To help your estate plans succeed, consider the right estate planning method to pass on your property. A trust can be beneficial to your family, but it is not always the best way to convey some assets to your loved ones.
Kiplinger describes a few examples of property that should not or probably legally cannot go into a trust.
Automobiles and other vehicles
Some people assign ownership of old, collectible vehicles to a trust. However, many automobiles used for everyday purposes are not suitable for a trust.
For one thing, it is generally not worth the trouble to assign your automobile to a trust since vehicles usually do not pass through probate. Also, assigning a vehicle to a trust means you must retitle the vehicle, which can cost you a sales tax fee under Virginia law.
Bank accounts
If you use a checking account to pay your bills, keeping the account out of your trust may be the more beneficial move. You could lose control of the account unless you also act as trustee.
In any case, using a trust is probably not necessary. Some people pass on their accounts with the use of a pay-on-death provision that transfers the account to an assigned beneficiary.
Retirement accounts
If you are putting money away in a 401(k) or an IRA, be aware of taxes you might pay if you put your retirement account into a trust. You would have to withdraw the money, which could trigger certain taxes and early withdrawal penalties. A possible alternative is to assign your trust as a beneficiary.
It may consume time to check each of your assets for suitability to enter your trust, but the end result can be worth it to prevent inheritance delays.
