Can I Invest Inside a Revocable Trust in North Palm Beach?

If you enjoy investing or see it as an important part of your retirement strategy, you might be curious about investing within your revocable trust. However, you might also be wary of investing in this manner. Perhaps you’re worried about the implications of investing within a trust vs. investing as an individual. What are the differences? Can an estate planning attorney in North Palm Beach help you learn more about the next steps?

You Can Transfer Your Existing Stocks Into a Revocable Trust

The first step for many investors is to transfer their existing portfolio into a new revocable trust. Transferring these stocks into your trust should not trigger any capital gains taxes. However, this only applies if you do not sell your stocks. If you want to avoid triggering capital gains implications, transfer your stocks to the trust without selling them first.

Once you transfer the stocks to your trust, you will cease to be their legal owner. Instead, your trust will own your stocks. You may need to fill out a form with your financial institution to formalize the legal transfer of ownership, but this is not overly complex.

How Do I Buy Stocks Inside My Revocable Trust?

To purchase new stocks inside a trust, you must “fund” the trust with dollars. You can then use those dollars to buy stocks in the same way you would as an individual. If you have not yet purchased stocks with your trust assets, you may need to set up a separate, new brokerage account under your trust’s name.

Financial institutions may have specific rules regarding the creation of brokerage accounts for trusts. You may need to contact your institution, explain your plans, and download the appropriate forms.

How Is Investing in a Revocable Trust Different From Investing as an Individual? 

Investing in a revocable trust is very similar to investing as an individual. You can use your Social Security Number to report income and capital gains. Aside from the slightly different setup process, there are minimal tax implications compared to investing as an individual. Because the trust’s stocks are linked with your Social Security Number and your personal estate, they still benefit from the “step-up in basis” under Internal Revenue Service regulations.

In other words, your beneficiaries won’t pay any capital gains when they inherit the stocks via the trust. In addition, stocks held inside a trust skip probate. This allows your beneficiaries to seamlessly inherit the wealth without spending time and money on a complex court process. If you invest in stocks as an individual, the assets would pass through probate before they reach your beneficiaries.

Can an Estate Planning Attorney in North Palm Beach Help Me?

If you’re curious about investing inside your revocable trust in North Palm Beach, consider speaking with an experienced estate planning attorney. Whether you want to transfer your existing stock portfolio into your trust or set up a revocable trust for the first time, a legal professional can offer guidance. Continue this conversation with Kitroser Lewis & Mighdoll today.

Sources: 

floridabar.org/public/consumer/pamphlet028/

investopedia.com/terms/s/stepupinbasis.asp