Funding a revocable living trust involves retitling your assets into the name of the trust. Basically, a funded trust “holds” assets of your choosing to accomplish your planning goals. The consequences of an unfunded or improperly funded trust include:
- Your trustee cannot manage assets held outside the trust. If you were to become incapacitated, for example, a court-supervised guardianship or conservatorship might be required to manage these assets
- Assets held outside the trust will have to go through probate. Avoiding the delays, frustration, and needless expense of probate is one of the main benefits of creating a trust in the first place
- Your assets may not go to the people you want to receive them after you pass away
In short, to ensure your trust-based plan accomplishes its goals, your trust must be properly funded.