With a living trust, you have the right to put away assets like stocks, real estate, certificates of deposits and bank accounts. You have a fair amount of flexibility when planning your estate in California, but there are some things you shouldn’t do. When managing a living trust, strive for a strategic understanding of what it can hold and what it should contain. Here’s a look at what to avoid.
Retirement accounts
The retirement accounts you have can’t, themselves, be held in a trust. Retirement accounts are individual accounts that require a beneficiary just like trusts do. Your retirement accounts are also private assets, so they aren’t part of a public hearing during probate. However, the funds of a retirement account can be transferred to a trust by listing the trust as a beneficiary.
Vehicles
Unlike a Roth IRA, which can hold gold, horses, and antiques, a trust doesn’t cover things like vintage trucks or fast cars. In regard to estate administration and probate, vehicles can be confiscated to cover the debt. Most vehicles are also bought through a lease, minimizing your claim to the vehicle until it’s fully paid.
Medical savings accounts
The programs you’ve entered to help you with medical expenses are useful but don’t qualify for the protection of a trust. Additionally, these types of programs are often reserved for self-employed professionals. The tax benefits that medical savings accounts offer are only available when the money is used for medical expenses.
Estate administration and probate in California
Every estate must prepare to withstand public scrutiny once its owner dies. The administration of an estate requires a probate case if you don’t prepare a trust to avoid a public hearing.