Chapter 5: What Property May Be Included in a Trust?
When preparing an estate plan, families often ask what property can be placed in a living trust. The answer depends on the type of property, how it is currently owned, the terms of the trust, applicable law, and the family’s goals.
Many assets may be eligible for transfer to a trust, but eligibility does not necessarily mean that a transfer is appropriate. Different assets require different procedures, and some should be coordinated with a trust without being retitled in the trust’s name. Before changing ownership or beneficiary information, families should obtain advice from qualified legal, tax, financial, insurance, or other professionals familiar with their circumstances.
Homes and Other Real Estate
A primary residence is one of the most common assets families consider transferring to a revocable living trust. Rental homes, vacation properties, undeveloped land, commercial buildings, and other real estate may also be considered.
Transferring real estate generally requires more than listing the property in the trust documents. A legally prepared deed may need to be signed, notarized, and recorded with the appropriate government office. The property description and ownership information must be accurate.
Before transferring real estate, families should consider mortgages, insurance policies, property taxes, ownership exemptions, title requirements, and any restrictions connected with the property. Real estate located in another state or country may be governed by different laws and may require advice from a professional in that jurisdiction.
Bank and Taxable Investment Accounts
Checking accounts, savings accounts, certificates of deposit, money-market accounts, and certain other financial accounts may be transferred to a revocable living trust. Taxable brokerage and investment accounts may also be eligible.
The financial institution may require specific documents or account forms. Changing the account title should be coordinated with existing payable-on-death or transfer-on-death instructions. Families should confirm in writing whether an account has actually been retitled rather than assuming that providing the institution with a copy of the trust completed the process.
Cash and investment accounts can also raise questions about access during incapacity, tax reporting, investment authority, and the powers of a successor trustee.
Business Interests
Ownership interests in corporations, limited liability companies, partnerships, and privately held businesses may sometimes be transferred to a trust. However, business interests can be especially complicated.
Operating agreements, partnership agreements, shareholder agreements, buy-sell arrangements, licenses, lender requirements, and contracts may limit or regulate ownership transfers. Approval from other owners, a governing body, lender, regulator, or contracting party may be required.
Business owners should also consider who would exercise voting rights, manage the company during incapacity, receive distributions, and assume responsibility after death. A trust should be coordinated with the company’s succession plan rather than treated as a substitute for one.
Valuable Personal Property
Families may wish to include jewelry, artwork, collectibles, antiques, furniture, equipment, precious metals, or other valuable personal property in their estate-planning inventory.
The appropriate transfer method may depend on the property and local law. Valuable items should be clearly identified, especially when several beneficiaries might expect to receive them. Appraisals, photographs, purchase records, insurance information, and storage details can help document the property.
A general reference to personal belongings may not resolve disagreements over particular family heirlooms. Families should discuss how legally valid instructions for specific items can be coordinated with the trust and other estate-planning documents.
Intellectual Property and Digital Assets
Intellectual property can include copyrights, trademarks, patents, royalties, books, photographs, music, inventions, licensing rights, websites, and other creative or commercial interests. Ownership and transfer rights may be affected by employment agreements, publishing contracts, licenses, registrations, or business arrangements.
Digital assets may include online businesses, domain names, monetized content, digital files, virtual property, and certain online accounts. Access to these assets can involve service-provider agreements, privacy rules, security procedures, and specific legal authorizations.
Families should document what exists, who owns it, where records are maintained, and which professionals or business partners have relevant information. Passwords and sensitive credentials should be stored securely rather than placed in a widely distributed estate-planning document.
Assets Requiring Separate Analysis
Not every asset should be retitled in the name of a living trust. Some assets commonly requiring separate analysis include:
- Retirement accounts
- Life insurance policies
- Health savings accounts
- Jointly owned property
- Vehicles
- Employee benefits
- Payable-on-death accounts
- Transfer-on-death registrations
- Property supporting eligibility for government benefits
Retirement accounts generally operate through plan ownership and beneficiary designations. Attempting to transfer ownership improperly could produce serious tax consequences. Life insurance is also commonly controlled by policy ownership and beneficiary forms, although specialized planning may sometimes involve a trust.
Jointly held assets may pass according to the form of ownership. Vehicles may be subject to registration rules, lender requirements, insurance considerations, or simpler transfer procedures. Health savings accounts have their own ownership, beneficiary, and tax rules.
Improperly changing the ownership of any asset could affect taxes, financing, insurance coverage, creditor rights, government benefits, account access, or existing beneficiary designations. Families should not assume that every asset belongs in a trust simply because a trust has been created.
Create an Organized Property Inventory
Before meeting an estate-planning professional, families can prepare an inventory containing:
- A clear description of each asset
- Its approximate current value
- The current legal owner
- Its physical or legal location
- Relevant account or document information
- Existing beneficiary designations
- Mortgages, liens, loans, or other debts
- Insurance information
- The professional or institution holding relevant records
The inventory should be reviewed periodically as property is purchased, sold, refinanced, inherited, transferred, or moved. Sensitive information should be stored securely and shared only with authorized people.
Creating an inventory does not transfer property or replace professional advice. It helps families identify what they own, recognize missing information, and ask better questions. A qualified estate-planning attorney can advise which assets may be appropriate for a trust and how each transfer should be completed and coordinated with the rest of the estate plan.
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