Trust Funding: The Step Most Families Never Finish
Most revocable living trusts do nothing.
The container got built: properly, expensively, and with care. The attorney collected somewhere in the $5,000 to $10,000 range. The binder sits on a shelf. And when the family member who signed it eventually passes away, the public, slow, and expensive probate process the trust was supposed to avoid happens anyway. Because the assets were never moved into the trust.
That step is called funding, and it’s the step most families never finish. This piece is about what funding actually means, why it gets skipped, and the question you can ask yourself today to find out whether your own plan is in force, or just on paper.
What funding a trust actually is
A revocable living trust is a legal entity. When you create one, you become the person setting it up (the grantor), the person managing it (the trustee), and the person benefiting from it (the beneficiary), all while you’re alive. It’s a container.
The mechanical error almost everyone makes is that they build the container and then never move anything into it.
Funding a trust means retitling your assets so the trust, not you personally, is the legal owner. That’s a series of concrete actions:
- The deed on your house has to be recorded into the trust’s name.
- Your non-retirement brokerage accounts have to be retitled.
- Your bank accounts have to be retitled or have the trust added as a successor owner.
- If you own a business interest, an LLC, a partnership, a closely-held company, the ownership has to be formally assigned to the trust.
- Out-of-state property (the Cape cottage owned by a client who lives in New Hampshire; the Florida condo) has to be deeded into the trust state by state.
Until all of that happens, the trust is paperwork. It holds nothing. It can do nothing.
What doesn’t belong in a trust (and why this isn’t universal)
Retirement accounts (IRAs, 401(k)s, 403(b)s) are governed by their beneficiary designations, not by your trust. Retitling a retirement account to a trust usually creates a tax problem, not a solution. The correct move for retirement accounts is to make sure the beneficiary designations are accurate and reviewed.
Life insurance is the same. It passes by beneficiary designation, not through the trust, unless you specifically and intentionally name the trust as the beneficiary for a reason (for example, to protect assets for minor children).
So the conversation about trust funding is always paired with a conversation about beneficiary designations. They are two sides of the same problem: who actually ends up owning what, and by what mechanism.
What goes wrong when the trust isn’t funded
Your family goes through probate anyway.
The whole point of a revocable living trust, for most people, is to avoid probate: the public, slow, expensive court process that settles estates. If the house is still titled in your name when you die, the house goes through probate. If the brokerage account is still in your name, it goes through probate. The trust sitting in the drawer does nothing for those assets.
In Massachusetts, informal probate typically takes six to twelve months for a straightforward estate and significantly longer for one with out-of-state property or complications. The costs, attorney’s fees, court fees, appraisals, often run three to five percent of the estate’s gross value. For a family we’d consider middle-class on the Outer Cape, that’s real money disappearing into an avoidable process.
Why this happens so often
The attorney drafts the trust. The client signs. Both parties experience the engagement as complete.
Most estate attorneys will include a “trust funding letter,” a checklist of what needs to be retitled, in the closing binder. A smaller number will actually prepare the deed for your primary home. A much smaller number will follow up two years later to ask whether you funded the brokerage account, moved the LLC interest, or added the NH cottage. That follow-up isn’t their business model. It’s ours.
How we handle it
When a client works with us on estate planning, we provide this service through Wealth.com, our dedicated platform partner, and we track trust funding as an ongoing discipline, not a one-time event. Every client plan includes a funding status record. We review it annually, and whenever an asset changes: you buy a new property, you open a new brokerage account, you take on an interest in a business. The trust stays current as your life does.
That’s a small-sounding process commitment. In practice, it’s the difference between an estate plan that works and one that exists only on paper.
The question nobody thinks to ask
If you already have a trust, the most valuable question you can ask yourself isn’t Do I have an estate plan? It’s Is the plan I paid for actually in force?
Open the binder. Look at the funding letter if you can find one. Check the deed on your house: whose name is on it? Pull up the most recent statement from your brokerage account: whose name is on that? If the answer on any of them is still yours, rather than the trust’s, the plan isn’t doing the work you paid it to do.
Fixing that isn’t complicated, and it isn’t expensive. But someone has to do it.
If you could not answer the deed question from memory, that is the sign, and it takes one meeting to find out. The consultation is a conversation, not a sales call.
This article reflects the views of Long Point Wealth Management as of the date written. It is intended for educational purposes and should not be construed as personalized tax, legal, or investment advice. Trust funding involves state-specific legal considerations; clients should consult with qualified legal counsel before retitling significant assets.