How to Help Your Loved Ones (and Your Life Savings) Avoid Probate

Today, many people choose a revocable living trust as the foundation of their estate plan, often in place of a will, joint ownership, or beneficiary designations. When set up correctly, a trust can bypass the expensive, public, and often time-consuming court processes of conservatorship or guardianship if you become incapacitated, and probate after your death.

However, there is one major misstep that can send your accounts, property, and your loved ones straight into the court system: failing to properly fund your trust.

What Does It Mean to Fund Your Trust?

Funding a trust means transferring ownership of your accounts and property from you as an individual to you as the trustee of your trust. Once the transfer is made, the trust becomes the legal owner, but you remain in full control as the trustee. You will still manage the assets and benefit from them as the trust’s primary beneficiary during your lifetime.

Funding a trust is accomplished in several different ways, including:

• Changing titles from your name (or joint names, if married) to the name of your trust. Example: John Smith becomes John Smith, Trustee of the John Smith Living Trust, dated June 1, 2025
• Assigning ownership of untitled property such as valuable artwork, jewelry, collectibles, or antiques through an Assignment of Personal Property
• Transferring business interests such as LLCs, corporations, or partnerships by executing the correct documents, including an Assignment of Membership Interest or Stock Transfer Agreement, depending on entity type and state law
• Changing beneficiary designations on accounts or property so the trust becomes the primary or contingent beneficiary

What Happens to Accounts and Property Left Out of the Trust?

Many people create a revocable living trust to avoid conservatorship or guardianship during their lifetime and to bypass probate after their death. It is a common misconception that once the trust agreement is signed, the work is complete. If you don’t update titles and beneficiary designations for your accounts and property before becoming incapacitated or passing away, those assets, as well as your loved ones, may still end up in probate court.

Which Accounts and Property Should (and Should Not) Be Funded into Your Trust?

In general (but with some exceptions), you should consider funding the following into your trust:

• Real estate, including homes, rentals, vacant land, and timeshares
• Bank accounts such as checking, savings, CDs, and money market accounts
• Safety deposit boxes
• Investment accounts
• Notes payable to you
• Business interests
• Intellectual property
• Oil, gas, and/or water rights or shares
• Personal effects such as art, jewelry, collectibles, and antiques
• Collector cars
• Digital assets and cryptocurrency, where possible
• 529 plans (*Please note that some plan administrators do not permit the transfer of existing 529 plans to a trust, but may permit opening a new 529 plan in the trust’s name. If transferring the account to the trust is not an option, be sure to designate a successor custodian to take over if the primary custodian becomes incapacitated or dies.*)

You should avoid funding certain assets into your trust during your lifetime, but you may want to consider funding them into your trust upon your death by beneficiary designation, including the following:

• Life insurance policies
• Individual retirement accounts, 401(k)s, and other tax-deferred retirement accounts

Finally, there are certain assets that you either should not, or legally may not be able to, place into your trust during your lifetime or upon your death:

• Interests in professional corporations: These typically cannot be transferred into a trust
• Foreign accounts or property. In some cases, placing non-U.S. accounts or property into a U.S.-based trust can create adverse tax consequences. In other cases, trusts, even U.S. trusts, may not be recognized under the laws of the other country
• Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) accounts. The minor child is the legal owner of the account, and you, as the custodian, only manage it. Name a successor custodian to take over if you become incapacitated or die, ensuring continuity of management without changing ownership
• Everyday automobiles and other low-value vehicles. Many states allow vehicles to be transferred outside of probate without adding them to a trust

While these recommendations should serve as basic guidelines, it is important to remember that there are no hard-and-fast rules with trust funding. Work closely with us to determine what should go into your trust and what should stay out. Also, when acquiring new accounts or property, call us to find out how to title the account or property or whom to designate as the beneficiary.

What Are the Benefits of Funding Your Trust?

Funding your trust is the key to ensuring your trust-based estate plan works as intended. If you become unable to manage your financial affairs, your chosen trustee, not a conservator or guardian appointed by a judge in a public proceeding, will take control of your accounts and property. This ensures you are cared for according to your wishes, by the person you selected, and under the instructions you provided in the trust. After your death, your trustee will continue this role, managing and distributing your trust’s accounts and property to your chosen beneficiaries, in the manner and timeline you have outlined, without the delays and costs of probate court.

Because the trust governs all accounts and property it owns, as well as any that will transfer into it by beneficiary designation upon your death, you only need to update the trust agreement when your wishes or circumstances change. This comprehensive approach is far simpler than managing an estate plan built from separate probate-avoidance strategies such as joint ownership, payable-on-death or transfer-on-death accounts, and individual beneficiary designations.

In most cases, a trust does not need to be filed with the probate court unless it is contested, keeping the details of your accounts, property, and final wishes private. By contrast, any accounts or property that are not held in a trust, are not jointly owned, and do not have a designated beneficiary will generally go through probate, a public court process where all your private financial and personal details become part of the public record.

The Bottom Line on Trust Funding

Many people appreciate the cost and time savings as well as the added control over their money and property that a trust offers. Yet in the end, an unfunded trust is not worth the paper it is written on, unfortunately.

Here at Strauss Attorneys, we are available to answer any questions about funding your trust and look forward to working with you and your advisors on all of your estate planning needs. Contact us today and let’s talk.