You've done the hard part — you worked with an attorney, signed your revocable living trust, and left the office feeling like your estate plan is finally in order. But here's the truth most people don't hear until it's too late: **a trust that isn't properly funded is just a piece of paper.**

Funding your trust means making sure your assets are actually connected to it. In Florida, there are two main ways to do that — and understanding the difference could save your family a significant amount of time and stress down the road.

What is Probate and how do we Avoid it?

Probate occurs when you die with assets in your own individual name and that asset does not have a beneficiary designation. This asset, known as an estate asset, must be probated in the county of your residence according to your last will and testament or through the laws of intestacy (without a will).

Probate is generally considered to be time consuming and expensive, so setting up your estate plan to properly avoid probate is good estate planning. Usually, setting up a revocable living trust is the best way to avoid probate.

The Two Ways to Connect Assets to Your Trust

Option #1: Title the Asset in the Name of the Trust

The first approach is to retitle the asset so that the trustee — not you individually — is listed as the owner. For example, instead of a bank account being held in the name of "Jane Smith," it would be held by "Jane Smith, Trustee of the Jane Smith Living Trust dated January 1, 2025."

This means the asset is legally owned by the trust right now, today, and upon your death, the asset is distributed according to the terms of the living trust.

Option #2: Name the Trust as a Beneficiary (POD or TOD)

The second approach is to keep the asset in your own name during your lifetime but designate the trust as the beneficiary upon your death. Depending on the asset type, this is done through a:

  • Payable on Death (POD): designation for bank accounts to your trust
  • Transfer on Death (TOD): designation for brokerage and investment accounts to your trust
  • Trust as Beneficiary: Your life insurance policy can (maybe should) go to the trust as well 

With this approach, the asset passes directly to the trust when you die — without going through probate — but it remains in your personal name while you're alive.

Why We Prefer the POD/TOD Approach

At our law firm firm, we typically recommend the POD/TOD method for most clients, and here's the practical reason why.

The Problem with Trust-Owned Assets During Incapacity

Imagine your mother has a stroke and is no longer able to manage her own finances. Your family needs to access her bank accounts to pay her bills, coordinate her care, and keep things running.

If her accounts are owned by the trust — titled in her name as trustee — accessing those funds isn't as simple as showing up at the bank. Financial institutions will require documentation proving that she is legally incapacitated and that a successor trustee has the authority to step in. That typically means obtaining **letters of incapacity from licensed physicians**, which can take days or even weeks to arrange, especially in the midst of a medical crisis.

It's a bureaucratic obstacle that hits families at the worst possible moment.

The Power of Attorney Solution

On the other hand, if the accounts remain in your mother's personal name — with the trust named as POD beneficiary — then her **durable power of attorney** can step in immediately. The agent named in her power of attorney has the authority to manage those personal accounts right away, without the need for medical documentation or court involvement.

The trust still does its job at death (the assets transfer directly to the trust without probate), but during her lifetime, the family has a much simpler path to access funds when needed.

A Special Note on Joint Trusts for Married Couples

Many married couples in Florida choose to create a **joint revocable living trust** — a single trust that holds both spouses' assets together. This is a popular and effective planning tool, but it comes with an important nuance when it comes to how assets are titled.

In Florida, married couples who own property together as **tenants by the entireties** enjoy a powerful form of creditor protection. Creditors of one spouse generally cannot reach an asset held as tenants by the entireties — the debt would have to be owed by both spouses jointly.

Here's the problem: **when an asset is transferred into a joint living trust, it is no longer held as tenants by the entireties.** It's now owned by the trust, and that creditor protection is lost. If one spouse has a judgment against them, a creditor may be able to reach assets sitting inside the joint trust.

By using the POD/TOD approach instead — keeping assets in the spouses' personal names with the joint trust named as beneficiary — the couple **preserves their tenants by the entireties protection** during their lifetimes, while still ensuring the assets flow seamlessly into the trust at death.

This is an especially important consideration for business owners, professionals with liability exposure, or anyone with potential creditor concerns.

What About IRAs and Retirement Accounts?

IRAs and other retirement accounts deserve a separate conversation, because they come with their own set of rules.

In most cases, **we do not recommend naming a revocable living trust as the beneficiary of an IRA.** Here's why: when an IRA passes to a trust rather than directly to an individual, the tax treatment can become complicated and, in many situations, unfavorable. Depending on how the trust is drafted and who the ultimate beneficiaries are, the IRA may be required to distribute — and be taxed — much more quickly than if it had passed directly to a spouse, child, or other individual beneficiary.

There are limited situations where naming a trust as IRA beneficiary makes sense, such as when there are minor children, a beneficiary with special needs, or significant concerns about a beneficiary's ability to manage a large inheritance. But those situations call for very specific trust language — and a careful conversation with your attorney.

For most clients, individual beneficiary designations on retirement accounts are the right approach, with the trust coordinating the rest of the estate plan.

The Bottom Line

Funding a revocable living trust isn't a one-size-fits-all process. The right approach depends on the type of asset, your personal circumstances, and what you want your plan to accomplish — both during your lifetime and after.

What we consistently find is that the POD/TOD method gives families the most flexibility: the asset stays accessible through a power of attorney if you become incapacitated, and it still flows through the trust at death without probate. For married couples, it has the added benefit of preserving tenants by the entireties protection.

If you've already signed your trust and aren't sure whether your assets are properly connected to it, now is a great time to find out. An unfunded trust can leave your family in exactly the situation you were trying to avoid.

**Contact our office today to schedule a review of your estate plan.** We're here to make sure your plan actually works when your family needs it most.

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