Skip to content 
If you think trusts are only for millionaires, you’re not alone. A lot of normal families hear the word trusts and immediately think fancy lawyers. Big money, something only the rich do. But here’s the truth. A trust isn’t about being rich. It’s about making life easier for the people you love. If life gets messy. Because life does get messy. People get sick. People get hurt. People pass away unexpectedly. And when that happens, your family is either holding a clear plan or they’re holding a stack of problems.
Some of you have stories. Stories of probate families being torn apart. Cost going crazy. Families caught up for years in the process. For now, I’m going to break this whole thing down into plain English.
- What a trust actually does.
- Why a Will is usually not enough.
- The biggest mistake people make.
- And a simple checklist to get things handled without feeling overwhelmed.
Why does our system make things so complicated?
Well, it’s complicated because people often don’t plan. And as a result, you have to have a default system that can handle that complexity. It’s complexity created by complexity. So our goal is to make it simple. Simple is cheaper, faster, and better. Your plan does not have to be complicated. In fact, the best plans are the most straightforward and answer basic questions like if I can’t do something, like talk to a doctor because I’m ill. Who can speak on my behalf? Or what happens to my business if I pass away or I’m incapacitated? If my body outlives my mind, who can handle my finances? Basic questions with basic answers.
If I give simple answers to simple questions, I can avoid a lot of unnecessary complexity. That’s true.
So how do I do that? You might be asking. So let’s make this very simple. A revocable trust otherwise known as a living trust is basically a legal bucket. While you’re alive, you put assets into the bucket and you control the bucket. You carry the bucket. If you die or if you become incapacitated, the person you choose steps in and carries the bucket. They follow your instructions without the court running the show. That’s it. The whole point of a living trust is to allow your wishes to be enacted without involving a judge or a court. What should be obvious is that my wishes do not depend on me being dead. I have wishes while I’m alive, and that should matter. Which is why the key word in living trust is living. Because this isn’t just about death. It’s about what happens while you’re alive. If you can’t manage your own affairs or advocate for yourself injuries, health issues like strokes or dementia, a car accident or surgery that goes sideways, anything. A living trust is one of the cleanest ways to keep your life functioning without involving a court process.
Now let’s compare it to a Will. A Will is important. Don’t misunderstand me. A Will still matters. In fact, a Will is still part of a living trust. But it’s simply a catchall in case something that you intended to have in your living trust bucket is left out. Then the Will says, put everything in the living trust bucket. It’s called a pour over. Well, that’s all we need the judge to do under those circumstances. Now, a Will is mostly a set of instructions that wake up after you die, and it still requires probate. It goes like this. Do nothing and you die with assets. Probate. Do a will and die with assets. Probate. Do a Trust and die with assets in the trust. No probate. That’s it. Remember, we like to keep it simple. And in writing.
But what is probate? Well, probate is the court process where a judge oversees the transfer of assets, deals with creditors, and basically makes sure everything is done by the book according to the state. The will is the form the probate court uses to decide who gets what. If I don’t have a will. It’s called intestate. The court uses the state laws to determine.
Sounds fine. Right? Yeah. Until you realize probate is a court process and it can be slow, expensive, and it’s public. Public. Meaning your estate file becomes part of a public record. Who inherited what? General asset details. Names. Addresses. Sometimes more than you’d like to share with the entire world. So here’s the easiest way to think about it. A will is instructions to distribute your estate that a judge uses to decide who gets what. The judge invites, contests and uses the courts complex and time consuming rules to ensure those rules are followed.
On the other hand, a funded trust avoids that process entirely by giving the instructions plus a container that actually holds the assets. The bucket. Think of it like a bucket of your stuff with instructions versus just a big pile of messy assets. This basket, this bucket also gives you the ability to control your estate long after you pass. More on that in a moment. This is why people love trusts. That’s why the rich use them. Because they know if their estate ended up in a drawn out court process, their heirs would receive nothing but headaches and heartache. The lawyers would somehow end up with the lion’s share of the estate and the damage done to their family would be irreparable. So people who know this use living trust to avoid probate.
But now I’m going to give you the hard truth. The biggest problem isn’t that people don’t create living trusts. No. The biggest problem is they create a trust and then they don’t fund it. This is the classic move. They. They sign the paperwork. They feel responsible. I’m feeling great. And then nothing gets moved into the trust. If your trust doesn’t own anything, your trust can’t do anything. You just have an empty bucket. Put another way, an unfunded trust is like buying a safe and then leaving all your cash on the kitchen table. So when people tell me I have a trust, my first question is always going to be, is it funded? Because funding is what makes it real.
Now, if I just described you, don’t panic. I’m going to go over simple ways to fund your trust. And that’s the trust. Then your trustee can follow your instructions without a judge. That will save you a ton of money and conflict just by itself. But we would prefer it if you avoided the probate process entirely, if at all possible. So let me give you an example of a common mistake. You did your house into living trust. Good. But your bank account is still in your individual name. And you didn’t set it up with the “payable on death” beneficiary and you didn’t retitle it to the trust. Guess what. Your house avoids probate but your bank account might still have to go through probate.
And that’s why families get surprised. They think they did everything right. Then they’re still in court, albeit it’s a much easier process when you’re using a pour over. Well, it’s worth diving into exactly why wealthy families use living trusts right beyond just probate. It’s not because they’re showing off. They use them because they want three things.
- less court,
- more control, and
- a plan that works if someone gets sick.
All three of those goals apply to regular families, too. We already discussed number one. As it pertains to death, a living trust can help keep your family out of probate court because probate is usually slower than you think. Even if everybody gets along, even if nobody is fighting, there are notice periods, paperwork, timelines, court calendars, sometimes months or years. It’s public, which many people do not want, especially if you have assets. They don’t want targets painted on their loved ones. A living trust allows your successor trustee to step in and follow your written instructions without waiting for a judge to approve every move. And it’s not public. Fewer delays, fewer fees, and less friction. While your family is already dealing with grief.
Number two, a living trust lets you control how money is handled after you’re gone. A will cannot do this. Will often say things like divide everything evenly between my kids. A trust can do so much more than that. Way more. Which is why the wealthy use them probably more than anything else, you see. A living trust lets you set guardrails. You can say things like, hey, distribute 10% at age 25 to a principle. They can have health, education and maintenance and support them. In the meantime, you’re never going to be homeless and if they want to go to school then go to school.
Then maybe you change it and you say so much at another 10% at 30 and another 25% at 40. Like you can actually put guardrails on this thing. You could say pay tuition, directly cover housing, cover books, but don’t hand an 18 year old a pile of cash. You can say give them a down payment amount for their first home, but not for a Ferrari. You can have someone you choose following the instructions, real life instructions for real life situations.
What if you have a beneficiary who is bad with money or they have creditor issues? They’ve had messy divorces. Trust planning can add layers of protection. Is it perfect protection? No. Someone is still following your instructions and doing their best. But we’re all human. But it’s way better than dumping cash into someone’s hands and hoping for the best. Stats bear this out repeatedly. You can unintentionally make somebody’s life way worse off by giving them a windfall without guardrails.
Number three incapacity planning. This one is huge and a Will cannot help in any way. This requires a living trust. If you become incapacitated, your successor trustee can manage trust assets for your benefit while you’re alive. And that means bills get paid. Investments get managed. Properties get handled without that planning. Families often end up in a court process just to get the authority to act.
Guardianships or conservatorships. Different names depending on the state. But the set process of these makes probate look easy. It’s way more difficult. It’s stressful, it’s slow, it’s expensive. And here’s the kicker. Incapacity planning isn’t just for old people. Incapacity happens to young people too. Accidents. Don’t check your age first. So living trust is a way to keep your life running, even if you can’t run it yourself. Okay. How do you set this up without feeling overwhelmed?
Here’s the simple approach. Think of who you would want to advocate for you if you could not manage your own financial affairs. Who would you choose? If that person wasn’t available? Who would be the next? Think of who you’d want to advocate for you. If you could not talk to your own doctors, who would you choose? If that person wasn’t available, who would you want stepping in and handling your affairs if you passed away? And if they weren’t available, who would you choose after that? This is the first step in making a great plan. While you’re alive and well, you can handle all these things yourself. So nothing feels different when you create a living trust. There’s no extra tax returns, there’s no bookkeeping, there’s no state filing fees. There’s nothing. Literally just sits there. It’s a bucket. It’s waiting. But if something happens, you already have people chosen to step in and act. You could even choose a professional like a tax advisor or an attorney or a bank or trust company to help. That’s what a lot of people do. Or you make them a co trustee. Hey, I don’t want to just dump this on somebody. I’m going to give them somebody else to work with. The key is thinking about it and making it part of your plan before it’s needed. It’s as easy as hiring an attorney to draft the trust and getting it done.
Step number two is to fund it. This is where most people drop the ball. Funding just means moving your assets into the trust where appropriate. So here’s a quick checklist. Your real estate. You may deed your home into the trust depending on your state and your situation. If you’re if the home is in your name, you would simply deed it to you as trustee of your living trust. It’s very simple, but it should be done to avoid having to worry about it later. Bank accounts retitle them in the trust. That’s the easiest. Or you could just add your trust as the paid on death beneficiary. If you don’t want to change the account now, same thing with brokerage account. Same idea.
Now many clients hold their accounts in LLCs because of privacy and asset protection. You could just assign that LLC into the trust. What about business interests like your LLC membership interest or shares in a corporation? Easy to assign them into the Living Trust. The Living Trust controls those. How about rental properties? They’re often a great fit, especially if you want to avoid multiple probate properties in your own name. Because here’s the dirty secret. Yet the probate in every state that you own real estate. Of course, in a rental case, I don’t want it in the living trust. I want it in an LLC, in which case you would just assign the LLC into the trust.
How about personal property? This is generally done with an assignment. Although I would still make a schedule of gifts in your trust as to who gets what. Just to avoid conflict. Things like cars, boats, RVs that are anything with a title, you’d want to retitle it into the trust. Make sure it’s in the trust name, though sometimes it’s easy to do after somebody passes. It depends on your state or when it’s just the trust is a beneficiary. Sometimes it’s really easy. All states are different, so I’d say it’s easiest just to title into the trust or making the trust the beneficiary, or make it a paid on death designation. But this is not usually something that will cause you a ton of pain if you don’t do it right, just know that.
Now those are the basics. Then just periodically keep it updated because a trust isn’t just a set it and forget it anyway. What if I buy a new property? You want to make sure it’s in the trust? What if I get divorced or remarried? Make sure it’s updated. New kid update. Start a new business. Update it. At least make sure that business is in it. A good rule of thumb is review your trust every year and especially after major life events.
So let’s recap and do some next steps. A living trust isn’t about being rich. It’s about being right. It can help you avoid probate so your family deals with less court and more privacy. It can give you control over who gets what when, and how. It can protect you if you become incapacitated.
