You worked with an attorney. You signed the documents. Your revocable living trust is officially created, and you probably felt good about it. The problem is that for many families, that signature is where the estate plan stops, but it is not where the work ends.
A trust that exists on paper, but holds no assets, offers almost none of the protection it was designed to provide. Assets that were never transferred into the trust still pass through your name, which means they may end up in probate court regardless of what your trust says. This step, called trust funding, is one of the most commonly skipped parts of the estate planning process, and it quietly undermines thousands of otherwise well-crafted plans every year.
At KLG Estate Planning, we work with families throughout Massachusetts and New Hampshire who come to us having done everything “right” on paper, only to discover that their trust was never properly funded. Here is what you need to know.
What “Funding a Trust” Actually Means
Funding a trust means transferring legal ownership of your assets from your individual name into the name of the trust.
When you create a revocable living trust, you become the trustee of that trust. The trust itself becomes a legal entity capable of holding property. For the trust to control what happens to an asset when you die or become incapacitated, that asset has to be owned by the trust, not by you personally.
For example, if your trust is named “The John and Mary Smith Revocable Living Trust,” your home would need to be retitled so that the trust, not John and Mary Smith individually, appears on the deed. The same logic applies to bank accounts, investment accounts, and other property that carries a title or ownership record.
Signing the trust agreement only creates the legal structure. Funding fills that structure with the assets it is meant to protect.
Why Unfunded Trusts Often End Up in Probate
Probate is the court-supervised process of validating a will and distributing a deceased person’s assets. One of the primary reasons people create revocable living trusts is to avoid it.
In Massachusetts, probate is handled through the Probate and Family Court under the Massachusetts Uniform Probate Code (M.G.L. c. 190B). In New Hampshire, estates are administered through the Circuit Court’s Probate Division. Both states have their own timelines, fees, and procedural requirements, none of which are quick or free.
A revocable living trust avoids probate because the trust, not the deceased individual, owns the assets. When the trustee dies, a successor trustee steps in and distributes assets according to the trust’s terms, with no court involvement required. But this only works if the assets are actually in the trust.
If you die with a bank account still titled in your own name, that account does not look at your trust for guidance. It looks at whether you had a will, a beneficiary designation, or a joint owner. If none of those apply, it goes to probate. The trust you spent time and money creating has no authority over it.
This is not a hypothetical edge case. It is one of the most common and preventable estate planning failures we see.
Common Mistakes Families Make After Creating a Trust
They assume the attorney handled it
Some attorneys do help clients transfer assets into a trust as part of the engagement. Many do not. If you are not sure whether your assets were transferred, that uncertainty is worth resolving now. Pull out your trust documents and compare the names on your accounts and deeds to the name of your trust.
They open new accounts in their personal name
People refinance homes, open new savings accounts, roll over old 401(k)s, or buy new property years after creating a trust, and forget that each new asset needs to be coordinated with the trust. An estate plan is not a one-time event. It requires ongoing attention as your financial picture changes.
They forget about accounts with beneficiary designations
Retirement accounts like IRAs and 401(k)s cannot be transferred directly into a revocable living trust during your lifetime without triggering tax consequences. These accounts pass through beneficiary designations instead. The trust may or may not be the right beneficiary depending on your situation, which is why coordinating your beneficiary designations with your overall estate plan matters as much as the trust document itself.
They misunderstand what a pour-over will does
Many estate plans include a “pour-over will” alongside the trust. This document says that any assets not already in the trust at death should be transferred into it. Some people interpret this as a backup system that makes trust funding unnecessary. It is not. Assets passing through a pour-over will still go through probate first, defeating much of the purpose of having a trust.
How Real Estate Is Transferred Into a Trust in Massachusetts and New Hampshire
Transferring real estate into a trust requires a new deed. The deed conveys the property from your name to you as trustee of your trust. In Massachusetts, this is typically recorded with the Registry of Deeds in the county where the property is located. In New Hampshire, deeds are recorded with the county Registry of Deeds, as well.
A few things to be aware of:
Mortgage lenders sometimes get nervous when they see a property transferred into a trust. Under the federal Garn-St. Germain Depository Institutions Act, lenders generally cannot call a loan due solely because it was transferred into a revocable living trust in which you remain a beneficiary. It is still worth notifying your lender and confirming their process.
Massachusetts also has a Homestead Act (M.G.L. c. 188) that protects a portion of a primary residence’s value from creditors. When you transfer your home into a trust, you may need to re-file a Declaration of Homestead to make sure that protection carries over. This is a detail that gets missed more often than it should.
In New Hampshire, property taxes and any applicable exemptions tied to owner-occupied status should be reviewed after a transfer to confirm eligibility is maintained.
A deed prepared incorrectly or recorded improperly can create title problems that are expensive to untangle. This is not a step to do with a template from the internet.
How Bank and Investment Accounts Are Transferred Into a Trust
For financial accounts, the process is usually simpler than real estate, but it still requires action.
For checking, savings, and non-retirement investment accounts, most financial institutions will let you retitle the account in the name of your trust or add the trust as the account owner. You will typically need to bring a copy of your trust document or a Certificate of Trust, which is a shorter document that confirms the trust exists and names the trustee without disclosing the full terms.
Some banks require you to close the existing account and open a new one in the trust’s name. Others can simply update the ownership records. Either way, plan for this to take some time and require a branch visit or a call to your advisor.
For retirement accounts (IRAs, 401(k)s, 403(b)s), the approach is different. These accounts cannot be retitled into a trust during your lifetime without treating it as a distribution, which triggers income tax. Instead, the question is who you name as the beneficiary. Depending on your goals, a spouse, children, or in some cases a special trust for retirement account assets, may be the right answer. This is a planning decision that should be made with your estate planning attorney, not simply defaulted to whatever name was on file from twenty years ago.
Why Periodic Trust Reviews Matter
Estate planning is not something you do once and file away. Life changes. Tax law changes. Your assets change. Your family situation changes. A trust that was well-funded five years ago may have gaps today.
Some specific triggers that should prompt a trust review:
- You purchased new real estate
- You refinanced your home
- You opened new financial accounts
- You changed jobs and rolled over a retirement account
- You received an inheritance or significant gift
- A beneficiary named in your trust or on an account has died
- You moved from one state to another, or from another state to Massachusetts or New Hampshire
Massachusetts and New Hampshire have different rules around estate taxes as well, which is worth flagging for anyone with assets that might approach those thresholds. Massachusetts imposes its own estate tax on estates exceeding $2 million as of 2023. New Hampshire has no state estate tax. If you own property in both states, the implications of that difference are part of a properly coordinated plan.
A periodic review, ideally every three to five years or after any major life event, gives you the chance to catch gaps before they become problems.
Frequently Asked Questions About Funding a Trust
What happens if I never fund my trust?
If assets are never transferred into the trust, the trust cannot control what happens to those assets. Depending on how your accounts and property are titled, your estate may go through probate even if you have a trust. The trust document will essentially sit unused.
Do I need to put all of my assets into my trust?
Not necessarily. Assets with proper beneficiary designations, jointly owned accounts, and retirement accounts are often handled outside the trust. The goal is to make sure that every asset in your estate is accounted for somewhere, whether inside the trust, through a beneficiary designation, or through some other legal mechanism. Your estate planning attorney can help you map out which approach makes sense for each asset.
Can I still use my accounts after they are in the trust?
Yes. For a revocable living trust, you are almost always the trustee during your lifetime. You can still deposit, withdraw, and manage your accounts the same way you always have. The trust label on the account does not change how you use it day to day.
Is a pour-over will the same as funding my trust?
No. A pour-over will is a safety net, not a substitute for funding. Assets that pass through a pour-over will still go through probate before landing in the trust. Proper funding keeps assets out of probate entirely.
How do I know if my trust is funded?
Compare the ownership on each of your significant assets (account statements, deeds, car titles) to the name of your trust. If the trust name does not appear, that asset is likely not funded. An estate planning attorney can do a more thorough review and help you identify gaps.
Working with KLG Estate Planning to Fund Your Trust
If you have a trust that you are not sure is properly funded, or if you are just beginning to think about whether a trust makes sense for your family, KLG Estate Planning serves clients across Massachusetts and New Hampshire with practical, straightforward guidance.
Getting a trust created is a meaningful step. Making sure it actually works the way you intended is the part that matters most for your family.
Contact KLG Estate Planning to schedule a consultation and review your current plan.
