Law Office of Harvey L. Cox.
Law Office of Harvey L. Cox.

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(254) 233-7779

Are There Certain Assets You Should Not Put In A Will Or Trust?

In this article, you will discover:

  • The assets that should not/cannot be put into a will or trust
  • How to deal with assets that cannot be in a will or trust
  • If/when a will or trust can be changed

A will is a death document, and it only becomes effective at your death. Anything in your estate that is not set up to bypass probate will go through the probate court system. So, there’s not an issue about “putting assets into a will.”

A trust, however, is significantly different. It is designed to bypass probate and keep your family and your assets out of the court system. Typically, I want to help you put all of your assets into a trust. However, some assets do not transfer to the trust.

Qualified money such as an IRA, 401k, 403b, etc., do not get put into the trust. Transferring ownership of qualified funds from the individual owner to the trust is a tax-triggering event, so we don’t want to do that. We handle qualified money by keeping it in the owner’s name and changing the beneficiary designation on those funds to be the trust. Then, at the owner’s death, the accounts are paid into the trust and managed by the trustee without passing through probate.

Life insurance is another example of an asset that does not transfer to the trust. If a person has life insurance, the beneficiary is changed to the trust. Changing the beneficiary designation to the trust allows all money to go into the trust and permits easy management by the trustee to benefit the trust’s beneficiaries.

What Should You Do With Assets That Should Not Or Cannot Go Into A Will Or Trust?

The best way to handle those assets is by making the trust the beneficiary of any assets that are not directly owned by the trust.

Can A Will Or Trust Be Changed At Any Time?

Yes, a will or trust can be changed at any time. To change a will, you create a codicil to the will expressing the changes you want to make. The caveat to that is that any codicil to a will must be filed in the probate court with the will. It is essential to keep the codicil with the will to file both documents with the probate court. If the codicil is lost or misplaced, the original will governs the disbursement of your estate. This is not a problem if a person has a properly created estate planning portfolio where all documents are organized and instructions are left for the executor. Often, there are situations where the will is not kept in an organized way, and the codicil is not in the exact location as the will. This is disastrous for an estate plan.

To change a trust, you create an amendment to the trust, and the amendment is kept with the trust document. Again, there needs to be a well-organized estate planning portfolio so that the amendment is readily available to the successor trustee.

For more information on Assets That Shouldn’t Be Put In A Trust In Texas, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (254) 233-7779 today.

Law Office of Harvey L. Cox.

Call For Your Free 1 Hour
Peace of Mind Planning Session
(254) 233-7779

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