What do we mean by the term "funding" a Revocable Living Trust? Essentially, it involves retitling your assets into the name of the trust, as well as making sure that the beneficiaries of any life insurance policies or retirement accounts coincide with the provisions of the trust.
If you fail to fund your Revocable Living Trust, your estate plan won’t work as you intended.
The consequences of not properly funding your trust include:
Assets held outside the trust cannot be managed by the trustee. So, for example, if you become mentally incapacitated, your loved ones will need to establish a court-supervised guardianship or conservatorship to manage the assets not held in the trust
Assets held outside the trust are subject to probate, defeating one of the main benefits of creating the trust in the first place
Assets held outside the trust may not go to your intended beneficiaries
The bottom line is this: Make sure your Revocable Living Trust is properly funded. And, be sure to keep it up to date so that any changes in your personal and financial situation, together with those of your loved ones, can be taken into account. In this way you can be sure your Revocable Living Trust is helping you to accomplish all of your goals and maintain complete control over your affairs.