Trust Funding 101: Don’t Let an Unfunded Trust Cost You
When most families sit down with me to create their estate plan, they’re focused on the big picture—protecting their loved ones, avoiding probate, and ensuring that their wishes are carried out. Creating a Revocable Living Trust is often the centerpiece of that plan.
But here’s the truth that too many people overlook: a trust only works if it’s properly funded.
Think of it this way—your trust is like a safe. You can build the strongest, most secure safe in the world, but if you never put your valuables inside, it doesn’t do you any good. The same is true with your trust. If you don’t transfer ownership of your home and other major assets into it, your trust is essentially an empty shell.
Why Funding Your Trust Matters
Your home is likely your largest asset. By properly transferring your deed into your trust, you ensure:
Avoidance of Probate: Without trust funding, your estate may still have to go through probate—exactly what you were trying to avoid.
Continuity of Ownership: Successor trustees can step in immediately if something happens to you, without court involvement.
Protection for Your Legacy: A properly funded trust ensures your home passes according to your instructions, not the court’s.
The Hidden Cost of Doing It Wrong: Realty Transfer Fees (RTF)
In New Jersey, transferring real estate comes with a minefield of rules around Realty Transfer Fees (RTF). When you properly transfer your home into your trust, you may qualify for an exemption. But if it’s done incorrectly, or if the exemption isn’t properly claimed, the county clerk can assess thousands of dollars in transfer fees.
I’ve personally seen cases where families could have been hit with over $1,000 in unnecessary fees—all because the deed wasn’t drafted, signed, or filed correctly. With rising property values, the stakes are only getting higher.
That’s why trust funding isn’t just a clerical step—it’s one of the most critical parts of your estate plan.
Common Mistakes People Make with Trust Funding
Even the most well-drafted trust can fail if it’s not funded correctly. Here are some of the top mistakes I see:
Forgetting to Transfer the Home: People create the trust but never record a new deed moving the property into it.
Relying on “Pour-Over” Wills Alone: A pour-over will may eventually move assets into the trust, but only after probate—the very thing the trust was meant to avoid.
Mismatched Titles and Beneficiaries: Accounts may still list individuals as beneficiaries instead of the trust, creating conflicts or unintended distributions.
DIY Deeds Gone Wrong: Trying to draft or file a deed without professional help can lead to costly mistakes—like triggering transfer taxes or failing to get the proper exemption.
Not Reviewing After Major Life Changes: Marriage, divorce, refinancing a mortgage, or purchasing a new property all require a fresh look at your trust funding.
Avoiding these mistakes takes more than paperwork—it requires a clear strategy and follow-through.
What This Means for You
If you’ve already created a trust, the next question you need to ask yourself is: Have I properly funded it?
Is your home deeded into the trust with the correct language and exemptions applied?
Have your bank accounts, investment accounts, and other assets been reviewed and retitled where appropriate?
Do you have a plan for beneficiary designations on retirement accounts and life insurance to coordinate with your trust?
An unfunded or partially funded trust is one of the most common mistakes I see. Unfortunately, it can undo much of the work and money you’ve invested into creating your estate plan.
Next Steps
At The Law Office of Jeffrey Blair, I don’t just draft trusts—I make sure they’re properly funded. That includes preparing deeds, working with the county clerk to secure exemptions, and giving you clear instructions on how to handle your financial accounts.
If you already have a trust but aren’t sure whether it’s properly funded, now is the time to review it. A simple check today could save your loved ones from major expense and frustration down the road.
✅ Take Action Today: Schedule a Peace of Mind Planning Session and let’s make sure your trust—and your legacy—are secure.
