How do I set up a revocable trust with my children and still have control over the assets?
I own land that is going to be sold and my children are concerned that if they are not on the deed or in a trust that the asset when sold may not come to them if something happens to me before it closes. How do I protect their interest now.
You set up a revocable trust by hiring an attorney to draft a legal document (trust agreement or indenture). You can name your children as beneficiaries of the trust. Since you're contemplating a trust that is revocable it will be included in your estate in any event so you (and if you have a spouse he/she) can be beneficiaries as well. If you're looking to save estate taxes, this is not the route to go.
You can transfer land into a revocable trust but be certain to address with a real estate attorney what transfer taxes and other costs may be involved. Depending on the state, whether the property is mortgaged, and other factors, there may be taxes and transfer fees to consider. If your children are named beneficiaries of the trust they will benefit from the sale of the property by the trust (the trust, not you would sell the property based on what you are describing). However, since the trust is revocable, the value will be included in your estate if you die before the proceeds are distributed to the children. If you survive and the trust distributes the proceeds to the children it may be deemed a taxable gift at that time (the transfer to the trust will likely be an incomplete gift for gift tax purposes since you can revoke the trust).
A better approach then the questions you ask is to meet with an estate and tax planner and state your goals and objectives and let the adviser guide you as to what techniques you should consider to achieve these goals. Your conclusions as to use a revocable trust may not really accomplish your goals. Start with goals, then work backwards with professional guidance.
You did not mention the type of property. If it is a personal residence that would qualify for the home sale exclusion you should make sure that the use of the trust arrangement does not taint your ability to qualify for that benefit.
If the property is a commercial property you could transfer it to a limited liability company (or other entity) depending on state law. This may protect other assets from claims arising from the property. Your children could be members of the LLC and own it in that manner. You might use this type of planning to gift interests in the LLC owning the property before it is sold to your children to discount the value of the gifts to them.
The bottom line is your facts are not complete or clear. Your determination to use a revocable trust does not necessarily seem correct, and you need to get competent professional advice. Lay out your goals. Do you want any benefit from the value of the property? Do you have adequate resources if you gift it away? Is your estate taxable?
You need to address with your advisers:
insurance as well as property and casualty coverage.
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