11/24/2024
Five items to leave out of a revocable living trust:
Vehicles. Whether it’s a 1963 Corvette, a Harley chopper or a prop plane, all that’s required to pass it on is a simple written instruction to transfer the title to a beneficiary. If it’s held in a trust, you could be vulnerable to lawsuits over accidents involving the vehicle.
Annuities and retirement accounts. A trust can turn non-taxed accounts into taxable ones. However, you can make the trust itself the beneficiary, so that these accounts pass directly to your trustees without an IRS agent crashing the wake.
Life insurance. No need to put this in a revocable trust. Simply name your beneficiaries within the policy. Or, create an irrevocable life insurance trust (ILIT) to avoid estate taxes.
If you’re worried about your loved ones having access to funds to cover your funeral expenses, or other costs and debts immediately after your passing, life insurance can offer a versatile solution to help support your family, providing coverage to potentially replace lost income or settle outstanding debts in the event of your death.
Opting for term life insurance ensures that as you age, your loved ones are protected from unexpected costs. With term life insurance, you can secure affordable coverage while managing your other financial responsibilities.
Assets held in other countries. This gets complicated, as you may not be permitted to place international assets in a trust. To find out if it’s possible, you'll need to consult an estate attorney licensed in the country where your international assets are located.
Checking and savings accounts. If you use these to pay monthly bills, you may run into financial complications unless you’re the trustee and granted full control of trust assets. There's a much easier route to take: Keep these accounts out of the trust.
