An unfunded trust is an expensive piece of paper. It is also extremely common — we see it constantly, usually in plans that were competently drafted and then never finished.
The concept is straightforward. A trust only controls what it owns. If your home is still titled in your individual name, the trust does not control your home, and your home goes through probate — the exact outcome the trust was created to avoid. Funding is the work of moving ownership so the trust actually holds what the plan assumes it holds.
A self-check
Work through these
- Pull your most recent recorded deed. Does it name your trust, or does it name you individually?
- Did you refinance after signing the trust? Many lenders require the property out of trust to close, and it is often never transferred back.
- Log in to your bank. Is the account registered to the trust?
- Check every brokerage and non-retirement investment account the same way.
- Review the beneficiary designation on each retirement account and life insurance policy.
- If you own a business, was your membership interest or share formally assigned?
- Have you bought any property, opened any account, or acquired anything significant since you signed?
Retirement accounts are the exception
Do not retitle an IRA or 401(k) into your trust. Doing so is treated as a distribution and triggers immediate income tax on the entire balance. These accounts stay in your name; what you review is the beneficiary designation.
Whether the trust should be named as that beneficiary is a genuine question with real consequences under current distribution rules. Sometimes it is the right answer — for a minor beneficiary, a beneficiary with a disability, or a blended family. Often naming individuals directly produces a better tax result. It deserves deliberate analysis rather than a default.
What a funding review looks like
- We pull the current recorded deed for each Hawaii property and confirm how title actually reads
- We inventory accounts and identify what is registered to the trust and what is not
- We review every beneficiary designation against the intent of your plan
- We prepare and record whatever deeds are needed to close the gaps
- We give you a written summary of what is in the trust, what is outside it, and why
We do this for plans we drafted and for plans drafted elsewhere. It is often reassuring. Occasionally it is urgent. Either way it is better to know.
This resource is general information about Hawaii law and is not legal advice. It does not create an attorney–client relationship. Outcomes depend on the specific facts of your situation — please speak with us or another qualified attorney before acting.