Hi, I’m Dan Weiner, founder of Weiner Law. A question we’re often asked is – do I need to create a trust only for my house?
There’s a common misconception that trusts are used only to hold real property, such as houses and condos. However, the primary purpose of a revocable trust is to avoid probate. That means that the assets held in your trust need to include any asset that could potentially go through probate. This includes not only houses but also your bank accounts, investment accounts, business interests, as well as intangible assets like furniture, art, and jewelry.
Assets for which you can name a beneficiary, such as retirement accounts and life insurance, generally pass to the beneficiary upon your death without having to go through the probate court process. However, if you have a minor child and that child is named as a primary or contingent beneficiary on your life insurance or your retirement account, there’s a risk that that account will still go through probate.
In those cases, we would want to name the trust rather than the minor child as the beneficiary on the account. Whether your trust or your spouse is named as the primary beneficiary on your life insurance or retirement accounts is a complex question that needs to be analyzed in every case.
Creating a set of documents without undertaking this kind of analysis will, unfortunately, lead to a plan that fails even though the documents you created will provide a false sense of security and make you feel as though, you protected your family by creating an estate plan.
If you think that a trust is used only if you have real property, that’s not always the case. A trust is most useful, for example, if you have an insurance policy and your minor children are the primary beneficiaries. However, it is best to consult with an experienced trust lawyer such as from Weiner Law. They can help you craft the estate plan suited to your situation.
Learn how a skilled trusts attorney in San Diego can assist you in your situation.