After you acquire a rental property, it is important to take a close look at your estate plan. There may be many reasons why it would make sense to modify your existing plan with something that takes the new asset into account. If you decide that you want to hold the rental property inside a trust, your next step is determining whether you want to use a separate trust for the rental property, or whether you want to put it into your already existing trust. An experienced attorney can help you with making this decision.
Four Reasons to Use a Separate Trust to Hold a Rental Property
Since you already took the time to create a trust as part of your estate plan, you may be wondering why you would ever need to consider using a separate trust for your rental property. The truth is, you may not need a separate trust. In some cases, however, such as the ones below, a separate trust may be preferable:
- If you want a different person to be in control of the asset prior to its distribution, a new trust may be the way to go. You can appoint different trustees for each of your two trusts.
- If you have a reason for wanting to keep the rental property separate from your other trust property, such as privacy. You may not want all of your beneficiaries to know about this rental property. In those cases, using two different trusts may be your best option.
- If your current trust was set up for a very specific purpose, such as the care and support of a specific individual, you may choose to keep your assets separate and in different trusts.
- If your estate plan involves more sophisticated estate tax planning for a married couple, you may want the asset to be held in one spouse’s individual trust rather than a joint trust.
To learn more about the best way to update your estate plan after acquiring a rental property, we encourage you to reach out. Send us an email today!