Revocable trusts are a very popular and useful estate planning tool. But the trust will be ineffective if you do not actually place your assets in the trust.  

Revocable trusts are an effective way to avoid probate and provide for asset management in the event of incapacity. In addition, revocable trusts — sometimes called “living” trusts — are incredibly flexible and can achieve many estate planning goals. 

However, you can’t take advantage of what the trust has to offer if you don’t place your assets into it. If you don’t fund the trust, your assets may have to go through a costly probate proceeding or be distributed to beneficiaries you did not intend. Not funding your trust can undermine your whole estate plan.  

To transfer assets to the trust during your lifetime, whether real estate, bank accounts, or investment accounts, you need to retitle the assets in the name of the trust. To place bank and investment accounts into your trust, you need to retitle them as follows: “[your name and co-trustee’s name] as Trustees of [trust name] Revocable Trust created by agreement dated [date].” Depending on the institution, you might be able to change the name on an existing account. Otherwise you will need to open a new account in the name of the trust and then transfer the funds.  

If you are placing real estate into the trust, contact our office for assistance. 

Not all assets need to be placed in a trust immediately, such as your day to day checking account, while other assets should not be placed in the trust during your lifetime. An example of the latter includes retirement accounts and life insurance policies. Assets not placed in the trust during your lifetime can be directed to the trust via beneficiary designations or via a “pour over” a provision in your Will. Although a major goal of a revocable living trust is to avoid probate, a Will with a “pour-over” provision will ensure that any asset that was inadvertently not directed to the trust will be put into the trust through the probate process…eventually. 

Finally, be sure to remember to add newly acquired assets into your trust. It is recommended that you review your estate plan every 4-5 years, however, you should review your own trust annually to make sure your assets are titled properly and that beneficiary designations are kept up to date.