Establishing a trust is an effective way to manage your assets and ensure their smooth transfer. However, deciding which assets to place in your trust can be challenging. Some assets are well-suited for trusts, while others are better left outside.
Assets suitable for your trust
Real estate, including your primary residence or rental properties, generally fits well in a trust. Placing these assets in your trust helps avoid probate and maintains privacy. Financial accounts such as bank accounts, stocks, and bonds also integrate efficiently into trusts, allowing faster access for your designated beneficiaries.
Valuable personal belongings like jewelry, art, or collectibles can be included in your trust if you want to control their distribution. Additionally, business interests or shares should be placed in trusts to facilitate orderly succession.
Assets typically excluded from trusts
Certain assets are usually better left out. Retirement accounts, such as 401(k)s and IRAs, generally remain outside trusts due to specific tax regulations and beneficiary designations. Life insurance policies also usually remain separate because beneficiaries are named directly.
In Texas, vehicles can be placed in a trust, but many people prefer using a transfer-on-death deed, which allows the vehicle to pass directly to a beneficiary without probate, making it a simpler option.
How to determine what fits
Assess your financial situation and objectives. Consider which assets you want to protect, how quickly you want them to transfer, and how to avoid probate delays. Consulting a financial or trust advisor can guide you toward the right decisions.
Maximizing your trust’s benefits
Selecting appropriate assets saves time and reduces complications. Including key assets in your trust gives you control over their distribution and minimizes legal hassles. Conversely, placing unsuitable assets in your trust can create tax issues or delays.
Apply these strategies to make your trust work effectively for your needs.
