What Assets Should You Put in a Trust?

When people hear the word "trust," they often assume it's only for the ultra-wealthy. In reality, trusts can be a practical estate-planning tool for many families, potentially helping simplify estate administration, maintain privacy, provide direction for how assets may be managed, and in some cases avoid probate, depending on applicable law and individual circumstances.

One of the most common questions people ask is: What assets should I put in a trust? The answer depends on your goals, but understanding which assets are commonly retitled into a trust, and which often are not, is a good place to start.

Why Fund a Trust?

Creating a trust is only the first step. To be effective, a trust generally needs to be funded, meaning certain assets may be retitled into the name of the trust or otherwise coordinated with the trust through beneficiary designations, as appropriate.

Proper funding may help:

• Avoid probate for assets titled in the trust, subject to state law
• Maintain privacy, as trust assets may avoid the public probate process
• Provide continuity if you become incapacitated
• Manage assets for children, beneficiaries, or loved ones
• Allow for more control over how and when heirs may receive assets

Assets Commonly Titled in a Trust

1. Real Estate

Real estate is one of the most common assets to place in a trust. This may include your primary residence, vacation homes, rental properties, and land or other real estate holdings.

Holding real estate in a trust may help avoid probate at death and may simplify management if incapacity occurs, depending on state law and how the trust is structured.

Important: Transferring real estate into a trust should be coordinated carefully. Deeds need to be retitled properly, and it's wise to review potential implications for mortgages, title insurance, and local property tax rules.

2. Taxable Brokerage Accounts

Non-retirement investment accounts are often good candidates for trust ownership: individual or joint brokerage accounts, trust investment accounts, and stocks, bonds, and mutual funds held outside retirement accounts. These assets can often be retitled relatively easily.

3. Bank Accounts

Depending on your goals, some bank accounts may be placed in trust, such as savings accounts, money market accounts, and non-operating cash reserves. Some people keep day-to-day checking outside the trust for convenience, while larger reserve balances may be held in trust.

4. Business Interests

Ownership interests in privately held businesses may warrant trust planning, including LLC interests, partnership interests, and shares of closely held corporations. These assets often benefit from coordinated legal and succession planning.

Assets Often Not Retitled Into a Trust

Not every asset should be moved into a trust.

1. Retirement Accounts

Assets such as IRAs, Roth IRAs, 401(k)s, 403(b)s, and pensions are generally not retitled into a revocable trust during life. Instead, these are usually coordinated through beneficiary designations, which may name individuals, or in some situations a trust, depending on the broader planning objective and advice from qualified professionals. Because beneficiary decisions can have major tax and estate implications, these should be reviewed carefully.

2. Health Savings Accounts (HSAs)

HSAs generally remain individually owned and pass by beneficiary designation.

3. Certain Vehicles

Cars, boats, and personal-use vehicles are often left outside a revocable trust, though state law and personal circumstances can influence this.

4. Everyday Personal Property

Household furnishings, jewelry, collectibles, and personal effects are often handled through trust provisions or related estate documents rather than individually retitling each item.

Assets Often Coordinated With a Trust (Rather Than Put In It)

Some assets may pass outside the trust but still work with your estate plan through beneficiary designations: life insurance, annuities, retirement accounts, payable-on-death (POD) accounts, and transfer-on-death (TOD) accounts. This coordination is just as important as trust funding.

Common Mistakes to Avoid

Creating a trust but never funding it. This is one of the most common problems. A trust without assets may not accomplish much.

Forgetting to update new accounts. People often create a trust, then open new accounts later outside the trust.

Not reviewing beneficiary designations. Beneficiary forms can override parts of your estate plan. They should be aligned.

Assuming a trust solves everything. Trusts can be powerful tools, but they work best as part of a broader estate plan that may include wills, powers of attorney, insurance planning, and tax considerations.

So, What Assets Should You Put in a Trust?

While every situation is different, assets often considered good candidates for trust ownership include real estate, taxable investment accounts, certain bank accounts, and business interests. Assets often coordinated rather than retitled include retirement accounts, life insurance, annuities, and HSAs. The right approach depends on your family, goals, tax picture, estate-planning objectives, and applicable state law.

Final Thoughts

A trust can be a valuable tool, but it is only as effective as the planning behind it. Properly titling assets, coordinating beneficiaries, and reviewing your plan over time can make a significant difference for your family.

If you're wondering whether your current assets are structured appropriately, or whether a trust may make sense as part of your broader financial plan, it may be worthwhile to have a conversation with your attorney, tax professional, and financial advisor.

This article is for general educational and estate-planning information only. It is not intended as legal, tax, or individualized financial advice. Trust and estate-planning decisions should be made based on your personal circumstances and in consultation with qualified legal and tax professionals.