Feb 10

If you choose an inter vivos (living) trust as an instrument of asset protection, bear in mind that your living trust cannot transfer property it does not own. An essential step in making your trust effective is to transfer ownership (title) of property to the trust’s name.
Some lawyers recommend a transfer of title to the trustee. Others say that it is better to transfer title to the trust’s name because trustees may change but the trust name remains the same throughout the trust’s existence. So when the trustees change, no new transfer of title is needed. For purposes of transferring title into the trust’s name, there are two types of property — those with ownership (title) documents and those without. Many types of property do not have title documents, including all kinds of household possessions and furnishings, clothing, jewelry; tools, most farm equipment, antiques, electronic and computer equipment, bearer bonds, cash, precious metals, and collectibles. You may transfer these items to the trust simply by listing them on a trust schedule. You may need one or more beneficiary clauses to actually give these items to beneficiaries. After the trust document has been signed and notarized, it is vital that you formally re-register ownership of all items of trust property, which have ownership documents (title papers) into the trust’s name.
The types of property owned by the trust which must have title documents re registered in the name of the trust include real estate, stocks and stock accounts, bonds, corporations, partnerships, money market accounts, bank accounts, mutual funds, safety deposit boxes, and vehicles. Once control over property disappears, the dignity; security and independence people worked so hard to acquire will eventually disappear as well. The law offers safety nets that may allow you to formulate strategies to skirt a financial calamity. Corporations, limited partnerships and trusts will limit the liability of individuals. These legal structures and other advanced methods of asset protection should be in place as early as possible if you wish to protect your life savings. Many people engage in basic forms of asset protection that include titling properties as tenants in common, placing titles of real estate in the name of the children and in the name of the spouse, a trusted friend or a close relative. Many of these methods will crumble in the face of judicial challenge once fraud is shown.