Unsuitable Assets for Living Trusts

There are some assets, that don’t necessarily have to be transferred to the living trust. Especially property of low value is often exempted from probate. Thus there is no need to put such property into the living trust.

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.