As the intricacies of financial planning continue to evolve, trusts have become an instrumental tool in wealth preservation, providing individuals a sense of security and control over their assets. However, the question of which assets to transfer into a trust and which to keep out often causes a significant dilemma. Here, we'll examine the types of assets most beneficial to place in a trust and those better kept outside of it.

First, it’s vital to understand the primary benefits of a trust. A trust fund allows a trustee to manage assets on behalf of a beneficiary. By transferring assets into a trust, you can provide for dependents, minimize estate taxes, and avoid probate, a process that can be lengthy and costly. GoGo Estate provides all of its trust customers with detailed guides on how to transfer assets into trust.

Assets Suitable for Trusts

  1. Real Estate: Your home and other real estate holdings are excellent candidates for trust transfer. Putting your properties in a trust helps avoid probate, provides seamless transition of ownership, and protects your privacy, as trusts don’t typically become part of the public record.
  2. Investment Accounts: Stocks, bonds, and other investment assets can also be transferred into a trust. This helps manage capital gains taxes and offers a streamlined inheritance process.
  3. Business Interests: For individuals who own a business, transferring it into a trust can ensure continuity and mitigate potential disputes after their death.
  4. Collectibles and Art: High-value collectibles and artworks can appreciate over time, making them potential trust assets. They can be efficiently passed to the next generation via a trust.
  5. Life Insurance Policies: A life insurance policy can be placed into a trust, known as an irrevocable life insurance trust (ILIT). It removes the policy from your taxable estate, thereby potentially reducing estate taxes. At this time, GoGo Estate does not allow customers to purchase ILITs. However, we anticipate providing this type of planning in the future, so be sure to look for updates.

Assets Not Suitable for Trusts

  1. Retirement Accounts: Retirement accounts, such as 401(k)s, IRAs, and pension plans, are typically not ideal for trust inclusion. These accounts already have designated beneficiaries and enjoy tax-deferred growth, which may be disrupted if transferred into a trust.
  2. Motor Vehicles: Vehicles generally aren't transferred into a trust due to the frequent title changes associated with buying, selling, or gifting vehicles. The administrative work often outweighs the benefits.
  3. Certain Types of Savings Accounts: Health Savings Accounts (HSAs) and certain Education Savings Accounts (ESAs) have tax advantages that could be lost if moved into a trust.

Considerations

Before deciding which assets to transfer into a trust, you should review your GoGo Estate documentation, access your attorney support following completion of your plan, or discuss with your financial advisor. Remember that each person's financial situation is unique, and what works well for one may not work as well for another. It's crucial to understand the purpose of each asset and how it fits into your broader wealth management strategy.

Conclusion

In conclusion, while not all assets should be transferred into a trust, carefully choosing which assets to include can help manage and protect your wealth, ensuring your legacy lives on just as you intended. Trusts, when used appropriately, can be a versatile and powerful tool in your estate planning toolbox.