16 Dec Your Trust Is Useless Until You Do This
Affluent families are used to solving big problems. You build companies, navigate markets, manage teams, structure deals, and make decisions that affect those around you.
But there’s one place where even the most sophisticated, financially successful families fall into a shockingly simple trap:
They believe their estate plan is “finished” the moment their trust is signed.
It’s not.
In fact, a trust that isn’t funded is nothing more than a fancy, very expensive piece of paper. It’s like an empty vault.
And an empty vault doesn’t protect anything.
Trusts: A Two-Step Process
That trust you paid an attorney thousands to prepare years ago? It could be useless.
Why? Because the assets were never actually put into the trust.
Creating the trust is just Step 1.
But Step 2 (funding) is where the real protection, probate avoidance, and tax strategy actually take shape.
You wouldn’t buy a state-of-the-art safe for your business, anchor it to the floor, reinforce the walls, install motion sensors, and then leave all your valuables sitting on the front desk.
Yet that’s exactly what families do when they sign a trust and never fund it.
And here’s where the danger compounds:
Different types of assets fund into a trust in completely different ways.
Do it wrong (or not at all) and you might as well not have a trust.
Let’s break this down.
Not All Assets Go Into a Trust the Same Way
1. Real Estate (Primary Homes, Vacation Properties, Rentals, Commercial Buildings)
This is the asset class where most funding mistakes occur.
To move real estate into a trust, you don’t simply “list it” somewhere in the trust document.
You must:
- Prepare a new deed transferring the property into the trust,
- Sign it correctly (state-specific rules matter),
- Include state-required forms, tax transfer information, and other state-specific information (again, state-specific rules matter)
- File it with the county recorder where the property sits.
If you miss even one of these steps, that property is not in your trust—no matter what your binder says. And if your family owns multi-state real estate, the process must be repeated in each state, each county, each jurisdiction.
One missed filing can result in probate chaos.
And for some real estate, this process doesn’t apply at all and there’s an entirely different process (see, New York City Co-Ops which are an entirely different animal to fund into a trust).
2. Bank Accounts (Checking, Savings, Money Market, CDs)
This is a completely different process.
Each financial institution has its own rules, forms, and internal procedures.
You may need to:
- Retitle existing accounts into the trust’s name,
- Open brand-new trust accounts and transfer funds,
- Or set the trust as the POD/TOD beneficiary.
Different banks = different rules = different delays = different risks.
It’s also critical you work with someone at the bank who knows how trusts work and what you’re seeking to do. I frequently communicate with bank representatives who incorrectly tell me “we can’t do that” regarding funding the trusts. It may be necessary to escalate to the appropriate individual or department to get this accomplished.
3. Retirement Accounts (401(k)s, IRAs, SEP, Roth)
Retirement assets are not retitled into a trust. If someone tells you otherwise, run.
Instead, you must determine whether the trust should be a beneficiary and whether the trust is even drafted to handle retirement distributions properly. Most aren’t.
One wrong beneficiary designation can trigger unintended taxes or disinheritance
4. Life Insurance Policies
Insurance funding depends on:
- The purpose of the policy,
- Whether it’s owned individually or by a trust (like an ILIT),
- And what tax implications the ownership change might cause.
This is an area where wealthy families accidentally create tax bombs.
5. Business Interests (LLCs, FLPs, Corporations, Partnerships)
This is where complexity multiplies.
Each entity may require:
- New membership certificates,
- Amended operating agreements,
- Consent of partners,
- Revised cap tables,
- Updated buy-sell provisions aligned with the trust.
Many business owners never complete this step because it requires coordination between the estate planning attorney, CPA, entity attorney, and financial advisor.
But if you skip it?
Your business (often your largest asset) gets forced through probate, court supervision, and possibly a partner dispute. The exact nightmare your planning was supposed to prevent.
The Dangerous Illusion of “We Signed the Trust, So We’re Safe”
This is the false sense of security that sabotages planning.
Families tell themselves: “We completed our estate planning. We’re all set.”
But until your assets are properly titled, transferred, assigned, or beneficiary-designated… your planning is incomplete, fragile, and unreliable.
Unfunded or partially funded trusts are one of the biggest reasons wealthy families face:
- Probate delays,
- Unwanted court involvement,
- Family disputes,
- Substantial legal fees,
- Exposure to creditors and predators,
- And avoidable estate taxes.
Trusts are a two step process: (1) Creating the trust; and (2) Funding the trust. Both steps are critical and necessary.
Your Team Determines Whether Your Plan Actually Works
Funding a trust is not a DIY paperwork exercise. It requires coordination among:
- Your estate planning attorney,
- Your financial advisor,
- Your CPA,
- And every financial institution and title company that holds your assets.
Each asset class has its own rules.
Each institution has its own process.
Each mistake has its own consequences.
The families who get this right have one thing in common:
They work with professionals who take funding as seriously as the drafting.
This is the difference between a trust that merely exists…
…and a trust that protects.
At Garza Law, we work with a select number of affluent families each year who are serious about protecting their wealth, their children, and their legacy.
If you have a trust, or you’re considering establishing one, and you want to ensure the plan actually functions in the real world, not just on paper, you can apply to work with us here:
We are intentionally selective about the families we take on.
Not because we’re exclusive for the sake of exclusivity, but because delivering this level of precision, coordination, and multigenerational planning requires deep, focused attention.
If you want planning that actually works when your family needs it most, apply now.