Creating an estate plan and an associated trust is an important step in documenting your wishes and helping loved ones avoid the probate process.

Trusts are designed to protect your assets, but they can only control the assets that are in the trust. If any assets don’t get transferred, that creates an underfunded or partially funded trust and could still lead to probate to fully settle your estate.

While most people think of real estate, primary bank accounts, and investment accounts as part of their trust, there may be other assets they overlook. In some cases, assets are transferred to the trust, whereas others require a change of beneficiary.

When it comes to properly funding your trust, be sure these eight items are included:

✅ Real property like your home, vacation home, mineral interests and timeshares.

✅ Life Insurance policies may require a change of ownership and/or a change of beneficiary, depending on whether the policy has cash value.

✅ Homeowner’s insurance and automobile insurance policies should be updated to add your trust as an additional insured on the policy.

✅ Tangible personal property such as furniture, jewelry, electronics, artwork and anything else that is physical property other than real estate.

✅ Financial accounts, including checking and savings accounts, money market accounts, certificates of deposit, savings bonds, investment accounts, brokerage accounts and stocks and bonds. There may be different steps required depending upon the specific type of account or asset, as well as the financial institution.  

✅ Safe deposit boxes, which are often overlooked when people DIY their estate plan and trust, but they are important to include so that your trustee will be able to access the safe deposit box after your death.

✅ Retirement plans, which may include an IRA, 401K, 403(b) or 457 plan. While ownership of the retirement account will remain with the individual account holder, sometimes it will be advisable to name the trust as the beneficiary of a retirement plan. The tax rules related to these types of accounts and trusts are complex, so be sure to follow the specific instructions of a qualified professional when updating your beneficiaries.

✅ Business interests, if you own a single member LLC or are part of a multi-member LLC, partnership or corporation. This is another complex area of trust funding, so be sure to consult with your experienced estate planning attorney to ensure these business interests are transferred correctly.

✅ Promissory notes are less common, but they may exist if someone owes you money, such as for a personal loan or other financial arrangement.

When we work with clients on their estate plan, we provide a customized checklist and action steps specific to their accounts to ensure they can properly fund their trust and that their estate plan works as expected when they need it. We also recommend that clients regularly review their trust and have a process to ensure any new assets or changes to financial accounts get added to the trust.