Estate planning is a critical component of securing your assets and ensuring they are distributed according to your wishes after you are gone. In California, one common estate planning tool is the revocable living trust. However, simply creating a trust is not enough; you must also fund assets to your trust. In this article, we'll explore what can happen if you don't properly fund your trust and the potential consequences.


One of the primary reasons for creating a revocable living trust is to avoid the probate process, which is a court procedure that can be time-consuming and costly. If you fail to fund your trust by transferring ownership of all relevant assets your estate may still be subject to a probate action after your passing. This means your heirs could face a lengthy legal process and substantial additional expenses. Below is a list of five potential consequences.


  1. Incomplete Ownership Transfer:

When you create a revocable living trust, you must transfer ownership of your assets into the trust. This involves changing the legal title of the assets from your name to the name of the trust.  Assets not properly transferred to the trust remain in your individual name, which could make them subject to probate if the assets total over $184,500 (in California).


  1. Lack of Beneficiary Designation:

Trusts have the advantage of allowing you to designate beneficiaries who will receive your assets upon your passing (allowing you to update through amendments from time to time). If you do not fund an asset to your trust or designate a beneficiary at the financial institution, the court may need to determine the rightful recipient, a process handled through court action (probate).


  1. Omitted Assets:

Without a detailed funding, it’s easy to overlook some assets. Even if you transfer most of your assets into the trust, any omitted ones may still go through probate.  Incomplete funding can occur when you acquire new assets but fail to transfer them into the trust, leading to potential probate exposure.


  1. Real Property and Legal Title:

Real estate, such as a home, is a common asset held within a trust. Properly transferring real property to the trust requires a deed. If you neglect to execute a new deed or properly record it, the property will remain outside of the trust and trigger a probate.


  1. Personal Property:

Personal items and belongings can also be included in a trust. You’ll want to ensure these assets are correctly transferred to your trust through an assignment. If overlooked, even personal property may result in probate proceedings.


Failing to fund your trust can lead to significant delays in the distribution of your assets. When assets go through probate, it can take months or even years before beneficiaries receive their inheritances. This can cause financial strain and frustration for your loved ones.  Probate comes with various costs, including court fees, legal fees, and administrative expenses as well as potentially causing undue stress on a family. By not funding your trust, you’ll likely expose your estate to these additional costs, which could diminish the value of your assets that ultimately pass to your beneficiaries.


When assets pass through probate, there is also a greater chance of family disputes and conflicts among beneficiaries. This can lead to strained relationships and legal battles. Funding your trust can help minimize the potential for disagreements among your heirs.


Probate proceedings are a matter of public record. If your assets go through probate, the details of your estate and its distribution become accessible to the public. By not funding your trust, you risk sacrificing the privacy and confidentiality that a trust can provide. 


Furthermore, trusts are not just about avoiding probate; they also provide a mechanism for managing your assets during your lifetime. If you don't fund your trust, you may miss out on the benefits of effective asset management, such as incapacity planning and ensuring that your assets are managed on your behalf by a trusted third-party of your choosing.


In conclusion, not funding your trust can have significant consequences. While the process of funding a trust may require effort and diligence, the benefits far outweigh any drawbacks. By properly funding your trust, you can ensure that your assets are distributed efficiently, maintain your privacy, reduce costs, and provide for a smoother transition of your estate to your loved ones. To avoid the potential pitfalls of neglecting this crucial step in estate planning, it is advisable to work with an experienced estate planning attorney who can guide you through the process and help you create a solid foundation for your estate plan.


If you, a friend, or family member need help establishing or restating an estate plan, please reach out to our Intake Department at 760-448-2220 or at We have offices in San Diego and Orange Counties, but we assist can families throughout California as well.

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