You can create a trust to avoid probate, protect your assets, and enjoy many other benefits. To enjoy the benefits of having a trust, you will first need to transfer your assets to the trust, also known as “funding the trust.” While there are many assets you can transfer to your trust, there are some you cannot. Examples of assets you cannot fund your trust with include the following:
• Cash – Physical cash cannot be transferred to your trust. If you want your cash in your trust, then you will need to put your cash in a bank account and the bank account will need to be transferred to your trust.
• Motor vehicle – While you technically can transfer your motor vehicle into your trust, it is not advisable in Florida. The reason is because motor vehicles can usually transfer to heirs outside probate, a motor vehicle owned by a trust can be more difficult to gift or sell during your lifetime, and many motor vehicle insurance carriers will not insure a motor vehicle owned by a trust.
• Retirement assets – While you technically can transfer your retirement accounts, such as IRAs, 401(k)s, 403(b)s, and certain qualified annuities to your trust, it is generally not recommended because transferring a retirement asset to your trust might be treated as if you cashed out the account. Instead of transferring the accounts to your trust, you can name your trust as the beneficiary of the retirement account(s).
• Health Savings Accounts – Because a Health Savings Account is a tax-free asset, you cannot transfer it to your trust. However, instead of transferring the Health Savings Account to your trust, you can name your trust as the beneficiary of the account.