Don't put these 5 assets in a living trust. How to help your kids bypass probate when you die

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If you will, allow us to present the hypothetical case of Pete Moneywise, a married, 78-year-old father of three who wants to get his financial affairs in order before his passing.

Though he exists only within the confines of this article, his situation reflects what countless people of retirement age face as they draft their wills and create their trusts.

“I hate probate,” Pete tells us in an exclusive interview. (What else did you expect? We created him.) “I went through it when my father died, and my family spent the next year talking to lawyers, trying to get things squared away.”

He shares how the probate process caused tension between his siblings. He also harbored frustration over one unanswerable question: “Why didn’t Dad create a living trust? It would’ve made things so much simpler.”

Credit Pete for now following his own advice. He has set up a living trust. Now, he must decide what, if anything, to leave out of it. He has done the homework for you: Here are five things to consider as you structure your living trust.

Probate explained

Back to living trusts and the reasons they’re better than a long and drawn-out probate process.

Unfortunately, many folks don’t even know what “probate” means until they’re in the thick of it.

Sometimes, not always, when a person dies — even if they left a will — a legal process called probate ensues. Probate is required to validate the will, name an executor to administer the estate if there isn’t one, pay off liabilities, and then distribute the remaining assets to heirs.

The process can take years, requiring piles of paperwork and ongoing legal fees.

For instance, after Ozzy Osbourne passed away in July, reports began surfacing that his $220 million estate would face hefty inheritance taxes and a lengthy probate process. According to estate planning attorney Gideon Alper at Alper Law, “If Ozzy’s assets were left in trust, his family could inherit faster and privately.”

In Pete’s case, a trust could have helped his family avoid probate, protect their privacy, and minimize estate taxes when his father died. A trust is a document that allows you to keep control of your money and property and designate who receives it once you die.

Consider life insurance for added peace of mind

Before we get into living trusts, it’s worth looking at an even simpler way to help your children live more comfortably after you pass.

Life insurance can be a faster and smoother way to ensure your loved ones are financially protected when that happens. But not all life insurance policies are made equal — so make sure you find one from a provider you trust, with premiums and payouts that align with your financial objectives.

For instance, Ethos offers term life insurance, is rated “Excellent” on Trustpilot, and has an A+ rating from the Better Business Bureau (BBB). Ethos offers simple and affordable coverage for a set period of time — typically between 10 and 30 years.

As a licensed third-party insurance administrator, Ethos has joined forces with some of the industry’s top insurance carriers, such as Banner Life, TruStage Financial, and Ameritas Life Insurance.

You can get coverage in just 10 minutes online or by phone, and guaranteed approval even if you have pre-existing health conditions. Even better, rates can start at just $9.80 per month.

Ethos also gives you the flexibility to select coverage amounts ranging from $2,000 to $100,000, depending on your needs, so you know exactly what you’re getting. And unlike the waiting time you might expect through probate, life insurance is typically paid out within weeks or months — not years. That means your children get support sooner rather than later.

Meet with experts

Clearly, even wealthy individuals like Ozzy Osbourne can get it wrong. That’s why it’s important that Pete meets with a qualified and regulated financial professional to make sure he’s not making mistakes with his estate planning.

High earners might consider working with the tax experts and legacy planning experts at Range. They offer white-glove financial services to high-income households, helping heirs minimize estate taxes while avoiding probate.

Range offers help with a wide range of estate planning services, including wills, trusts, power of attorney documentation, and even advanced health care directives stating your wishes for medical treatment.

When you work with Range, you work with Certified Financial Planners (CFPs) who are legally required to put your interests first. Their advisors will evaluate your existing estate plan documents to ensure they meet your current needs — and help coordinate drafting basic estate plans if needed.

And the best part? You can book a complimentary demo to see if Range can meet your comprehensive financial needs.

## Five items to leave out of a revocable living trust

Vehicles. Whether it’s a 1963 Corvette, a Harley chopper or a prop plane, all that’s required to pass it on is a simple written instruction to transfer the title to a beneficiary. Meanwhile, if it’s held in a trust, you could be vulnerable to lawsuits over accidents involving the vehicle.

Annuities and retirement accounts. A trust can turn non-taxed accounts into taxable ones. However, you can ​make the trust itself the beneficiary, so that these accounts pass directly to your trustees without an IRS agent crashing the wake.

Diversify your retirement accounts with gold

When it comes to non-taxed retirement accounts, make sure your money is being put to work in the background. For instance, you could invest in precious metals through a gold IRA with Thor Metals.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against inflation and economic uncertainties.

To learn more, you can get a free information guide that includes details on how to get up to $20,000 in free metals on qualifying purchases.

Life insurance. You don’t need to put life insurance in a revocable trust. Rather, you can simply name your beneficiaries within the policy or create an irrevocable life insurance trust (ILIT) to avoid estate taxes.

Assets held in other countries. This gets complicated, as you may not be permitted to place international assets in a trust. To find out if it’s possible, you'll need to consult an estate attorney licensed in the country where your assets are located.

Checking and savings accounts. If you use these to pay monthly bills, you may run into financial complications unless you’re the trustee and granted full control of trust assets. There's a much easier route to take: Keep these accounts out of the trust.

If Pete were real, he’d surely remind you that the information in this article does not constitute legal advice. Talk to a trust lawyer in your state, financial adviser, or other professional before making any decisions. Pete’s imaginary kids — and your real ones — will be grateful you did.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.