If you have a Revocable Living Trust you can either fund your estate assets into the Trust or name the Trust as a beneficiary. Which way you choose will depend upon the asset.
Life Insurance Policy You can fund your life insurance policy into your trust, but when do so you must use caution. Some state laws may not protect a Revocable Living Trust from creditors. In this case your life insurance money may be used to pay debts.
Funding your policy into your Trust can, however, allow your trustee quick access to funds before and after your death. If you should become mentally or physically incapacitated, your trustee may be able to borrow against the policy if it is funded into your account. These funds can be used to care for your medical and personal well-being.
Financial Holdings Most accounts that are not retirement accounts set up through your employment can be easily funded into your Trust. These accounts include your savings accounts, checking accounts, non-retirement investments, and money market accounts. You can also fund a mature certificate of deposit into your account. If you prefer, you may instead name a pay on death beneficiary for many of these accounts. You must, however, stay on top of updating all beneficiaries as needed.
If, however, an account has tax deferment status as many retirement accounts do, you may want to name your Trust as a beneficiary instead of funding it into the Living Trust. When you fund a tax deferred account such as a 401K, the income taxes will become immediately due.
Personal Items Most personal items such as housewares, jewelry and clothing can be funded into your Trust. You may also fund vehicles, but there is a chance you may have to pay taxes when the Title is transferred from you to your Trust. You also run the risk of creating a liability for the trust if the vehicle is involved in an accident.
Real Estate A Living Trust is one of the best places to title your real estate because it can help your land holdings pass easily from you to your heirs upon your death. Using a Trust to bequeath land is a great way to help your property avoid probate.
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