7 Assets People Forget to Put Into Their Trust
You did it. You met with an estate planning attorney, made all those decisions you had been putting off, signed your revocable living trust, and walked out of the office feeling pretty good about yourself.
Your estate plan is done.
Except there is one more very important piece of the puzzle: your trust actually needs to own your assets.
This is something I spend a lot of time talking about with clients because creating a trust and funding a trust are two different things. You can have a beautifully drafted revocable living trust sitting safely in your estate planning binder, but if the assets that are supposed to be governed by that trust never make their way into it, your family may not receive all of the benefits you created the trust to provide.
And sometimes the problem isn't that someone never funded the trust at all. They did everything correctly when the trust was created. Then life happened.
They refinanced the house. They opened a new bank account. They changed financial advisors. They inherited money. They bought a vacation property. They started a business.
Ten years later, their financial life looks very different, but their trust funding still looks exactly like it did on signing day.
That is why trust funding should not be viewed as a one-time homework assignment. It is part of keeping your estate plan current.
Here are seven assets I frequently see people overlook.
1. Your House—and Other Real Estate
Let's start with the big one.
A lot of people assume that because their house is listed somewhere in their estate planning documents, it is automatically "in the trust." Unfortunately, that isn't how ownership works.
If the plan calls for your home to be owned by your revocable living trust, we generally need a deed transferring the property from you individually to you as trustee of your trust. The deed then needs to be properly recorded.
The same issue can come up with rental properties, vacant land, vacation homes, and other real estate.
This becomes especially important when you own property in another state. One of the reasons we may use a revocable living trust is to help avoid having your family deal with probate proceedings in more than one state. If that out-of-state property never makes it into the trust, however, we may have lost one of the benefits we were trying to create.
There can also be tax, mortgage, insurance, title, and other considerations involved in transferring real estate, so this is not a situation where I recommend downloading a deed from the internet and hoping for the best. Your attorney should help make sure the transfer fits the rest of your estate plan.
2. Bank Accounts
Checking accounts tend to get attention because we use them constantly. It is often the other accounts that get forgotten.
Maybe you have a savings account you opened years ago for emergencies. There is a money market account at another bank because the interest rate was better. Perhaps there is an old certificate of deposit that keeps renewing every year.
If those accounts are intended to be owned by your trust, they need to be properly titled.
That does not necessarily mean you need brand-new accounts or that your daily banking life has to become complicated. In many cases, the change is simply in how the account is titled.
This is also a good reason to occasionally make a list of every financial institution where you have money. If you have accounts scattered among several banks and credit unions, your successor trustee needs to know they exist in the first place.
3. Non-Retirement Investment Accounts
Brokerage and investment accounts are another common trouble spot, especially because people change financial advisors and investment companies over the years.
Let's say we properly fund your trust when you sign your estate plan. Five years later, you decide to move your investments to another company. The new account gets opened in your individual name rather than in the name of your trust.
Nobody did anything intentionally wrong. The trust simply got lost in the shuffle.
That new account may now be outside the carefully designed plan we created.
This is why I encourage clients with trusts to mention the trust whenever they establish a new non-retirement investment account. Your estate planning attorney and financial advisor should be working from the same playbook.
4. Business Interests
If you own an LLC, partnership interest, family business, or other closely held business interest, don't forget about it when funding your trust.
These assets can be particularly easy to overlook because there may not be a traditional "account" to retitle. Instead, transferring an ownership interest may require an assignment and changes to the company's records.
And this is an area where we need to be careful.
If there are multiple owners, we need to review the operating agreement, shareholder agreement, buy-sell agreement, or other governing documents before making a transfer. North Carolina's LLC law gives significant importance to the operating agreement in determining the rights and obligations associated with LLC ownership, and transferring an interest does not necessarily mean the recipient automatically receives every right of a member.
For a business owner, trust funding should therefore include a conversation about what you own, how you own it, what your business documents allow, and what you actually want to happen to that business if you become incapacitated or die.
5. Vehicles, Boats, and Other Titled Property
This one deserves a big asterisk because I do not automatically recommend putting every car in a revocable living trust.
Yes, North Carolina allows vehicles to be titled in a trust. The N.C. Division of Motor Vehicles even has specific requirements for transferring a vehicle registration to a trust. But the fact that we can put an asset into a trust does not always mean we should.
We need to look at the overall estate plan, the value of the vehicle, how it is used, insurance considerations, liens, and the practical benefit of retitling it.
Boats, trailers, recreational vehicles, and other titled property deserve the same review.
The better question isn't, "Should every titled asset go into my trust?" It is, "Have we intentionally decided how this asset fits into my estate plan?"
That is a very different question. I usually recommend people do an Assignment of Personal Property which makes sure that your trustee can transfer your vehicles at your death without having to go through probate.
6. Valuable Personal Property
Most of us have a lot of "stuff." Furniture, dishes, clothing, electronics, tools, and everything else we accumulate over a lifetime.
Then there is the other category.
The grandmother's diamond ring. The art collection. The antique furniture. Valuable coins. A collection that took 30 years to build. Firearms. Family heirlooms that may be worth far more emotionally than financially.
Your trust may include provisions covering tangible personal property, and your estate plan may also include a general assignment transferring certain personal property to the trust. But valuable or unusual assets sometimes deserve individual attention.
Firearms are a particularly good example because federal and state law may affect how certain firearms can be owned and transferred.
And even when an item does not require special legal treatment, there is another problem: your family needs to know what you want done with it.
If three children all believe Grandma's ring was promised to them, the value of that ring suddenly becomes the least important part of the problem.
This is why a good estate plan does more than address ownership. It also gives your family clear instructions.
7. The Asset You Don't Own Yet
This may be the most commonly forgotten asset of all.
You sign your trust today. Everything is properly funded. We celebrate. You go home with your estate planning binder.
And then you keep living your life.
Two years from now, you open a new investment account. Four years from now, you inherit money from your mother. Six years from now, you sell your house and buy another one. Somewhere along the way, you buy a piece of land at the beach because you have always wanted one.
Those assets weren't around when we created your trust.
A trust doesn't magically reach out and grab everything you acquire for the rest of your life. New assets need to be reviewed and coordinated with your estate plan too.
This is one reason I believe estate planning should be an ongoing relationship rather than a transaction you complete once and never think about again. Your life changes. Your family changes. Your finances change.
Your estate plan needs to keep up.
Wait—Not Everything Belongs in Your Trust
After reading all of this, you may be tempted to pull out your estate planning binder and start changing ownership of everything you have.
Please don't.
There are assets that generally should not simply be retitled into your revocable living trust.
Retirement accounts are the most important example. Your IRA belongs to you individually, and what happens to it after your death is generally controlled by the beneficiary designation on the account. The IRS specifically recognizes that IRA and retirement-plan benefits pass to designated beneficiaries, and the rules governing distributions after death can vary significantly depending upon who—or what—is named as beneficiary.
That means your IRA, 401(k), 403(b), and other retirement assets require beneficiary planning, not ordinary trust funding.
Sometimes a trust is intentionally named as the beneficiary of a retirement account, particularly when we want continuing protection for a beneficiary. But that is a planning decision that should be made carefully because retirement accounts have their own tax rules.
Life insurance and certain other assets also generally pass according to beneficiary designations. Those beneficiary designations need to coordinate with your estate plan even when the trust does not own the asset itself.
This distinction is important:
Some assets need to be owned by your trust. Other assets need to work with your trust.
A good estate plan does both.
Your Trust Isn't Finished Just Because You Signed It
One of the things I tell clients is that signing day feels like the finish line, but in some ways it is really the beginning.
The legal documents give us the structure. Funding is what connects your real financial life to that structure.
And maintaining that funding is what keeps the plan working as your life changes.
If you already have a revocable living trust, pull it off the shelf and think about what has changed since you signed it. Have you bought or sold real estate? Opened new accounts? Changed financial advisors? Started a business? Received an inheritance? Purchased something valuable?
If the answer is yes, it may be time for a trust funding checkup.
Because the goal isn't simply to be able to say, "I have a trust."
The goal is to make sure your trust will actually work when your family needs it.
Contact Us
If you have been thinking about whether a trust might be a good idea for you, contact us today. We offer a complimentary Discovery Call. Call us at (919) 336-4219 to schedule. Or, use the below link to schedule. We would be happy to assist you. At Mackintosh Law, you will always talk to a real person and not an AI bot.
This article is for general educational purposes and is not legal advice. Estate planning and trust funding should be tailored to your individual assets, family circumstances, tax considerations, and goals.
