Protecting Your Family And Your Future For Over 20 Years

What Should Be In A Trust

One frequently asked question I get is “what should be in my trust?” This article is devoted to providing you with a sample of the items that should be in your trust.

Your Trust must be funded to benefit you and your heirs. What this means is that some of your assets must have the title (ownership) transferred to the Trust. This is done by changing the ownership of certain assets to, for example: “John Smith and Jill Smith, as Trustees of The John and Jill Smith Trust established June 15, 2006.”

If your trust is not properly funded, your estate could have to go through probate even though you have a Trust.

What to Transfer to a Trust

In Trust (Re-Titled):

  • Real Property
  • Stocks & Bonds Outside of Retirement
  • Accounts Checking, Savings Accounts/CD’s
  • Business Interests (consult an attorney)
  • Promissory Notes and Loans
  • Boats, Expensive Automobiles
  • Expensive Personal Property
  • Safe Deposit Boxes

Not in Trust (Not Re-Titled)

  • Retirement or Tax-Deferred Accounts
  • Life Insurance (except for life insurance trusts)
  • Annuities
  • Joint Tenancy Property (consult an attorney)

Naming Trust as Beneficiary

Some of your assets should not be re-titled because of change of ownership issues, such as, retirement accounts because to change ownership will cause taxes to be due. Those assets that do not get re-titled can have the Trust listed as a beneficiary or second beneficiary (i.e.- The Trustee or Successor Trustee under The John and Jill Smith

Trust established June 15, 2006 by John Smith and Jill Smith, Trustors). When to name a Trust beneficiary of assets not transferred into the Trust is a complex subject. Married couples often want to name their spouse as their first beneficiary on any retirement accounts because of the right to greater deferment of taxes. If there are minor children to consider, then often naming the Trust as a second or first beneficiary makes sense; that way the Trustee can manage the funds. However, there are rules that pertain to what types of Trusts can be a beneficiary of retirement accounts and still allow tax deferral. Also, different issues arise when a charity is named as an additional beneficiary of the Trust. If a charity is a beneficiary, then the retirement account has to pay out to the Trust and deferment of taxes is lost.