Estate planning is more than creating documents—it’s about making sure those documents work when you need them to. One of the most common oversights we see at Lumsden Law is when clients create a trust, but never fund it properly. Unfortunately, an unfunded trust doesn’t protect your assets from probate. It’s like building a safe but never placing your valuables inside.
In this blog, we’ll break down:
- What it means to “fund” a trust
- Why proper funding is essential
- How to fund different types of assets
- What happens if you don’t fund your trust
- How Lumsden Law can help Florida residents avoid probate with smart planning
What Is Trust Funding?
Trust funding is the process of transferring ownership of your assets into your trust. Once an asset is owned by the trust—or the trust is listed as the beneficiary—those assets bypass the probate court upon your death. This keeps your estate private, avoids delays, and ensures your loved ones receive their inheritance efficiently.
If you’ve established a revocable living trust in Florida but haven’t transferred your assets into it, then those assets are still considered probate assets, and your trust won’t work the way you intended.
Why Is Trust Funding So Important?
Here’s why funding your trust is a critical step in your estate plan:
Avoids Probate
Assets owned by your trust are not subject to probate. That means no court delays, no extra legal fees, and no public records.
Keeps Things Private
Probate is a public process, but assets held in trust are handled confidentially. Your beneficiaries receive their inheritance without court interference.
Maintains Control
A fully funded trust allows you to control how and when your assets are distributed after your passing.
Protects Beneficiaries
Minor children, special needs beneficiaries, and financially inexperienced heirs can receive protection through structured distributions.
Funding Your Trust: What Should Go In?
Almost any asset can be transferred to a revocable trust. Here’s how to handle the most common categories:
1. Real Estate
Your primary residence, vacation homes, or investment properties can all be deeded to your trust.
- We prepare and record a new deed that changes the ownership from you individually to your trust.
- In Florida, transferring homestead property into a trust must be handled carefully to maintain homestead protection.
2. Bank Accounts
You can either:
- Retitle the account to the trust’s name
- Or add the trust as the pay-on-death (POD) beneficiary
This ensures those funds avoid probate and are distributed directly to your intended heirs.
3. Investment and Brokerage Accounts
Investment accounts can be:
- Retitled to the trust (for revocable accounts)
- Or list the trust as a transfer-on-death (TOD) beneficiary
Your financial advisor or brokerage firm can help complete the necessary paperwork.
4. Retirement Accounts (401k, IRA)
These accounts usually cannot be retitled into your trust. However:
- You should name the trust as a beneficiary—especially if you want to protect minor children or distribute assets over time.
- This must be done thoughtfully to avoid negative income tax consequences or missed Required Minimum Distributions (RMDs).
5. Life Insurance
List your trust as the primary or contingent beneficiary. This allows the death benefit to pass into your trust, especially if you have young children or need structured distributions.
6. Personal Property
Furniture, art, jewelry, and other tangible items can be assigned to the trust through a general assignment of assets, which we prepare at Lumsden Law.
7. Digital Assets
Cryptocurrency, online business accounts, domain names, and other digital assets should also be included:
- You can title cryptocurrency wallets in the name of the trust.
- Maintain a secure inventory of access credentials and instructions for your successor trustee.
What If You Don’t Fund the Trust?
An unfunded or poorly funded trust will not work as intended. Your loved ones may still have to go through probate, and the assets you wanted to protect could end up in court.
Here are some of the risks:
- Delays: Probate can take months, even years.
- Costs: Attorney’s fees, court costs, and administrative expenses eat into your estate.
- Public Records: Probate filings are public, meaning anyone can see your assets and beneficiaries.
- Unintended Heirs: If assets aren’t titled correctly, they may not go to your chosen beneficiaries.
Avoiding Probate Is a Process—Not a One-Time Fix
Trust funding is not a one-and-done task. As your life evolves, so should your estate plan. Every time you:
- Buy a new property
- Open a new account
- Start a new business
- Receive an inheritance
- Invest in cryptocurrency
You should ask: Should this be titled in the name of my trust or at least have my trust as the beneficiary?
At Lumsden Law, we walk you through this process and provide customized guidance on updating your trust over time.
How We Help at Lumsden Law
Our team doesn’t just draft documents—we build strategies that work when you need them most.
We offer:
- Custom trust creation
- Trust funding guidance
- Real estate transfers
- Beneficiary designations
- Ongoing trust updates
You can rely on our years of experience to safeguard your legacy and simplify the process for your loved ones.
Call to Action
Don’t let your trust fail you. Ensure your estate plan is ready to protect your family when it matters most.
Schedule a consultation with Lumsden Law today and review your trust, retitle assets, and secure peace of mind for your future.
FAQs:
1. What does it mean to “fund” a trust in Florida?
Funding a trust means transferring ownership of your assets—like real estate, bank accounts, or life insurance—into the trust or naming the trust as a beneficiary. This step is crucial for avoiding probate.
2. What happens if I don’t fund my trust?
If your trust is not properly funded, your assets may still go through probate despite having a trust. This can result in delays, legal costs, and public access to your estate details.
3. Can I put my Florida home into a trust without losing homestead protection?
Yes, but it must be done correctly. At Lumsden Law, we ensure your deed is structured in a way that maintains Florida’s homestead exemptions while transferring ownership to your trust.
4. Do I need to update my trust every time I get a new asset?
Yes, updating your trust is an ongoing process. Every time you acquire a significant new asset, it’s important to retitle it in your trust or name the trust as a beneficiary to keep your estate plan current.
