Insights

The Simplest Estate Planning Mistake: Forgetting to Fund the Trust

By Terry L. (T. L.) Turnipseed, J.D., LL.M., CTFA · October 28, 2026

A trust only works if the assets actually make it into the trust. The documents may be excellent and the plan can still fail.

One of the simplest estate planning mistakes is also one of the most consequential: failing to fund the trust. MoneyLion's Gabriel Vito included my observation in a recent piece on why inherited homes get stuck in paperwork, and I will repeat it here because it is the single most common problem I see in plans drafted by others.¹ An unfunded trust is the equivalent of buying moving boxes and then forgetting to pack the house.

What funding means

A revocable living trust is a container. It controls only what is inside it. Funding the trust means changing title to real estate by deed, retitling bank and brokerage accounts, assigning business interests, and coordinating beneficiary designations on life insurance and retirement accounts so that they work with the trust rather than around it. The lawyer who drafts the trust often prepares a deed for the home and a letter explaining how to retitle everything else. The client, understandably, puts the letter in a drawer.

Why it fails

When the client dies, the trust owns the house and perhaps one account. Everything else is still in the client's individual name, and individually owned property passes through probate under the will, which usually pours over into the trust. The family ends up in the probate court the trust was supposed to avoid, with the delay, the expense, and the public record that come with it. If the will cannot be found, or if it was never updated to pour over into the trust, the result can be worse: assets pass by intestacy to people the client never intended to benefit.

Beneficiary designations are the other half of the problem. A retirement account or a life insurance policy passes to the person named on the designation form, regardless of what the will or trust says. A designation left in the name of a former spouse, or of a child who has since died, or of the client's own estate, undoes the plan for that asset.

The documents may be excellent

This is the frustrating part. The plan on paper may be very good. The trust may have the right tax provisions, the right successor trustee, the right distribution standards for the children. None of that matters for an asset that never made it into the trust. The plan only works if ownership and beneficiary designations are actually coordinated with it.

A practical checklist

If you have a revocable trust, pull it out and check the following:

• Is the deed to your home, and to every other parcel you own, recorded in the name of the trustee?
• Are your non-retirement bank and brokerage accounts titled in the trust, or at least payable or transferable on death to it?
• Are your business interests assigned to the trust, and do your operating or shareholder agreements permit the assignment?
• Do the beneficiary designations on your retirement accounts and life insurance name the people or the trust you intend, with contingent beneficiaries?
• Have you reviewed the designations after every major life change: marriage, divorce, a birth, a death?
• Does your will pour over into the trust, and does the family know where the original is?

Fund it once, review it yearly

Funding is not a one-time event. New accounts get opened, refinances sometimes require a deed out of the trust and back in, and advisors change. An annual review takes an hour. A probate that could have been avoided takes a year.

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