What Assets Can Go in a Trust?

Establishing what assets can go in a trust can help you avoid estate taxes, provide specific parameters for your assets, and help you maintain control of your estate even after you’re gone. But this begs the question, can any assets be held in a trust?

There are certain assets you should avoid, or cannot place, in a trust including 401(k)s and other retirement accounts, any type of medical saving accounts, and anything that will depreciate in value over time. Other than those examples, pretty much any asset can be placed into a trust.

With so many variances, the wealth advisors at Avidian Wealth Solutions will be breaking down what assets can go in a trust by category: testamentary trusts, revocable trusts, and irrevocable trusts. However, the assets you should use to fund your trust will be dependent on your unique financial situation and goals. As such, you should always consult with a high-net-worth financial advisor before making any big financial decisions on your own.

What assets should be in a trust?

Any asset that is important to you, with the exception of the assets that cannot fund a trust like your retirement account, should be placed into your trust. This will work to ensure that they are passed on in the exact way you want them to be and will protect them from probate.

Depending on the type of trust you choose to establish, the assets you most want to protect for your beneficiaries are typically safest in a trust. How does a trust protect your assets? By removing assets from your ownership, they are safe from creditor lawsuits and they are able to avoid the lengthy probate process.

Testamentary Trust

A testamentary trust is established after the person’s death and is considered to be irrevocable seeing as the trustor is no longer present to make changes. However, it is considered revocable prior to the individual’s death and does allow the trustor to make changes while they are still alive.

This type of trust is most beneficial for parents with young children or someone looking for a more affordable option that still protects their assets should they pass prematurely. Assets you can put into a testamentary trust include:

• Real estate
• Life insurance
• Bank accounts
• Assets of the estate

Revocable Trust

A revocable trust, also known as a living trust, is an estate planning tool that allows high-net-worth families to protect assets throughout their lifetime and reduce the impact of probate when passing on parts of their estate after their death.

Unlike with an irrevocable trust, you do not lose control of your assets once you’ve put them in your living trust. Although you have to change the title and beneficiary designations so that the trust has ownership in order to fund it, you can change them back to your ownership at any time.

What assets should be included in a living trust?

• Cash accounts (checking, savings, money markets, and CDs)
• Non-retirement investment, mutual funds, and brokerage accounts
• Non-qualified annuities
• Stock or bond certificates
• Valuable personal property and real estate (jewelry, clothing, antiques, watches, airplanes, collectible vehicles, boats, livestock, artwork, etc.)
• Business interests (company stocks, sole proprietorships, limited liability companies interests, etc.)
• Life insurance
• Secured and unsecured personal loans
• Oil, gas, or mineral rights (Learn more about specialty asset management in Houston)

Though almost any asset can be added to your trust, you may not — or should not — place retirement accounts, health savings accounts (HSA), active bank accounts, or vehicles such as cars, boats, or airplanes (that do not appreciate in value) into a living trust.

Irrevocable Trust

An irrevocable trust, otherwise known as an asset protection trust (APT), is a strategy for high-net-worth estate planning in Houston that safeguards your assets, and therefore your legacy, from harsh creditors, estate taxes, and/or legal actions. Because you forfeit ownership of your assets before placing them in an irrevocable trust, decisions should not be made without consulting your wealth manager prior.

So, what assets can be placed in an irrevocable trust? Similarly to revocable trusts, almost any asset can go into an irrevocable trust including:

• Cash accounts
• Non-retirement investment, mutual funds, and brokerage accounts
• Non-qualified annuities
• Stock or bond certificates
• Valuable personal property and real estate
• Business interests
• Life insurance policies
• Secured and unsecured personal loans
• Rights to commodities

Who needs a trust instead of a will?

Everyone should still have a will as part of their estate plan whether or not they’ve protected most of their assets in a trust. Your will names any beneficiary designations that may not have been named through your trusts. It also establishes a financial power of attorney, medical power of attorney, and guardianship. If these decisions are not established by you, they’ll be chosen by the state and may go against what you would have wished.

Protect your assets for the ones you love with Avidian Wealth Solutions

Now that you have a better understanding of what assets can go in a trust, you may want to consider establishing a trust to protect your hard-earned assets, and your legacy, from probate, long transition times, and maybe even legal actions. 

Funding your trust can feel overwhelming, but it doesn’t have to be. Our multidisciplinary team at Avidian Wealth Solutions can help you work through all of the details of funding a trust and project how it will affect your overall wealth management plan — and we do all of this while considering its effect on your business succession planning and financial risk management in Houston.

To learn more about how we can help you with your estate planning strategy, schedule a meeting with us today!

More Helpful Articles by Avidian: 

• How to Start a Family Office
• Retirement Planning Checklist: How to Get Retirement Ready
• Are Managed Accounts Worth It?
• Where is the Safest Place to Put Your Retirement Money?
• What is the Capital Gains Tax in Texas?

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