If your living trust was never properly funded, some assets may remain outside the trust despite the fact that you signed the document. That can prevent the trust from managing those assets as intended and may lead to court proceedings if you become incapacitated or die.
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What does it mean to fund a living trust?
Funding means taking the appropriate steps to connect assets to the trust. For many assets, this means transferring legal title into the trust's name. Your home, other real estate, and certain bank or investment accounts may need to be titled that way. Review the firm's guide to funding a California living trust for background.
Does every asset need to be retitled into my trust?
No. Retirement accounts and life insurance often call for careful beneficiary designation planning instead of a routine change of ownership. The right treatment depends on the type of asset, account rules, and the rest of your estate plan.
What can happen to a house left outside the trust?
If a home that should be in the trust remains outside it, your family may face added legal steps or a probate proceeding after death; incapacity may also create difficulties with property management. An attorney should verify that a deed was properly prepared and recorded. California property tax consequences also need to be considered when preparing transfers. See the firm's article about including California real estate in your estate plan.
How can I tell whether my trust was funded?
Start by reviewing the ownership information on deeds, property records, and financial statements. Check beneficiary designations for accounts handled that way. Property tax bills and account statements can provide clues, but not a complete legal assessment. A trust funding review looks at the documents and actual ownership together.
Can a funding problem be corrected?
Often an attorney can help identify appropriate steps to align current asset ownership and beneficiary designations with your estate plan. The available options depend on the asset and whether the trust creator is living and able to act. Do not assume the trust's schedule of assets alone establishes legal ownership. A comprehensive review is the best way to learn what still needs attention.
