Legacy Design Strategies
Omaha, NE, Minot, ND and Iowa Fall, IA Estate Planning and Elder Law Firm

Estate Planning and Elder Law Blog

What Happens If Trust Not Funded

January 26, 2021
Andrew Sigerson
Revocable trusts are a very popular and effective estate-planning tool. However, the trust will be ineffective, if you do not actually place your assets in the trust.

Revocable trusts can be an effective way to avoid probate and provide for asset management, in case you become incapacitated. These revocable trusts — also known as “living” trusts — are very flexible and can achieve many other goals.

Point Verda Recorder’s recent article entitled “Don’t forget to fund your revocable trust” explains that you cannot take advantage of what the trust has to offer, if you do not place assets in it. Failing to fund the trust means that your assets may be required to go through a costly probate proceeding or be distributed to unintended recipients. This mistake can ruin your entire estate plan.

Transferring assets to the trust—which can be anything like real estate, bank accounts, or investment accounts—requires you to retitle the assets in the name of the trust.

If you place bank and investment accounts into your trust, you need to retitle them with words similar to the following: “[your name and co-trustee’s name] as Trustees of [trust name] Revocable Trust created by agreement dated [date].” An experienced estate planning attorney should be consulted.

Depending on the institution, you might be able to change the name on an existing account. If not, you’ll need to create a new account in the name of the trust, and then transfer the funds. The financial institution will probably require a copy of the trust, or at least of the first page and the signature page, as well as the signatures of all the trustees.

Provided you’re serving as your own trustee or co-trustee, you can use your Social Security number for the trust. If you’re not a trustee, the trust will have to obtain a separate tax identification number and file a separate 1041 tax return each year. You will still be taxed on all of the income, and the trust will pay no separate tax.

If you’re placing real estate in a trust, ask an experienced estate planning attorney to make certain this is done correctly.

You should also consult with an attorney before placing life insurance or annuities into a revocable trust and talk with an experienced estate planning attorney, before naming the trust as the beneficiary of your IRAs or 401(k). This may impact your taxes.

Reference: Point Verda Recorder (Nov. 19, 2020) “Don’t forget to fund your revocable trust”

Share This Post
Meeting with a client

Get Started Today

Book your Free Estate Planning Consultation Now

  • You have people you care about.
  • You want to maintain control of your life and your assets.
  • You'd like to leave a legacy.
  • You'd enjoy some peace of mind.
  • We can help.
Book a Discovery Call

Stay Up-To Date

Subscribe to Our eNewsletter

Office Locations

Omaha, NE Office

9859 South 168th Avenue,
Omaha, NE 68136

Directions

Minot, ND Office

7 Third Street SE, Suite 202,
Minot, ND 58701

Directions

Iowa Falls, IA Office

320 North Oak Street, PO Box 295,
Iowa Falls, IA 50126

Directions

Some Of The Areas We Serve

LD Strategies Logo PNG
Omaha, NE Office

9859 South 168th Avenue,
Omaha, NE 68136

Minot, ND Office

7 Third Street SE, Suite 202,
Minot, ND 58701

Iowa Falls, IA Office

320 North Oak Street, PO Box 295,
Iowa Falls, IA 50126

IMS - Estate Planning and Elder Law Practice Growth Advisors
Powered by
cross