Are There Assets That Shouldn’t Go Inside the Revocable Trust?

Planning ahead for your future likely involves a sit-down meeting with a New Jersey estate planning attorney, and that conversation may include mention of estate planning tools such as a revocable trust. Known for its flexibility, the revocable trust empowers you to maintain control over assets placed inside and the trust itself over the course of your life.

While a trust is a valuable component of many an estate plan, it’s not always appropriate to put every asset inside the trust. First of all, some assets will pass directly on to beneficiaries without going through the probate process. Most people won’t title these in the name of the trust, such as your life insurance policy, a retirement account, or a payable-on-death account.

Retirement assets are often tricky to manage since the retirement account company will keep their own records of your beneficiaries. One of the biggest estate planning mistakes made all too often is that people forget to update these materials after a major life change, like a divorce. The company managing your retirement account will simply use whatever the last filed valid form was, so this could go to a former spouse if you do not update your materials.

When you meet with your estate planning attorney, talk through all the potential assets that might go into the trust and determine whether or not that’s the appropriate strategy. Often talking it out with someone else can help you figure out the approach that is right for you.