Assets You Should Not Place in a Living Trust

Introduction

• Importance of funding a living trust to bypass probate.
• Discussion on specific assets that should not be in a living trust due to tax ramifications and potential liabilities.

Vehicles

• Types: Cars, boats, equipment.
• Why Not?:
  • Estate Transfer: Simple to transfer to beneficiary with a death certificate.
  • Lawsuits & Asset Protection: Potential creditors can target the trust if the vehicle is in its name.
  • Insurance Complications: Insurance companies may struggle to insure vehicles titled in a trust.

Annuities (401k, IRA)

• Self-Contained Trust Agreements: Treat these as separate from the living trust.
• Tax Consequences: Changing ownership to trust may lead to taxable events.
• Beneficiary Designation: List the trust as the beneficiary to ensure funds are managed per trust terms.
• Distribution: Specify conditions in trust for stretching asset control post-death to cater to younger beneficiaries.

Life Insurance

• Beneficiary Designation: Important for bypassing probate.
• Spouse as Primary, Trust as Contingent Beneficiary: Ensures proceeds follow estate plan in spouse's absence.
• Irrevocable Life Insurance Trust: Consider for high-value policies to avoid estate tax inclusion.

Conclusion

• Fully fund living trust for all other assets to prevent probate.
• Ensure proper beneficiary designations align with estate planning goals.