Some individuals have questions about what assets should be included in their trusts. Certain financial accounts such as CDs and money market accounts can be placed into the trust or left separate. While, sometimes, there may be a good reason for leaving certain accounts out of the trust, it is usually good practice to fund the trust with all of one’s financial accounts. In California, doing so can be a part of trust preparation.
A trust can only control the assets that have been titled in its name. However, most people include a pour-over provision in their wills that will funnel any probate assets into the trust eventually. However, usually an individual’s goal in creating a trust is to avoid probate and also to allow another person to have administrative abilities if they become incapacitated as well.
In some instances, an account may have a payable-on-death or a transfer-on-death beneficiary, and the account will be transferred to that individual upon the person’s death, but it will not allow another person to manage the asset during the owner’s lifetime should he or she become incapacitated. If the asset is in the trust, the trustee can manage it even while the individual is still alive. Also, assets not left in trust may be managed by a court-appointed guardian.
Typically, individuals in California should title their assets into the trust as part of the trust preparation process. There may be exceptions to this rule. Each case is unique, and some people may want more guidance. Help can usually be found with an experienced estate planning attorney.