Estate planning is a critical part of ensuring that your assets are secure and transitioned properly to the people or organizations you want, and a living trust can be used as a valuable instrument in estate planning. Trusts offer several significant advantages, like allowing you to dictate the distribution of your assets. However, it’s also important to understand what assets should not be included and why; every individual estate is unique and needs personalized attention from a trusted Vista estate planning attorney.
A trust lets your assets be transferred to specific individuals, called beneficiaries, after your death. The person who establishes the trust is the settlor; the person or persons who are set to receive the assets of the trust are the beneficiaries, and a trustee is the individual appointed to manage the trust’s assets according to the terms outlined in the trust document. Typically, trusts will fall into one of two categories: revocable trust and irrevocable trust.
A revocable trust gives you (the settlor) the power to change the terms of the trust whenever you choose, while an irrevocable trust cannot be changed or modified at any time without the formal approval of all the trust’s beneficiaries.
There are several types of assets that should not be included in trusts for various reasons:
Now that we’ve discussed all the things not to include in a trust, it’s important to also list the different kinds of assets that are typically included in a trust. Assets in a living trust most commonly include the following:
Be sure to speak with an experienced Vista estate planning attorney about which type of trust is suited for your particular assets.
A: Bank accounts can be included in a trust, but not all accounts should be. For example, joint accounts with the right of survivorship automatically pass to the surviving account holder, which would negate the need to be included in a trust. Oftentimes, the financial institution will request you to provide the certification of trust, which you should receive from the attorney who drafted your living trust and effectively verifies your trust.
A: Certain assets, such as IRAs, 401(k)s, life insurance policies, and Social Security benefits, to name a few, may not be suitable for inclusion in a trust. Tangible personal property with sentimental value (family heirlooms, jewelry, etc.) may also be better addressed in a will.
A: While avoiding probate is a major advantage of putting your house in a trust, there are also some major disadvantages. First, maintaining a trust is typically much more expensive than creating a will. Second, if the house is placed in an irrevocable trust, then you cannot change the terms of the trust or change the beneficiaries.
A: Yes, however, it cannot be done on behalf of the trustee but rather on behalf of the trust and in the interests of all beneficiaries. As the trustee, you would be limited to withdrawing money strictly on an as-needed basis to cover necessary expenses.
Working with a trusted estate planning attorney can go a long way because every individual estate is unique and requires a nuanced approach to understand what assets should be and should not be included in your living trust. Consulting with the experienced Vista estate planning attorneys at Paul V.L. Campo Attorney at Law, can provide you with personalized guidance that aligns specifically with your assets and goals. Contact us today.