Creating a revocable living trust is only part of the estate planning process. If you forget to fund your trust by transferring your assets into it, those assets may still have to pass through probate after your death, even though you created the trust to help avoid that outcome.
Many people sign their trust documents and assume everything is complete. Unfortunately, a trust only controls property that is actually titled in the name of the trust or otherwise properly designated to it. Reviewing your assets regularly can help ensure your estate plan works the way you intended.
What Does It Mean to Fund a Trust?
Funding a trust means transferring ownership of your assets into the name of your trust or updating beneficiary designations when appropriate. Your trust becomes the legal owner of those assets, while you typically continue managing and using them during your lifetime if you created a revocable living trust.
Depending on the type of property, funding may involve:
- Recording a new deed transferring real estate into the trust
- Retitling bank accounts
- Changing ownership of investment accounts
- Assigning certain personal property to the trust
- Updating ownership documents for other eligible assets
If your primary residence is your Florida homestead, take extra care before transferring it into your trust. A properly drafted trust and deed can help preserve valuable homestead tax benefits, so it’s wise to have the transfer reviewed by an estate planning attorney.
Without these steps, your trust may exist on paper but have little authority over your property.
What Happens to Assets That Are Left Outside the Trust?
Assets that remain in your individual name generally do not become part of your trust automatically. Instead, they may become part of your probate estate.
That means your personal representative may need to open a probate proceeding before those assets can be distributed to your beneficiaries. Probate can increase costs, add administrative work, and delay the transfer of property.
Whether probate is required depends on the type of asset, how it is titled, and whether another method of transfer applies. For many people, avoiding unnecessary probate is one of the primary reasons for creating a living trust in the first place.
Which Assets Are Commonly Forgotten?
Even people with carefully prepared estate plans sometimes overlook individual assets. Others acquire new property after signing their trust and simply forget to transfer it.
Some of the most commonly missed assets include:
- Real estate purchased after the trust was created
- Checking and savings accounts
- Investment and brokerage accounts
- Certain vehicles
- Valuable personal property
- Business interests
- Newly acquired property that was never retitled
Changes in your financial life, such as buying a home, opening a new account, or starting a business, are good opportunities to review whether your trust needs to be updated.
Does a Pour-Over Will Solve the Problem?
Many Florida estate plans include a pour-over will. This document directs assets that were left outside your trust to be transferred into the trust after your death.
A pour-over will provides an important safety net, but it has limitations.
If probate is required before those assets can be transferred into the trust, the pour-over will does not eliminate that process. Instead, it simply determines where the probate assets ultimately go after the estate is administered.
For that reason, relying on a pour-over will instead of properly funding your trust may defeat one of the primary benefits of having a trust.
What Should You Do If Your Trust Is Underfunded?
Finding out that your trust is missing assets does not necessarily mean your estate plan has failed. In many cases, the issue can be corrected during your lifetime.
If you believe your trust is underfunded, consider taking these steps:
- Review all assets you currently own.
- Compare ownership records with your trust documents.
- Identify any property that remains in your individual name.
- Transfer eligible assets into the trust.
- Review your estate plan after major life or financial changes.
- Meet with an estate planning attorney if you are unsure whether an asset belongs in the trust.
Regular reviews can help ensure your trust continues to reflect your current financial situation.
Make Sure Your Trust Can Do the Job You Created It to Do
A living trust can be an effective estate planning tool, but only if it is properly funded. Leaving assets outside your trust may result in probate for those assets and create additional work for your loved ones.
At Verras Law, we help Florida families review existing trusts, identify missing assets, and update estate plans as circumstances change. Whether you recently created a trust or have not reviewed it in years, we can help you determine whether your trust is fully funded and discuss any updates that may be appropriate. Contact us today to schedule a consultation.