How to Transfer an Inheritance to a Trust

By John Cromwell

An inheritance may be placed in a trust in two ways. Prior to death, a person may create a trust to ensure the inheritance is quickly transferred to the beneficiaries and doesn’t have to go through probate. Or a person may draft a will so that when he dies, a portion of his property is placed into a trust. The process of transferring the property into the trust is the same no matter how the trust is created. The trust becomes effective when property is transferred into it.

An inheritance may be placed in a trust in two ways. Prior to death, a person may create a trust to ensure the inheritance is quickly transferred to the beneficiaries and doesn’t have to go through probate. Or a person may draft a will so that when he dies, a portion of his property is placed into a trust. The process of transferring the property into the trust is the same no matter how the trust is created. The trust becomes effective when property is transferred into it.

Step 1

Identify the trustee. The trustee is responsible for managing the trust property and distributing the assets to the beneficiary in the manner defined by the trust. The trustee holds all of the trust property in his name on behalf of the trust; therefore, all the property will ultimately have to be transferred to him.

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Step 2

Record the transfer of any real estate to the trustee at the appropriate Recorder’s Office. Recording the deed provides notice to the general public that the trust owns title to the land. The appropriate Recorder’s Office is generally the one in the county where the property is located. The process of recording varies by state. Consider hiring an attorney or acquiring a generated transfer deed through an online document provider.

Step 3

Sign over financial securities to the trustee. Financial securities, such as stocks and bonds, are generally held by a third-party financial institution prior to being donated to the trust. This agent will generally continue to hold the securities for the trust, but the ability to control those assets will be transferred to the trustee. To signify this change, you will have to submit to the financial agency a letter of direction. This letter should inform the agency what financial assets have been transferred to the trust, identify the trustee and cause you to surrender all rights to the investment in favor of the trust.

Step 4

Assign personal trust property to the trustee. Personal property, such as jewelry or machinery, does not have formal titles or require a formal filing of documents with the state to transfer ownership. Be sure to list in the document that creates the trust all personal property you intend to transfer. Consider drafting an assignment, or a formal document stating that a specific item is being transferred to the trust, for high value personal property.

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References

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