To most people, the word “probate” is a catch-all phrase having to do with estate planning and referring to something expensive and to be avoided. A recent article from yahoo! finance, “If you want your kids to bypass probate when you die, here are 5 assets to avoid putting in a living trust,” says a living trust is a good way to avoid probate, but needs to be carefully planned.
When someone dies with a will, a legal process is required to validate the will, name an executor to administer the estate, have the executor approved by the court, pay off liabilities and then distribute assets remaining in the estate. This process is known as probate. Depending upon the complexity of the estate, it can take years and generate significant costs. What can you do to minimize probate?
First, everyone should have a will. This prevents your family from being subjected to a court-appointed executor and fighting over who gets what from your estate. The next step is to talk with your estate planning attorney about having a living trust. This estate planning document lets you control assets and designate who should receive them after you die without going through probate.
Because the trust is revocable, you can change the terms at any time you want, from who receives the assets to when they are distributed. You can also use the assets in the trust, at your discretion. However, there are some assets you don’t want to place in a trust.
Vehicles. Your prized Harley or big block Corvette may be transferred with a written instruction to transfer the title to a beneficiary. Placing this type of asset in a trust could make the trust vulnerable to a lawsuit if the vehicle is in an accident.
Annuities and retirement accounts. Depending on the trust, placing certain financial assets can transform them from non-taxable accounts into taxable ones. If you make the trust the designated beneficiary, those accounts may pass directly to the trustees. Talk with your estate planning attorney to see if this strategy will work for you.
Life insurance. There’s no need to put a life insurance policy into a trust. Proceeds go to the named beneficiary within the policy. At The Riddle Firm, we may recommend placing the life insurance policy inside an Irrevocable Life Insurance Trust (ILIT) to avoid estate taxes.
International assets. Overseas property can’t always be put inside a domestic trust. Talk with an estate planning attorney in your state and in the country where your asset is located to learn how to protect any overseas asset.
Checking and savings accounts. These accounts could technically be placed in a trust. However, unless you are the trustee with full control of trust assets, the trustee might find themselves unable to pay bills in case of your death or incapacity. Keeping them out of the trust will be easier. Make sure you have a designated Power of Attorney, so someone can take care of your day-to-day finances.
Call us today to create an estate plan. Your family will be spared the brunt of probate with a well-crafted, state-specific plan. It’s an investment for those you love.
Reference: yahoo! finance (Sep. 11, 2025) “If you want your kids to bypass probate when you die, here are 5 assets to avoid putting in a living trust”