A revocable living trust is a useful estate planning tool, allowing you to avoid probate and ensure your assets get distributed as you wish after your death. For your trust to work as intended, you need to transfer ownership of the right assets into it.
There are three key types of assets to consider placing in your revocable trust.
1. Personal property
Your personal property includes valuables such as jewelry, art, antiques and collectibles. These items can be contentious for heirs and difficult for probate courts to appraise. By putting them in your trust, you ensure they will go straight to your desired beneficiaries without the need for court involvement. This helps avoid family disputes down the road.
2. Financial accounts
Any financial accounts with beneficiary designations, such as life insurance policies and retirement accounts, will pass outside of probate regardless of being in your trust. But you should include any standard bank accounts and brokerage accounts in your trust to avoid the delays and expenses of probate.
3. Real estate
For real estate including your home, vacation property or rental investments, you need to formally transfer ownership into your revocable living trust to keep them out of probate. This requires updating the titles with your county recorder’s office. According to the U.S. Census Bureau, the current U.S. homeownership rate is 66%, making this an important factor in your estate plan.
By taking steps to include your personal property, accounts and real estate in your revocable trust, you can maximize its effectiveness as part of your estate plan.