What Assets Can and Cannot Be Placed in a Revocable Trust?

Revocable trusts are powerful tools in estate planning. They allow you to manage your assets during your lifetime and provide a seamless way to transfer those assets after your death, all while avoiding probate. But not every asset should—or can—go into a revocable trust. 

Understanding what fits and what doesn’t is crucial to making your estate planning strategy work the way you want.

At the Porter Law Firm, we understand that estate planning can feel overwhelming. That’s why we’re here to help you make informed decisions about your future. With over 40 years of experience, we’ve dedicated our practice to estate planning and business law, providing personalized legal solutions to individuals and families across South Carolina. 

Here, we’ll explain the types of assets you can place in a revocable trust, which ones are better left out, and how to make decisions that align with your long-term goals. Whether you’re new to estate planning or revisiting your current plan, this guide can help you take the next step with confidence. Contact us today for more tips.

What Is a Revocable Trust?

A revocable trust, sometimes called a living trust, is a legal entity you create to hold and manage your assets during your lifetime. You can act as the trustee, meaning you retain full control over what goes into or comes out of the trust. And because it’s revocable, you can amend or dissolve it at any time, as long as you're mentally competent.

One of the key advantages of a revocable trust is that it avoids probate. Assets held in the trust can pass directly to your beneficiaries, saving them time and reducing legal fees. But to make the most of this tool, it's important to know which assets belong in the trust—and which don't.

Assets You Can Place in a Revocable Trust

Placing the right assets in your trust allows it to function as intended. The following assets are commonly placed in revocable trusts:

Real Estate

Homes, rental properties, vacation houses, and undeveloped land are ideal for a revocable trust. Titling real estate in the name of your trust avoids probate and makes property transfers much smoother after death. Be sure to update insurance policies and alert mortgage lenders when making this change.

Bank Accounts

You can transfer ownership of checking, savings, and money market accounts into your trust. Some banks may offer the option to name the trust as a payable-on-death (POD) beneficiary instead, which can serve a similar function.

Investment Accounts

Brokerage accounts, mutual funds, stocks, and bonds (held outside of a retirement plan) can generally be transferred to a revocable trust. Doing this allows the successor trustee to manage these investments if you're no longer able to do so.

Business Interests

If you own an LLC or shares in a corporation, you can often transfer your ownership interest to your trust. Check your operating agreement or bylaws to confirm that this is allowed. Partnerships may have restrictions as well.

Personal Property

Valuable personal property like jewelry, art, antiques, and collections can be assigned to your trust. Everyday items, such as furniture and appliances, are sometimes included as a general assignment rather than listed individually.

Life Insurance

While life insurance proceeds usually avoid probate through beneficiary designations, you may choose to make your trust the beneficiary. This can be useful if you're concerned about how the proceeds will be managed or want to control distribution over time.

Assets You Shouldn't Put in a Revocable Trust

Not all assets are a good fit for a revocable trust. In fact, placing some in a trust could trigger unintended consequences, including tax issues or penalties.

Retirement Accounts

You shouldn’t transfer ownership of IRAs, 401(k)s, or other tax-advantaged retirement accounts to a revocable trust. Doing so is considered a withdrawal and will likely lead to taxes and penalties. Instead, you can name the trust as a beneficiary if that suits your goals.

Health Savings Accounts (HSAs)

HSAs can’t be owned by a trust. They must be owned by an individual, although you can name a trust as a beneficiary.

Vehicles

While it's possible to retitle a vehicle into a trust, it’s not always necessary or practical unless the vehicle has significant value. Many states offer simplified transfer options for vehicles after death, making this an easier route for most people.

UTMA/UGMA Accounts

Accounts set up under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act must remain in the name of the custodian for the benefit of the child. These can't be moved into a trust until the minor becomes of age and assumes ownership.

Everyday Checking Accounts

If you use a checking account for regular expenses, it may be better to leave it outside the trust to avoid delays or complications in accessing funds.

Pros and Cons of Using a Revocable Trust

Before deciding to transfer everything into a revocable trust, weigh the pros and cons. Here's a quick breakdown:

Pros

Here are some of the main advantages that make revocable trusts a popular choice in estate planning. These benefits often align with the goals of individuals who want flexibility and privacy in how their assets are handled.

• Avoids probate, saving time and court costs

• Maintains privacy (no public court records)

• Allows you to manage assets during incapacity

• Flexibility to modify or revoke during your lifetime

• Smooth transfer of assets to beneficiaries

These advantages make revocable trusts a practical tool for many people looking to keep control over their assets while simplifying the transfer process later. Still, it’s important to weigh these benefits against potential limitations before deciding if a revocable trust fits your estate planning goals.

Cons

While revocable trusts offer flexibility and control, they aren't without drawbacks. Here are a few considerations to keep in mind before creating one:

• Initial setup and funding require time and effort

• May involve costs to retitle assets

• Doesn’t offer creditor protection while you're alive

• Some assets still pass outside the trust (like retirement accounts)

These limitations don’t mean a revocable trust isn’t worth considering—it just means it’s important to understand how it fits into your broader estate planning goals. Working with someone knowledgeable can help you decide whether it's the right tool for your situation.

How to Transfer Assets Into a Revocable Trust

Once you create the trust, it's not enough to just list your assets—you have to move them into the trust. Here are the general steps:

1. Re-title Real Property

You’ll need a new deed that transfers the title from your name to the name of the trust. This should be recorded with your county's recorder of deeds.

2. Update Financial Accounts

For bank and investment accounts, contact your institution and request the necessary forms to retitle the accounts in the trust’s name.

3. Assign Personal Property

For items like furniture or jewelry, a simple assignment of personal property form can be used to declare that these assets are owned by the trust.

4. Update Beneficiaries

While you may not transfer ownership of some assets, you can name your trust as a beneficiary—such as with life insurance or retirement accounts—if it aligns with your estate planning goals.

Why Getting Help With Estate Planning Makes a Difference

Because every estate planning situation is unique, it’s smart to talk through your options with an experienced estate planning attorney, like the attorneys at Porter Law Firm. We can help you avoid mistakes, make the most of your trust, and choose the right strategy for protecting your legacy. We’ll also make sure everything is properly titled and that your documents are current with South Carolina law.

Contact Us Today

A revocable trust can be a valuable tool in estate planning, but it only works well if it’s funded with the right assets. Knowing what should be placed in the trust and what should remain outside helps prevent unnecessary complications and confusion down the road. 

As you think about how to organize your estate planning documents, consider your goals, the people you want to protect, and how you want your assets managed. 

At the Porter Law Firm, we’re here to guide you through this process with care and attention, serving clients in Mount Pleasant, Charleston, Summerville, Hilton Head, and throughout South Carolina. Remember, creating the trust is just the first step—it’s what you place into it that makes all the difference.

If you're ready to take the next step in your estate planning journey, we're here to help. Contact us today to start working with an experienced estate planning attorney.