Should a 401(k) Be Put Into a Living Trust?

By Heather Frances J.D.

A living trust can be an important part of an estate plan, allowing assets to pass directly to named beneficiaries without having to go through a court-administered probate process. Many assets can be included in the trust, such as real estate, vehicles and bank accounts. But 401(k)s, IRAs and some other retirement accounts cannot be placed in a trust.

401(k) Ownership and Trusts

401(k)s must be owned by individuals, not trusts, businesses or other entities. Thus, you cannot place your 401(k) into your living trust even though you can put other assets into the trust's name. Creating a living trust does not automatically place any of your assets into the trust. You must place your assets into the trust's name by changing the title documents or other ownership papers. However, typically, you cannot change your 401(k)'s ownership, since only individuals can own 401(k) accounts.

Giving a 401(k)

Though you cannot put your 401(k) into your trust, you can leave it to someone when you die. Generally, you can select a beneficiary when you set up the account by listing your beneficiary's name on the paperwork that establishes the account. You can also change your beneficiary, typically by completing a beneficiary change form with the company that manages your account. At the time of your death, your beneficiary inherits your account.

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What Items Should Be Put Into a Living Trust?


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What Is the Difference Between a Living Trust and an Estate Account?

Living trusts and estate accounts are entirely different entities. The former is an estate-planning tool that allows a person to control assets placed in the trust during his lifetime and simplifies distribution to beneficiaries after death. The latter is an account opened by the executor of an estate after probate has been commenced to pay the estate's taxes, debts and any other necessary distributions out of estate assets.

How to Name a Living Trust

A living trust is a plan in the form of an agreement that manages all the property you place into the trust while you're still living. A common estate-planning tool, a living trust is created by the preparation and execution of a trust agreement, a document that identifies the trust's owner, the trustee -- the person who oversees the trust -- and lists the trust's provisions. A living trust needs a name because the trust is the owner of all the assets placed into it. The name allows the trust's owner to identify the trust as the owner on property transfer papers, other legal documents and financial accounts.

What if My House Is Not Paid for: Can I Put It in My Living Trust?

A living trust is an estate planning tool that acts as a holding area for property. A grantor -- the legal term for a person who creates a trust -- can add many types of assets to a trust, including a house with a mortgage, bank accounts and personal property. Property is placed in the trust for the benefit of the trust's beneficiaries, to whom the trust assets are distributed according to the terms of the trust. A trustee, who can also be the grantor, manages the trust and its property.

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