Unsuitable Assets for Living Trusts
Besides there are some other assets that mostly stay out of the trust for different reasons. Those are:
- The personal checking account – some people won’t accept checks in the name of the trust.
- Circulating assets and other property that you buy or sell frequently – its often not worth the paperwork, meaning this kind of property is usually sold before you die and therefore will not have to go through probate.
- Individual retirement accounts such as IRA, 401(k), 403(b) – because a beneficiary is already named for those accounts, making probate unnecessary; in some cases it is illegal to transfer those accounts into a living trust.
- Cars and other automobiles – insurance companies might refuse insurance for a car that is owned by a trust. Often it is possible to register a car in joint tenancy or with a transfer-on-death arrangement, thus making probate unnecessary.
- Life insurance – the very nature of life insurance makes it necessary to name a beneficiary of the insurance. No probate is necessary. If you want to leave the insurance sum to a minor, you will have to name the minors child’s trust as a beneficiary. Ask your attorney for assistance.
- Joint tenancy property – the other tenant will receive the property upon death, no probate is necessary.
- Pay-on-death bank accounts, transfer-on-death real estate, community property with the right of survivorship – property titles of this sort pass without probate to the respective designated beneficiary, no probate is necessary.
- Employee stock options – typically the issuing company restricts the transfer of those stocks. Employee stock options might therefore not be transferable to a living trust. Additionally complex tax issues might arise, that require the help of a tax professional.