How to Transfer Assets to a Trust in Virginia

Creating a trust is an important first step toward protecting your family’s future, but what comes next? If you’re like many Virginia residents, you might wonder how to transfer assets to a trust. While this blog offers an overview of the process, it’s crucial to consult with an experienced trust attorney to ensure everything is done correctly.

Whether you’re managing your family home in Richmond, a vacation property in Virginia Beach, or investment accounts, an attorney can guide you through the specific steps. By understanding the basics, you can feel more confident when working with a professional to finalize your estate plan.

Getting Started: Gathering Documentation

Before you can begin transferring your assets into the trust, it’s essential to gather all necessary documents, such as your trust document, property deeds, vehicle titles, and financial account statements. A trust only protects assets that are properly transferred to it, so this step is crucial for ensuring your trust is effective.

If you don’t transfer assets (fund the trust), those assets could still be subject to probate, defeating the purpose of creating the trust. Completing the funding process ensures your assets are managed as intended.

With your documentation in order, you’re ready to begin transferring specific assets into your trust. One of the first and most important steps is transferring any real estate you own.

Real Estate Transfers in Virginia

Transferring real estate into your trust involves a few key steps:

• Obtain a new deed form that transfers ownership from your name to the trust’s name
• Ensure the exact legal name of your trust is included on the new deed
• Sign the deed in front of a notary public
• Record the new deed at your local county clerk’s office
• Pay any necessary recording fees

Before completing the transfer, it’s important to check with your mortgage lender. Some mortgages include “due on sale” clauses, which could trigger the full balance to become due if the property is transferred to a trust. An attorney can help you navigate this issue if your lender raises concerns.

After transferring the property, notify your home insurance provider to update your policy. They may request a copy of your Certification of Trust, which is a summary of your full trust document, to make changes to the policy to reflect the trust as the new owner.

Transferring Financial Accounts

To transfer financial assets like bank accounts, brokerage accounts, or investment accounts:

• Contact your financial institution to inform them of your intention to transfer ownership to your trust
• Complete their specific forms for changing account ownership
• Provide a copy of your trust documentation
• Update the account titles to reflect the trust’s ownership

Many financial institutions require a Certification of Trust to verify the trust’s terms and the trustee’s powers. Some institutions may allow you to retain the same account numbers, while others might require issuing new ones.

If you have joint accounts, be sure to handle the ownership transfer carefully so both parties retain access to the account after the change.

Transferring Vehicles in Virginia

To transfer your vehicle to your trust, follow these steps:

• Complete the Assignment of Title by Owner section on your current title, listing the trust as the buyer.
• Submit a Virginia DMV Application for Certificate of Title (Form VSA 17A) in the trust’s name.
• If applicable, file a Purchaser’s Statement of Tax Exemption (Form SUT 3) to avoid paying sales or use tax.
• Pay the necessary title transfer fees and update your auto insurance.

You might also want to consider whether transferring certain vehicles makes sense for liability or insurance purposes.

Tax Considerations for Asset Transfers

When transferring assets to a trust in Virginia, tax implications vary. Real estate transfers to revocable trusts typically avoid transfer taxes, but irrevocable trusts may trigger gift taxes. Stocks, bonds, and most business interests are generally tax-neutral, though you should check operating agreements for restrictions.

Virginia doesn’t have an estate tax, but federal taxes apply for estates over $13 million (2024). Property taxes usually remain unchanged, but it’s worth confirming with local authorities. Always consult a tax advisor to ensure compliance with federal and state laws.

Timing Your Asset Transfers

Strategically timing your transfers can affect both asset protection and potential tax consequences. Consider these two approaches:

Immediate Transfers

• High-value assets needing immediate protection: Quickly place valuable assets into the trust to safeguard them.
• Property that may appreciate significantly: Transferring now locks in lower valuation for tax purposes.
• Assets with clear titles and no mortgage or lien restrictions: These assets can be transferred smoothly without additional legal steps.

Phased Transfers

• Business interests requiring partner approval or complex structuring: Gradual transfers may accommodate partner or contractual restrictions.
• Properties undergoing mortgage refinancing or other legal transactions: Wait for the process to complete before transferring ownership.
• Assets that generate seasonal income or are subject to restrictions: Timing the transfer around income cycles or legal restrictions ensures smooth transitions

What About Retirement Accounts

When it comes to retirement accounts like IRAs and 401(k)s, you cannot directly transfer them to a trust. However, you can name the trust as a beneficiary. This requires careful planning because:

• Required Minimum Distributions (RMDs): Naming a trust as a beneficiary could affect how RMDs are calculated.
• Income Tax: Distributions to the trust may be taxed at a higher rate, so consulting a financial advisor is crucial.
• ERISA Spousal Rights: Spouses may have certain rights under the Employee Retirement Income Security Act (ERISA), so you’ll need to ensure your trust complies with these provisions.

When designating beneficiaries, it’s common to name a spouse as the primary beneficiary and the trust as a contingent beneficiary. This structure ensures that your spouse can access the account if you pass away first, but if they are no longer living, the trust will manage the proceeds according to your estate plan.

Be sure to consult with Virginia estate planning attorneys or tax advisors, as retirement accounts have specific rules, especially under recent changes like the SECURE Act.

Ongoing Trust Management

To keep your trust effective, it’s essential to:

• Maintain copies of new deeds, titles, and account statements
• Regularly review and update your trust as you acquire new assets
• Stay on top of changes in your financial and legal situation

After funding your trust, remember that any new assets you acquire should also be titled in the name of your trust. This could save you steps later and ensure that your trust remains fully funded.

Keep in mind that transferring assets to your trust is an ongoing process, not a one-time event. As you accumulate new assets or make changes to existing ones, you’ll need to transfer those to your trust to maintain its protections. If you feel unsure or face complex situations, consulting with an experienced trust attorney can help ensure the transfers are completed smoothly and in compliance with Virginia law.

Take the Next Step in Protecting Your Assets

Understanding how to transfer assets to your trust is a key step, and ensuring each transfer is handled smoothly can help you avoid complications down the road. At McCarthy & Akers, we’re here to support you through the process—from document preparation to working with financial institutions—so you can feel confident that everything is done right.

Our Virginia estate planning attorneys work with you to review your current assets and identify what should be transferred. We prepare all necessary legal documentation and guide you through the transfer process for each type of asset. Throughout our work together, we ensure compliance with Virginia laws and regulations while helping you maintain proper records of all transfers.

With offices in Strasburg, Woodstock, Front Royal, Winchester, Manassas, and Warrenton, we make it convenient to get the help you need. Take action today to protect your assets and secure your legacy.

If you’ve been searching online for a “trust attorney near me,” contact us instead at (540) 722-2181(540) 722-2181 or complete our confidential online form to schedule your consultation. Let us help you complete your trust funding properly and give you peace of mind knowing your assets are protected.

Copyright © 2024. McCarthy & Akers, PLC | Estate Planning Attorneys. All rights reserved.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.

McCarthy & Akers, PLC | Estate Planning Attorneys
302 W Boscawen St.
Winchester, VA 22601
(540) 722-2181(540) 722-2181
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