What Assets Should—and Shouldn’t—Be Placed in Your Trust?

Creating a trust is a smart step in many estate plans. It helps you avoid probate, protect your privacy, and ensure your assets are distributed according to your wishes. But when it’s time to actually fund your trust, a common question comes up: What exactly should I put in it?

Not all assets belong in a trust. Some are perfect candidates. Others could create complications, tax issues, or may already have built-in beneficiary instructions that override your trust entirely. Below, we’ll walk through what typically goes in, what often stays out, and why titling and beneficiary designations matter more than many people realize.

The Purpose of a Trust

A trust is a legal arrangement that holds and manages your assets on behalf of your beneficiaries. When properly funded, a trust allows your assets to pass directly to your chosen heirs without going through probate court.

This is especially helpful for families who want to:

• Avoid delays and court fees
• Maintain privacy (Trusts are not public records)
• Provide for minors or individuals with special needs
• Protect complex estates, like those involving real estate or businesses
  

But even the most carefully drafted trust won’t work as intended unless it’s properly funded—that means knowing what to place into it.

Assets Commonly Placed in a Trust

Here are some of the most frequent (and appropriate) assets to place in a Revocable Living Trust:

1. Real Estate
   Your primary residence, vacation homes, and rental properties can all be retitled into your trust. This avoids probate in multiple states and ensures continued management if you become incapacitated.
2. Non-Retirement Investment Accounts
   Brokerage accounts and stocks not held in a retirement wrapper (like an IRA or 401(k)) are often placed in a trust to simplify management and distribution.
3. Business Interests
   If you own a small business, your ownership interest can often be assigned to your trust. This helps avoid disruption if something happens to you.
4. Valuable Personal Property
   Jewelry, artwork, antiques, or collectibles with significant value can be included—either through assignment or documentation—so they don’t get tied up in probate.
5. Bank Accounts (Sometimes)
   Large savings or money market accounts can be titled in the name of the trust. But everyday checking accounts may not need to be, depending on your usage and preferences.

Tip: Use a checklist when funding your trust to ensure nothing is overlooked.

Assets That May Not Belong in a Trust

While the list above might feel comprehensive, there are several asset types you should think twice about before placing in a trust:

• Retirement Accounts (IRAs, 401(k)s, 403(b)s):
  These accounts come with tax advantages that could be disrupted if transferred into a trust. Instead of retitling them, consider naming the trust as a beneficiary if that makes sense for your goals.
  
• Health Savings Accounts (HSAs):
  Like retirement accounts, HSAs are not meant to be owned by a trust. However, you can name a trust as a beneficiary if you want the funds to be directed that way upon your death.
  
• Vehicles:
  Transferring personal cars or everyday vehicles to a trust may cause title or insurance issues. In most cases, the value of a vehicle doesn’t justify the hassle—unless it’s a collector’s item or high-value asset.
  
• Everyday Bank Accounts:
  Your daily checking or spending account might be best left outside your trust. Instead, consider adding a Payable on Death (POD) designation to ensure it transfers smoothly to a chosen recipient.
  

In short, not every asset benefits from being placed in a trust. Some are better handled through careful titling or updated beneficiary forms.

Titling and Beneficiary Coordination: Why They Matter

Let’s say you have a beautifully written trust that outlines how your assets should be distributed. But your retirement account still names your ex-spouse as the beneficiary. Guess what? That account is going straight to your ex. That’s because beneficiary designations override your trust.

Proper estate planning isn’t just about putting assets in a trust. It’s also about coordinating how each asset is titled and who it names as beneficiary. Otherwise, your plan may unravel in ways you didn’t intend.

Here’s what to keep in mind:

• Review all account titles and deeds to ensure the trust is properly listed.
• Update beneficiary forms on retirement accounts, life insurance policies, and annuities.
• Coordinate naming conventions so there’s no conflict between your trust and outside designations.
  

Real Life Example‍

Sarah created a trust to care for her two kids and left instructions to divide her estate equally. But her 401(k) still named her brother—set up years ago before she had children. When she passed, that account (the largest one) went to her brother, not her kids. A simple update would’ve saved a huge portion of her estate from going off course.

Conclusion: Get Clarity Before You Fund a Trust

Setting up a trust is only half the job. Funding it properly—and knowing which assets truly belong in it—is what makes your estate plan effective. And while some assets clearly belong in a trust, others may require a different strategy, like a beneficiary designation or joint ownership.

Estate planning isn’t one-size-fits-all. Your goals, family dynamics, and financial situation all matter. Before moving your assets around, take the time to get clarity and double-check every detail. That way, your trust will actually do what it’s meant to do: protect your loved ones and preserve your intentions. Book a call with Anastasio Law Group and protect your legacy today.