Hi there. Bridget Mackay at the Law Offices of Bridget Mackay here in Petaluma, California.
Today I want to talk to you about the four assets that don’t actually go into your Trust. So, there’s sort of a myth out there when you get your Trust done, hopefully by a qualified attorney, that all of your assets are going to get, go into that Trust or be funded to that Trust. If you have questions about funding, I’ve done a blog before about it. What assets go in, what that process involves. So, check it out.
Here are four things that don’t go in there. Number one, typically retirement accounts. So, IRA’s, 401k’s, qualified annuities and why? Because these have special rules on them from the IRS about how they’re going to be taxed.
If the Trust and the Trust can’t own these assets. So, the only way it goes into your Trust is you name the Trust as the beneficiary of these assets. Typically, they don’t go into your Trust. You’re just going to name beneficiaries on them. If you pass away, this asset is going to go typically to your spouse but if you don’t have a spouse, you’ll name a primary beneficiary. Maybe your kids, maybe a friend, maybe a charity. We always advise to have a contingent beneficiary in place should something more catastrophic happen. So that’s number one.
Number two is life insurance. Again, life insurance as a beneficiary designated asset of yours. So, all your life insurances should have a beneficiary designated for when you die. It could be the Trust. And that wouldn’t have tax consequences if the Trust was the beneficiary like it would with a retirement type account. But most folks don’t name the Trust and they’ll name a certain individual to get their life insurance policy at their death.
The third and this is surprising with many clients because we have title to our cars or any other vehicle, boats, motorcycles, trucks. Vehicles typically are not titled In the name of your Trust. We usually recommend clients just stay on title and if you have a spouse, name it as an “or” so you or your spouse. Because, at your death it’s much easier to transfer trial through your department of motor vehicles if you’re not having the title of the Trust on there. Those typically also don’t go into your Trust.
And then the fourth is personal property. Rarely do we put personal property in our Trust. Number one, typically personal property don’t doesn’t have any kind of documentation where you transfer title. Like your jewelry doesn’t, your baseball card collection doesn’t, your Lladró collection doesn’t. Personal property items are typically dealt with, with kind of a generalized paragraph in your Trust that says all my personal property goes to my children. Unless I leave behind a memorandum stating otherwise. And typically, that document at least for our clients, is something we give them and it’s simply here’s some instructions to my trustee. These things of my personal property I want to go to these individuals. And then it’s just dated and signed, it doesn’t have to be notarized. It doesn’t have to be made a part of the Trust.
Those are the four things that don’t go into your Trust. If you have any questions or you have a special asset, I recommend you talk to your estate planning attorney. If you don’t have one of those, hire an experienced estate planning attorney to resolve any of those issues.