Can I Put Jointly Held Property in a Living Trust?

By Jane Meggitt

Generally, you place assets into a living trust for your management, use and benefit during your lifetime, with those assets passing to beneficiaries after your death, without going through the probate process. These assets are titled in the name of the trust, typically with you as the trustee. While you might put jointly-held property into a living trust for a variety of reasons, the overriding purpose should not be to avoid probate, since jointly held property normally passes directly to the joint owner at death without going through probate.

Generally, you place assets into a living trust for your management, use and benefit during your lifetime, with those assets passing to beneficiaries after your death, without going through the probate process. These assets are titled in the name of the trust, typically with you as the trustee. While you might put jointly-held property into a living trust for a variety of reasons, the overriding purpose should not be to avoid probate, since jointly held property normally passes directly to the joint owner at death without going through probate.

Jointly-Owned Property

If you hold property jointly with another person, depending on how the property is titled, it should automatically pass to that individual after your death. This would include bank accounts titled as joint owners with right of survivorship or real estate owned jointly or as tenants in common. Although jointly-owned property passes automatically, if co-owners die simultaneously, such as spouses in an accident, that asset may be subject to probate if not held in a trust.

Protect your loved ones. Start My Estate Plan

Living Trusts

The most common type of living trust, the revocable living trust, may be changed or terminated at any time by the individual creating it, known as the grantor. Assets placed in the trust, such as a house, stocks and bonds or bank accounts, belong to the trust and must be re-titled as such. However, by naming yourself as trustee, you have the benefit of these assets during your lifetime. The trust also names beneficiaries who receive the assets after your death. Proceeds from the trust during your lifetime are reported on your personal income tax return. You can have your attorney draft a trust agreement or use a trust kit from an online document provider.

Joint Living Trusts

Rather than creating individual trusts, spouses may create joint living trusts, with both husband and wife acting as grantors and trustees. Both jointly and individually-owned assets may be placed in such trusts. Each person may revoke the trust during his or her lifetime. If either person revokes, any property in the trust goes back to the way it was titled before being placed in the trust.

Other Exceptions to Probate

For many people, a major reason for establishing a living trust is to avoid property going through the probate process after their death. However, property going through probate is generally titled solely in the decedent's name. You may also arrange for transfer-on-death provisions for beneficiaries for brokerage and mutual fund accounts or stock shares, or payable-on-death provisions for bank accounts. These assets then pass directly to the beneficiaries, bypassing probate. Certain assets, such as IRAs, 401(k)s and life insurance policies, do not go through probate, as you name the beneficiaries for these instruments.

Protect your loved ones. Start My Estate Plan
Living Trust Procedures

References

Related articles

The Pros & Cons of Making a Will

A will is a written legal document that describes how you would like to distribute your property after you die. However, there are both pros and cons to making a will and whether drafting a will is beneficial to you may depend on your particular circumstances. In addition, there are other estate planning tools that you can use to handle your property following your death, such as creating a living trust. If you do not have a will or other estate planning document in place upon death, your property will be distributed according to your state’s rules.

What Are the Rules for Changing a Living Trust After a Spouse Dies?

A living trust is a legal vehicle you can use to transfer property upon your death that avoids probate. If you and your spouse create a living trust together, you need your spouse's permission to change trust terms. After your spouse dies, you can only change the part of the trust that relates to your property.

How to Protect Your Assets From Probate

Probate is a time-consuming process that can tie up your property for months and disclose the contents of your estate in public records. It can also be quite expensive due to court costs and attorney fees. If your heirs require access to your property shortly after your death, you have several options to ensure the property is kept out of probate.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Items That Are Not Part of a Probate Estate in Pennsylvania

Not all of a decedent's property in Pennsylvania falls under the state's probate laws. Whether or not a particular ...

How to Set Up a Joint Revocable Trust

A joint revocable trust is a type of living trust where you with your spouse, or you with another party, assign ...

How to Form a Revocable Trust

A revocable trust is an agreement that dictates how your assets will be distributed, both during your lifetime and ...

The Advantages of Changing a Bank Account Title to a Living Trust

A living trust, which is created during the grantor's lifetime, is an estate planning tool used as a holding area for ...

Browse by category
Ready to Begin? GET STARTED