What assets should I include in my trust in California?
Include major assets like real estate, financial accounts, and business interests in your trust, while considering specific assets individually based on your goals. Proper trust funding is essential for avoiding probate and achieving your estate planning objectives.
Primary Assets to Include in Your Trust
Real Estate
Your home, rental properties, and vacation homes should typically be transferred to your trust:
- Primary residence: Maintains California property tax benefits under Proposition 13
- Rental properties: Provides seamless management during incapacity
- Vacation homes: Avoids out-of-state probate proceedings
- Undeveloped land: Simplifies future management and transfer
Financial Accounts
Bank and investment accounts benefit from trust ownership:
- Checking and savings accounts: Immediate successor trustee access
- Brokerage accounts: Continued investment management
- CDs and money market accounts: Seamless renewals and management
- Exception: Retirement accounts often work better with direct beneficiary designations
Business Interests
Business ownership should generally be transferred to trusts:
- Closely held corporations: Stock transfers to trust ownership
- Partnership interests: Provides continuity planning
- LLC membership interests: Avoids operating agreement complications
- Professional practices: Subject to licensing restrictions
Assets Requiring Special Consideration
Personal Property
Handle personal property strategically:
- High-value items: Jewelry, art, collectibles may warrant direct trust transfer
- Household items: Often handled through pour-over will
- Vehicles: Consider practical access issues for trustees
- Personal property memorandum: Detail specific item distributions
Life Insurance
Insurance requires careful beneficiary planning:
- Naming trust as beneficiary: Provides liquidity for trust expenses
- Tax considerations: May affect estate tax calculations
- Irrevocable life insurance trusts: For large policies requiring tax planning
Trust-Specific Asset Considerations
Revocable Living Trusts
Most assets work well in revocable living trusts:
- Real estate, financial accounts, and business interests
- High-value personal property
- Assets requiring management during incapacity
Irrevocable Trusts
Irrevocable trusts serve specific planning goals:
- Life insurance trusts: Remove policy values from taxable estate
- Grantor retained annuity trusts: Transfer appreciating assets at reduced gift values
- Charitable trusts: Achieve philanthropic and tax planning goals
Special Needs Trusts
Fund special needs trusts carefully:
- Life insurance proceeds
- Income-producing property
- Investment accounts for ongoing support
- Assets that won't jeopardize government benefits
The Trust Funding Process
Creating the trust is only the beginning - proper funding is crucial:
- Real estate: Record new deeds transferring property to trust
- Bank accounts: Retitle accounts or change ownership designations
- Investment accounts: Work with brokers to transfer ownership
- Business interests: Execute assignment documents and update corporate records
Assets That May Not Belong in Trusts
Some assets work better outside trusts:
- Retirement accounts: IRAs and 401(k)s with direct beneficiary designations
- Health savings accounts: Better with spousal or individual ownership
- Professional licenses: May not be transferable
- Small personal items: Impractical to formally transfer
Ongoing Trust Asset Management
Your trust assets require ongoing attention:
- New asset acquisitions: Transfer to trust immediately
- Asset sales: Ensure proceeds stay in trust
- Regular reviews: Confirm all assets remain properly titled
- Insurance updates: Adjust coverage for trust-owned assets
Working with Estate Planning Professionals
Experienced California estate planning attorneys help you:
- Determine which assets belong in trusts
- Execute proper transfer documents
- Coordinate with financial institutions
- Plan for tax implications of asset transfers
- Ensure ongoing compliance and maintenance
Key takeaway: Successful trust planning requires careful asset selection and proper funding procedures. Work with qualified professionals to ensure your trust assets align with your comprehensive estate planning goals and provide the intended benefits for your beneficiaries.
