Every week, I speak with people who believe they have taken care of their estate plan. They went to an attorney, signed the documents, paid the fees, and left with a binder full of paperwork. They feel — rightfully — like they have done something important.
And they have. But many of them have stopped at step one of a two-step process.
The Problem: An Empty Trust
A revocable living trust is one of the most effective estate planning tools available. It allows your estate to pass to your loved ones privately, without going through probate court, and with specific instructions for how and when assets are distributed.
But here is the thing most people are not told clearly enough: a trust only controls what is inside it.
If your home, your bank accounts, and your investment accounts are still titled in your individual name when you die — they are not in your trust. And if they are not in your trust, they go through probate. The very thing you created the trust to avoid.
An unfunded trust is a trust that exists on paper but does not actually own any of your assets. It is surprisingly common, and it can undo all the planning you intended to do.
What Does "Funding" Actually Mean?
Funding a trust means changing the legal ownership of your assets from your name individually to the name of your trust. For example:
- Your home's deed is updated to read: Kathryn E. Young, Trustee of the Young Family Revocable Living Trust
- Your bank accounts are retitled in the name of the trust
- Your brokerage and investment accounts are transferred to the trust
- Beneficiary designations on life insurance and retirement accounts are reviewed and updated appropriately
It is not glamorous work. It involves paperwork, calls to your bank, and sometimes a trip to the county recorder's office. But it is the step that makes your trust actually function the way you intended.
What About the Pour-Over Will?
Most trust-based estate plans include a pour-over will as a safety net. This document says that anything not already in your trust at the time of your death should be transferred into it. It is a catch-all — but it still requires going through probate for those assets, which is exactly what you were trying to avoid.
Think of the pour-over will as a net below the tightrope. You hope you never need it, but you are glad it is there. The goal is to have as little as possible fall into it.
Creating a trust without funding it is like buying a safe and leaving all your valuables on the kitchen table. The safe exists — but it is not doing its job.
How to Know if Your Trust Is Funded
If you already have a trust, here is a simple check: pull out the deed to your home. Does it list your trust as the owner, or does it list you by name individually? If it is your individual name, your home is not in your trust.
Do the same for your bank and investment accounts. Call your financial institution and ask how the account is titled.
If you are not sure — or if you created a trust years ago and have since bought a new home, opened new accounts, or made other changes — it is worth a review. I am happy to help you work through this in a consultation.