I remember when I got my new Trust a couple of years ago. I was so proud of myself, doing some adulting, and taking care of my kids. It was expensive (note: it doesn’t have to be!), and the ceremony around it seemed a bit much for the occasion, although the view of the San Gabriels from the conference room was stunning.
And then my friend said, “Great job, Bryan…now it’s time to fund your Trust.” “What do you mean?” “You know, fund your Trust.” “Nope…same words, still not understanding.” “...oh, um, well, you need to change the title of your home and bank accounts to the newly formed Trust so it is funded.” “Wait, what?!”
What I’ve learned since is that this is common. Standard practice, really. Let’s leverage oft-cited CPA Kurt Supe via X, “Is your trust funded? Most people have no idea what that even means. You paid a lawyer thousands to set up a trust. You signed the papers, put the binder on a shelf, and felt responsible. Here's the problem. That trust might be completely empty, and an empty trust protects nothing. This is the single most common estate mistake I see, and it's brutal because people think they're done. A trust is just an empty container.”
There are two fundamental issues here:
- Who is here to actually help the family?
- Why are we not speaking to each other like neighbors?
Your estate attorney is paid to produce a legal document every decade. They are not paid to help you actually Fund Your Trust, so they don’t (not complaining here, just stating the fact that people will do what you pay them to do). And your wealth manager is definitely not here to Fund Your Trust. They are paid to grow the balances of your accounts at their firm (or what they consider their Assets Under Management or AUM) (again, not complaining, this is a valuable service).
Funding Your Trust is the responsibility of the family. But who checks on that? Who cares for the family besides the family? Who reviews the paperwork on an annual basis? After a major life event? On behalf of the Next Generation? Again, from Mr Supe:
“Have the conversation. The best plan fails if nobody knows it exists. Tell your family where the documents are and who's in charge before they have to find out the hard way. A trust you never funded isn't a plan. It's a really expensive folder. When did you last check whether yours actually owns anything?”
Without the family doing the work, having the critical family conversations around the kitchen table, ensuring there is a plan in place and the paperwork is a proper reflection of the plan, well understood by Mom and Dad, by the Sandwich Generation, and by the Next Generation, the Trust is just an expensive shell of a document. Without doing the work, we will not have the Great Wealth Transfer, we will have the Great Probate.
Let’s help ourselves and our families. Let’s do the work. Let’s move forward…