A revocable living trust is only as strong as the assets you place in it. An unfunded or partially funded trust can cause unnecessary stress and still require families to go through probate.
Careful funding and regular updates help your trust function properly when it matters most. Let’s look more closely at these trusts.
The importance of funding a trust
Funding essentially means changing titles so that the revocable living trust legally owns the assets. This often includes real estate, bank accounts, brokerage accounts and some business interests. Proper funding helps bypass California probate, which can be lengthy, expensive and public.
It’s important to periodically review each major asset intended for your trust and confirm that it is properly titled. This simple step can prevent costly surprises later.
Common funding mistakes to avoid
Many people make preventable errors when funding a revocable living trust. Examples include:
- Leaving out the home – for example if the deed is never retitled to the trust and the property later requires probate
- Ignoring new assets and leaving recently purchased real estate, accounts or interests in individual names instead of the trust name.
- Mismatched beneficiary designations: Any beneficiary designations listed directly on an account or insurance policy take precedence over what the trust document says if they don’t match.
Reviewing your titles and beneficiary designations on a regular schedule helps reduce these risks and keeps the trust aligned with your goals.
When and how to update your trust
A revocable living trust should be revisited after major life events such as marriage, divorce, birth, death or a significant purchase or sale. Updates may involve changing trustees, adjusting distributions or adding newly acquired assets. Regular reviews with legal support can help ensure the trust remains current, funded and ready to function when needed.
