Over the years I’ve worked with countless clients — some getting organized ahead of time, some in the thick of loss — and there’s a theme I keep running into. A trust that was never funded.
Here’s how it usually goes. Someone works with an estate attorney, creates a trust, and walks out with a list of assets that need to be transferred into it. Good intentions firmly in place. And then life happens.
As I always say, our biggest competitor in life is good intentions.
It’s actually one of the themes in my book, Late To Your Own Funeral. Turns out I have a lot to say about it.
I am not throwing stones here. My attorney gave me the same list, and it took me longer than I want to admit to get it done. What’s that joke about the cobbler’s children? This is one of those things I write about precisely because I’ve lived it.
So let’s back up. There are many different types of trusts, but the one I’m talking about today is a Revocable Living Trust — sometimes called an RLT. Think of it as a vehicle for holding and moving your assets. People often create them for a few key reasons: to avoid the time and cost of probate, to keep their estate private, to manage their affairs if they become incapacitated, and to make it easier to transfer assets to their beneficiaries when they’re gone. If you want to go deeper on how a trust compares to a will, this is a good read from an estate attorney colleague. But here’s the thing — the vehicle doesn’t work if you never put anything in it.
And here’s what nobody tells you: actually funding the trust is its own project. It’s not just a signature and a handshake. It’s bureaucratic red tape — forms to fill out, trust documents to send, legal jargon to translate, and financial institutions that make the whole thing harder than it needs to be. I’m looking at you, Chase Bank.
This is where a lot of people get sidetracked. Not because they don’t care, but because the process is genuinely tedious and life keeps moving. The trust sits there, partially funded or not funded at all, and the to-do list gets longer.
When a trust isn’t funded after someone dies, what you end up with is what I call probate spaghetti. Some assets are in the trust, some aren’t. Some have to go through probate, some don’t. In the worst cases, nothing ever made it into the trust at all, and what was meant to be a powerful estate planning tool becomes a really expensive piece of paper.
So what I’m saying is, girl, guy, or anyone else reading this: fund your trust.
Where do you start? Pull out your trust documents and revisit the funding instructions your attorney gave you. Is anything outstanding? Many attorneys will recommend transferring some combination of the following into your trust:
- Real property
- Banking, brokerage, and investment accounts
- Cash accounts
- Stocks and bonds not held in investment accounts
- Stock options
- Personal effects
- 529 plans
- Life insurance policies and annuities
- Business or professional interests
- Anticipated inheritance, gift, or lawsuit judgment
One important note: most attorneys I’ve worked with advise against transferring ownership of a qualified retirement plan, pension plan, or IRA into your RLT — doing so can have serious tax consequences. That said, depending on your estate planning goals, your attorney may recommend naming your trust as a secondary beneficiary. This is a nuanced area, and it’s worth a direct conversation with both your estate attorney and your financial advisor before making any moves.
Bottom line: don’t try this at home, folks. This is definitely a place where you want estate planning professionals in your corner.
If you’re not sure where to start or the list feels overwhelming, that’s exactly what we help with. Hit reply, and we’ll help you get your arms around it.
The goal isn’t perfection. It’s progress.
