control entirely. This can be a positive thing for tax purposes, but not if your circumstances change and you need to make adjustments.

What Assets Are Included in a Trust?

The specific assets that are included in a trust are determined by the grantor. Some assets are typically not included in trusts, such as everyday vehicles and retirement accounts, but for the most part, you can choose to include any assets you wish. Many people choose to include various bank accounts, personal items with high value, collectible vehicles, and even business holdings in their trusts. Real estate properties, such as homes and commercial businesses, may also be included in a trust.

Nearly any asset can be included in a trust, though they will each present unique challenges. For example, some things you need or use on a regular basis could be included in your trust, but that might mean losing access to them when you need them. The best practice is to carefully determine what assets should be included in your trust before you finalize it.

Who Owns the Property in a Trust?

The trustee is officially responsible for the assets in a trust when it is established. The individual who established the trust may retain ownership of a living trust, but otherwise, the trustee controls all assets. They must maintain accurate records, distribute assets according to the trust document, and provide regular reports to the beneficiaries. Once the assets can be transferred to beneficiaries, however, full ownership will be transferred as well.

FAQs

Q: What Are the Disadvantages of Putting Your House in a Trust?

A: Placing your house in a trust can allow you certain protections, but it also has its drawbacks. The process of establishing a trust can take a significant amount of time, which can cause frustration, and you will need to keep meticulous records to ensure that your taxes are correct. Including your house in your trust also means that you will have to retitle the home to name the trust as title holder, which may be difficult to complete.

Q: Who Are the Owners of a Trust?

A: Once a trust has been established, the trustee is officially the party responsible for all the assets held in the trust. In a revocable or living trust, this may mean that the individual who established the trust retains control of it while they are alive, but then it is transferred. With an irrevocable trust, the trustee is guaranteed to be a third party from the time the trust is established.

Q: What Are the Disadvantages of a Trust?

A: Trusts are a great tool for protecting your assets and providing for your loved ones, but they can present their own unique challenges. The process of creating a trust can be time-consuming and costly, as you are responsible for any legal fees incurred from setting it up. Trusts also require you to maintain immaculate records to ensure that your taxes are filed properly. Therefore, it is important to determine whether the disadvantages outweigh the benefits.

Q: Who Controls the Money in a Trust?

A: Once a trust has been established, the trustee is responsible for any assets that are included in the trust. This means that the trustee is the only one who is able to move any assets, and they must also maintain the trust. Until the assets are given to beneficiaries, the trustee must abide by the rules established in the trust itself, distribute assets properly, and maintain all tax reports for the assets in the trust.

If you are looking to establish a trust for your loved ones, you can rely on the team at Ken R. Ashworth & Associates. Contact us today to get started!