What should not go in a revocable trust?


Editorial team Published on

Certain assets should not be directly titled or transferred into a revocable living trust because doing so can trigger immediate taxes, ruin tax-advantaged status, or cause administrative complications.

Assets to Exclude

  • Retirement Accounts: Do not retitle accounts like traditional IRAs, Roth IRAs, or 401(k)s into a trust. Doing so treats the transfer as a full taxable distribution. Instead, name the trust as a primary or contingent beneficiary.
  • Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs): Transferring these accounts into a trust ruins their tax-free status. Keep them in your individual name with designated beneficiaries.
  • Life Insurance Policies: Owning the policy inside a revocable trust is usually unnecessary. It is cleaner to name individuals or the trust as the beneficiary on the policy rather than retitling the policy itself.
  • Everyday Vehicles: Standard cars, trucks, and boats do not need to be in a trust. Motor vehicles transfer easily through the DMV using simple state-specific death transfer forms without needing probate.
  • Uniform Gifts/Transfers to Minors Accounts (UGMA/UTMA): These accounts are legally controlled for the minor by state law and cannot be commingled or retitled into a personal trust.