Creating a revocable living trust is one of the most effective ways to protect your assets, avoid probate, and ensure your wishes are carried out smoothly. But many people don’t realize that simply signing the trust document is only the first step. To work as intended, a trust must be funded.
So, what does that mean? And why does it matter?
What Does It Mean to “Fund” a Trust?
Funding a trust is the process of transferring your assets into the trust’s name. Think of your trust as an empty basket: the document creates the basket, but until you place your property into it, there’s nothing inside.
Funding can involve several steps depending on the type of asset:
- Real estate: Transferring your home or other properties into the trust with a new deed.
- Bank and investment accounts: Changing ownership or adding the trust as a beneficiary.
- Business interests: Assigning ownership shares or membership interests to the trust.
- Personal property: Using an assignment document to transfer valuable items such as jewelry, artwork, or collectibles.
Why Is Funding So Important?
If your assets are not properly transferred to your trust, the trust cannot control or distribute them when you pass away. This can lead to unintended consequences, including:
- Probate court involvement: Assets left outside the trust may still require probate, defeating one of the main benefits of creating a trust.
- Delays and costs: Your loved ones could face additional legal expenses and long waits to access what you intended for them.
- Confusion and disputes: Without clear ownership in the trust, family members may disagree on how property should be divided.
- In short, a beautifully drafted trust that isn’t funded is like a car without gas—it looks good on paper but won’t take you where you need to go.
The Bottom Line
Ready to Take the Next Step?
If you already have a trust, it may be time to review whether it’s properly funded. If you’re considering creating one, working with an experienced estate planning attorney can help ensure every step—from drafting to funding—is handled correctly.
At the Law Offices of Glenn Bishop, PLLC, we guide Arizona families through every stage of the estate planning process so they can have peace of mind knowing their wishes will be honored.
Contact us today to schedule a consultation and make sure your trust is truly working for you.