Financial advisors know that the most effective client relationships are built on trust, foresight, and the ability to guide families through the full arc of their financial lives. But while investment management and retirement planning are often top of mind, estate planning is too often left siloed, delayed, or outsourced. The reality is simple: holistic financial planning and estate planning are inseparable. The bookend to any successful financial plan is an estate plan. When advisors weave them together, they unlock deeper value for clients, preserve wealth across generations, and strengthen long-term client relationships.

What Holistic Financial Planning Really Means

Holistic financial planning looks beyond accounts and performance metrics to encompass every part of a client’s financial life. It integrates:

• Cash flow and budgeting to sustain daily stability.
• Tax strategies that optimize lifetime outcomes.
• Retirement planning to ensure longevity of resources.
• Insurance and risk management to guard against disruptions.
• Investment management to build a portfolio that aligns with the client’s goals.
• Education and legacy goals to prepare for the future.
• Estate planning to secure the client’s wishes for wealth transfer.
  

At its core, holistic planning means aligning money with purpose. It asks: What matters most to this client, and how should their wealth serve those priorities?

The Role of Estate Planning

Estate planning is the capstone of comprehensive wealth management. It ensures that assets are managed and distributed in accordance with a client’s wishes, both during life and after death. Common tools include wills, trusts, powers of attorney, healthcare directives, and beneficiary designations. But beyond documents, estate planning provides clarity. It minimizes conflict, protects against unnecessary taxation, and communicates a client’s legacy intentions clearly to heirs and charities.

Even the most thoughtful financial plan can fall short if a client’s legacy wishes are trapped in probate. Without the right estate planning in place, wealth can become tangled in delays, legal fees, and family disputes. What was carefully built over decades risks being lost or diminished in transition.

For advisors, estate planning is not a separate service but a critical extension of the financial plan. Without it, all the work put into growing and protecting wealth risks unraveling at the moment it matters most.

Why Advisors Must Bridge the Two

Holistic financial planning and estate planning share the same objective: maximizing financial well-being while preserving a client’s values. When these processes operate in silos, critical details fall through the cracks and clients ultimately miss out.

Advisors are uniquely positioned to bridge the gap. Unlike attorneys, CPAs, or insurance specialists who each see only one piece of the puzzle, advisors maintain the full picture with investments, taxes, retirement, cash flow, and more. Often, they have walked alongside clients for years, if not decades, building deep trust and understanding.

This vantage point makes the advisor the natural quarterback. They can anticipate how estate planning choices will ripple across a client’s broader financial life, coordinate among attorneys, CPAs, and insurance professionals, and ensure consistency across disciplines. Most importantly, they keep the client’s long-term goals and legacy intentions at the center of every decision, so that wealth not only grows but transfers in alignment with the client’s wishes.

Advisors who integrate these disciplines create tangible advantages for their clients. Here are three standout examples: 

1. Risk Mitigation and Wealth Preservation: Without thoughtful estate integration, risks emerge. A client underinsured for long-term care may have to liquidate assets intended for heirs. A lack of clear documentation may trigger probate disputes. A trust structure left unreviewed after a divorce can unintentionally exclude or include beneficiaries. Holistic planning helps advisors proactively identify these vulnerabilities and protect client wealth.

2. Tax Efficiency: Estate and income taxes can significantly erode generational wealth transfers. Coordinated planning makes tax optimization possible through strategies like annual gifting, irrevocable trusts, and charitable contributions. Advisors who bring estate planning into their process not only preserve wealth but also demonstrate measurable value to clients.

3. Seamless Adaptation to Life Events: Life rarely goes according to script. Marriage, divorce, the birth of children, the sale of a business, or even evolving philanthropic priorities can all reshape both financial and estate plans. Holistic advisors ensure estate strategies are revisited alongside financial updates, keeping the entire plan current and aligned.

Separation Comes at a Cost

When financial planning and estate planning are treated as silos, clients are exposed to inefficiencies, missed opportunities, and costly mistakes. Conflicting advice from different professionals can leave gaps. Outdated beneficiary designations may unintentionally override a carefully drafted will. Valuable tax advantages can slip through the cracks.

Most importantly, a client’s intentions may never be fully realized. Without coordination, their legacy risks being dictated by default legal frameworks instead of by thoughtful, deliberate design.

This challenge is amplified by the fact that estate planning participation remains alarmingly low. A 2024 survey found that only about 24% of American adults have a will or living trust, with even lower rates among younger clients and underrepresented demographics (Caring, 2025). Meanwhile, Baby Boomers are projected to transfer $124 trillion in wealth by 2048 (Cerulli, 2024). This unprecedented generational wealth transfer is already underway, and advisors who fail to integrate estate planning into their offering risk being left behind. Those who embrace it, however, position themselves as indispensable partners to clients and their families at the moments that matter most.

The Advisor’s Opportunity

For financial advisors, estate planning is not just about compliance or risk management; it’s a growth opportunity. By making estate planning part of your holistic process, you can:

• Differentiate your practice. Few advisors provide this level of comprehensive service.
• Deepen client trust. Guiding families through sensitive legacy conversations builds enduring relationships.
• Retain assets across generations. By engaging heirs early through estate discussions, advisors are more likely to maintain client relationships when wealth transfers occur.
• Simplify the process. Modern technology removes the barriers that once made estate planning slow, intimidating, or cost-prohibitive.

Financial Advisor Jason Oestreicher from PATH Financial Partners said, “You can’t provide any other type of value that is as impactful as estate planning. Clients aren’t going to leave you when you offer it. This isn’t just another service; it’s how you set yourself apart, retain clients, and secure the next generation.”

Estate Planning as the Capstone of Holistic Advice

Holistic financial planning without estate planning is incomplete. Financial advisors who integrate the two create durable value: protecting wealth, honoring client intentions, and ensuring financial legacies reflect what matters most.

The opportunity is clear. As trillions of dollars prepare to change hands, advisors have a responsibility, and a competitive advantage, to deliver comprehensive, unified planning.

The good news? At Wealth.com, we make estate planning not just accessible but actionable. Our platform equips advisors with the tools to seamlessly integrate estate planning into their practice, enhancing client outcomes and strengthening advisor-client relationships.

Historically, estate planning required sending clients to attorneys, often creating disjointed experiences. Today, our platform bridges the gap between holistic financial planning and estate planning, empowering advisors to provide end-to-end service without friction.

Ready to see how Wealth.com can help you bring estate planning in-house? Get started today.

Estate planning often involves a balancing act: providing support to beneficiaries without enabling dependency, establishing firm rules while preserving flexibility, and expressing intent without sacrificing efficiency.

One tool that strikes this balance particularly well is the side letter. Though informal and typically not legally binding, a side letter accompanies a trust and provides the trustee with meaningful context into the grantor’s values, intentions, and distribution preferences.

What Is a Side Letter in Estate Planning?

A side letter is a document written by the grantor to the trustee, offering personal insight that supplements the formal trust. It might express the grantor’s vision for how funds should be used, share guidance on supporting beneficiaries through key life stages, or articulate broader family values.

Think of the trust as a screenplay. It outlines the storyline, characters, and structure. The side letter, then, is like a director’s notes. It provides behind-the-scenes guidance that explains the motivation and meaning behind the plot. It gives the trustee a fuller picture of the “why” behind the “what,” helping them make decisions that stay true to the grantor’s intent.

Why Specific Distribution Provisions Can Be Problematic

Weighing Trustor’s Control vs Trustee Flexibility. 

It’s tempting for clients to want very specific provisions in their trust: “Don’t give my son any money unless he graduates college,” or “distribute money to my son for wedding expenses or if my son starts a business.” While these types of provisions can technically be “hard-coded” directly into the trust, doing so can often be problematic.

Rigid language can backfire. Life changes can result in scenarios where the grantor would regret the instruction. Importantly, because the trust’s provisions are legally binding, this language opens the door for a beneficiary to sue to demand a distribution, despite the trustee’s reservations. Maybe the son starts a business instead of finishing college. Maybe the son’s business is unsuccessful, and the trustee doesn’t want to pour more money into it so that the money can be deployed more wisely elsewhere. A trust that’s too rigid may force a trustee into an outcome the grantor never intended.

Preserving Tax and Asset Protection Features. 

Vesting discretion in the trustee to make distributions isn’t only beneficial for reacting to changing circumstances. Many asset protection and tax protection strategies require trusts to be fully discretionary, and forced distributions of trust property to beneficiaries negate those objectives. These objectives should be important to all families, not just high-net-worth families.

To ensure that a trust you set up for your beneficiary is hard to reach by that beneficiary’s creditors (including former spouses), the state law that governs the trust will require that the beneficiary have no discretion to access the trust property. One of the ways to demonstrate that the beneficiary has no access to the trust is to vest distribution decisions fully in the trustee (and appoint a trustee who is not the beneficiary). If your trust requires the trustee to distribute a certain amount to the beneficiary at the beneficiary’s request, you may be defeating the spendthrift nature of that trust.

Many wealth transfer strategies that are driven, in part, by the desire to minimize estate and generation-skipping transfer taxes require that the trustee have full discretion to distribute income and principal of the trust. This is primarily a concern for high net worth families. 

The main objective is to have assets grow and accumulate any income inside the trust so that the taxable estates of the beneficiaries remain under the taxable exemption amount. The trust assets become taxable only if distributed to the beneficiary for consumption (and not to reinvest or control outside of the trust and inside the beneficiary’s taxable estate). A trust that requires the distribution of assets to the beneficiary under circumstances dictated by the trust creator may be causing more assets to be included in the taxable estate of the beneficiary than is necessary. For example, it may seem like a good idea to force a distribution of cash to the beneficiary so that he can purchase his first home. But the trust could just as well purchase the home and let the beneficiary live in the home. This way, the beneficiary can earn and accumulate his own assets (e.g., by working) without worrying that the home purchased through his parents’ assets also adds to the future estate tax burden for his own estate.

Increasing Drafting Cost. 

Rigid distribution guidelines increase complexity and cost. The more unique provisions a trust has, the more time (and billable hours) are required to draft, review, and ultimately administer the trust.

How Side Letters Support Trustees in Estate Administration

Trustees often shoulder the burden of making difficult distribution decisions. Should they say yes to a request? Does this align with the grantor’s wishes? Would they have approved of this use?

A side letter offers helpful insight. It may share values the grantor held dear (like financial independence, philanthropy, or education) or describe how the grantor hopes the trust will help future generations. It can include specific examples, personal reflections, or reminders to be philanthropic.

Although it’s not necessarily legally binding, a well-crafted side letter can:

• Reduce ambiguity in how a trustee should use discretion
• Minimize family conflict by providing clarity of intent
• Help the trustee make difficult decisions with greater confidence

Why Side Letters Offer Flexible, Cost-Effective Estate Planning

Incorporating a side letter allows the trust document to remain clean, flexible, and broadly discretionary. That makes it easier to use standardized trust drafting platforms or software, reducing cost and complexity. Meanwhile, the grantor’s personal vision lives in a parallel, more narrative format.

In short, where estate plans may provide flexible language, side letters allow for a place for nuance, emotion, and intent (without locking a trustee into a given course of action).

Final Thoughts: The Value of Side Letters in Estate Planning

When used appropriately, side letters can be a powerful complement to a well-drafted trust, helping a trustee to administer a trust in line with the grantor’s intent, without sacrificing flexibility or increasing complexity.

Wealth.com’s forms are specifically drafted to address these concerns, emphasizing trustee flexibility, asset protection and tax planning. This is why we prefer for our forms to be paired with a side letter, rather than drafting bespoke distribution language directly into the trust document.

In estate planning, it’s not always about having the most rigid guardrails. Sometimes, the best guidance is a well-lit path.

It’s the kind of estate question that’s both oddly common and incredibly difficult to answer: What if someone disappears—and no one knows if they’ve died?

A client recently faced exactly this. Her daughter, named as a beneficiary on her estranged father’s retirement account, was contacted by the financial institution holding the funds. They couldn’t locate him—and neither could she. Their question was simple but unsettling: Is he deceased? And, if so, how can she get a death certificate to move forward?

What AI Says — and Why It’s Not Enough

We posed this question to two leading AI engines. The answers pointed to familiar tools:

• Social Security Death Index (SSDI)
  
• Ancestry.com
  
• FamilySearch.org 

These are decent starting points, especially for genealogical research. But here’s a few nuances those AI tools don’t know:

• SSDI is outdated. It only covers deaths reported to the Social Security Administration (SSA) and typically ends in 2014 for publicly accessible records.
  
• The real-time data is locked away. The SSA’s modern death database—the Death Master File (DMF)—is restricted. Only “certified” institutions, such as major banks and insurers, can access it.
  
• Even private tools like Ancestry.com rely mostly on public obituaries and grave data—not official government death records. 

So What Can You Actually Do?

1. Check if you have any connections to “certified” entities. The National Technical Information Service (NTIS) keeps a public list of institutions certified to access the DMF. If you or your client has ties to one, they may be able to help.
   
2. Work with an attorney. Attorneys with access to legal research tools like WestLaw PeopleMap may be able to perform more sophisticated searches or petition for information directly from the SSA.
   
3. Request records from local counties. For more recent events (as opposed to genealogical searches), death records are usually held by the county where the death occurred—which is exactly the problem if the last known location is unknown. In these cases, a hired attorney can write to multiple counties or file court petitions to aid in the investigation.
   
4. Understand the time barrier. Free archival sites like FamilySearch only make death records available after several decades—typically 50 to 75 years postmortem.
5. Petition the court. If all else fails, and and a person has been missing for an extended period, some states allow for a court petition to have them declared legally deceased, which can serve as a substitute for a traditional death certificate. There are formal procedures to declare someone legally deceased after a period of disappearance (often 5–7 years).

The Value of Legal Insight—and Human Support

This is exactly the kind of situation where AI, while incredibly valuable, may fall short in some respects. These tools can point to public resources—but they can’t always navigate the legal gray areas, interpret the rules, or advocate on your behalf.

At Wealth.com, we bridge that gap. Our Attorney Network provides the kind of practical, real-world support financial advisors need when their clients face complex estate planning questions—especially those that require more than a database search.

Hear from a customer who recently leveraged the Attorney Network, Jared Tanimoto, CFP®, Founder & Financial Planner at Sedai Wealth:

“I actually had a great experience using Wealth.com recently with a client in Hawaii. We were setting up a trust, and as part of the process needed to retitle their home. Hawaii has a unique system called Land Court, which adds an extra layer of complexity to the titling process. Wealth.com connected both me and my client to a local Hawaii estate attorney who understood the nuances of Land Court and handled everything smoothly. The coordination was seamless, and it made the client experience feel really polished.”

Whether you’re trying to confirm a death, resolve beneficiary questions, or support a family in transition, our platform doesn’t just give you the tools—it connects you to the people who know how to use them.

Gifting plays a crucial role in wealth transfer planning, allowing individuals to support loved ones, fund education, and optimize their estate plans. As a financial advisor, understanding and discussing gifting strategies with your clients is essential, particularly with the potential tax law changes set to take effect at the end of 2025.

The Tax Cuts and Jobs Act (TCJA) significantly increased the lifetime gift and estate tax exemption, but these provisions are set to sunset after 2025, reverting to pre-2018 levels. While the Trump Administration is pushing to make these tax cuts permanent, high-net-worth clients who haven’t yet taken advantage of the elevated exemptions may still want to consider accelerating their gifting plans.

Here’s what advisors need to know to guide their clients through the complexities of gifting and help them optimize their wealth transfer plans.

Understanding the basics of gifting rules and exemptions

To effectively guide clients, advisors must grasp the basics of gifting rules and exemptions:

• Annual exclusion: In 2025, individuals can gift up to $19,000 per recipient without triggering gift tax reporting. Married couples have the ability to combine their annual exclusions to gift up to $38,000 per recipient. This amount is indexed for inflation and may increase in future years.
• Lifetime gift tax exemption: The current lifetime gift tax exemption is $13.99 million per individual in 2025 but is set to revert to an estimated $7 million (adjusted for inflation) after 2025 if the Tax Cuts and Jobs Act sunsets.
• Gift tax reporting: Gifts exceeding the annual exclusion may require filing Form 709, even if no gift tax is ultimately owed due to the lifetime exemption.
• Unlimited gifting exceptions: Direct payments for educational expenses (tuition only) and medical expenses are exempt from gift tax limits. This means that paying a grandchild’s college tuition or a parent’s hospital bill should not typically count towards the annual exclusion or lifetime exemption.
• Estate tax interplay: Taxable gifts made during life reduce the available estate tax exemption at death. This creates an interconnected planning dynamic, where lifetime gifts and bequests at death must be strategically balanced.

Tailoring gifting approaches to client wealth goals

Effective gifting strategies often vary based on a client’s wealth level and goals. Here’s a high-level breakdown:

Mass affluent clients ($5M or less)

For clients with more modest estates, consider these simpler gifting strategies:

• Direct family gifts: Annual exclusion gifts of cash, property, or other assets to children, grandchildren, or other relatives can help support their financial needs while incrementally reducing the taxable estate.
• Education funding: Contributing to 529 plans for children or grandchildren’s education qualify for the annual exclusion, and some states offer additional tax deductions or credits. Plus, the assets grow tax-free if used for qualified education expenses.
• First-time homebuyer assistance: Helping family members with down payments on a first home is a popular gifting strategy. These gifts can be structured as annual exclusion gifts, or larger amounts can be reported as taxable gifts using the lifetime exemption.
• Charitable giving: Modest charitable gifts, whether direct donations or through donor-advised funds, can provide income tax deductions and reduce the taxable estate.

High-net-worth clients (Over $5M)

Wealthier clients, especially those with estates exceeding the current lifetime exemption amount, may benefit from more advanced gifting structures:

• Irrevocable trust strategies: Grantor Retained Annuity Trusts (GRATs) can transfer appreciating assets to beneficiaries with minimal gift tax impact. Irrevocable Life Insurance Trusts (ILITs) remove life insurance proceeds from the taxable estate. Charitable Remainder Trusts (CRTs) provide an income stream to the grantor while benefiting charity and reducing the taxable estate.
• Family limited partnerships (FLPs): FLPs pool family assets under a central entity and allow for discounted gifting of partnership interests.
• Dynasty trusts: These long-term trusts are designed to minimize estate and generation-skipping transfer taxes over multiple generations.
• Charitable giving: Private foundations and charitable lead trusts allow for more specific philanthropic impact while offering estate and gift tax benefits.

Navigating the tax landscape of gifting

Gifting strategies can have large tax implications that advisors must help clients navigate:

• Basis considerations: Gifted assets generally retain the donor’s cost basis (known as “carryover basis”), which can lead to larger capital gains taxes for recipients if the assets are later sold. Inherited assets that have appreciated typically receive a “stepped-up basis” to fair market value at the owner’s death, potentially reducing capital gains for heirs.
• Generation-skipping transfer (GST) Tax: Gifts to grandchildren or later generations (known as “skip persons”) may trigger an additional 40% GST tax without proper allocation of the GST exemption (which currently mirrors the gift and estate tax exemptions).
• State-specific issues: Some states also impose their own estate or inheritance taxes with exemptions far below the federal amount. States may have separate gift taxes.
• Income tax implications: Certain gifting strategies, such as transferring appreciated assets or creating grantor trusts, can impact the donor’s income tax situation. For example, income generated by assets in a grantor trust is taxed to the grantor, not the trust itself.
• Timing considerations: Advisors should help clients time gifts strategically. For example, gifting appreciating assets early shifts future growth out of the taxable estate. With the potential impending reduction of the gift and estate tax exemptions in 2026, planning to utilize the higher exemptions before they sunset could yield significant tax savings.

Debunking gifting myths: What clients need to know

Navigating gifting strategies can be complicated, and clients often have misconceptions that advisors must address:

• Clients may not realize that some gifts need to be reported even though they are under the lifetime exemption amount. It is important that clients are aware of their tax reporting obligations, even if it will not actually result in a tax liability being due.
• Some clients confuse gift tax and estate tax rules, not understanding that taxable gifts during life also reduce the available estate tax exemption at death. Others may think that all gifts are inherently taxable or that only cash gifts need to be reported.
• Clients often don’t realize that indirect gifts, like paying a family member’s expenses or forgiving a loan, can count as reportable gifts. Helping with a down payment, covering medical bills (if paid directly to the provider), or even adding a joint owner to a bank account all have potential gift tax implications that need to be properly tracked and reported.
• The difference between “carryover basis” for gifts and “stepped-up basis” for inheritances is a frequent point of confusion. Clients may not know how gifting an appreciated asset during life can lead to higher capital gains taxes for the recipient compared to leaving that same asset as a bequest at death.

To help clients visualize potential gifting scenarios and their impact, consider leveraging Wealth.com’s Scenario Builder. While advisors cannot provide legal advice, tools like this can help inform and guide client conversations.

Conclusion

Gifting is a powerful wealth transfer strategy that requires careful planning. By understanding the fundamentals, optimizing for tax implications, and addressing common misconceptions, advisors can help clients navigate the complexities of gifting.

Remember, the advisor’s role is to educate, guide, and facilitate these conversations, not to provide legal advice. Encourage clients to consult with estate planning attorneys and tax professionals to implement their specific strategies.

As tax laws continue to evolve, advisors who engage clients in gifting discussions will differentiate themselves and provide immense value. Your clients will appreciate your initiative in helping them navigate this complex — but essential — aspect of their financial lives.

Creating a trust is a critical part of estate planning, but a trust is only effective if it’s properly funded. Without the right funding, even the most meticulously drafted trust can fail to achieve its intended purpose, leaving clients vulnerable to probate and other issues they specifically sought to avoid. In this guide, we’ll explain what it means to fund a trust, why funding a trust is so important, and key considerations for funding different types of assets.

What does it mean to fund a trust?

“Funding a trust” involves transferring ownership of your assets from yourself as an individual into your trust. Once the assets are owned by the trust, the trust controls those assets, based on the rules you’ve established in the trust document.

It’s important to note that creating a trust and funding a trust are two separate steps. Creating a trust happens when your client is setting up their estate plan. But funding the trust is the crucial next action—and one where you, as their financial advisor, can add immense value. Even if an attorney created the trust, they may not be deeply involved in the actual funding process.

Funding a trust typically involves:

1. Retitling assets like real estate and vehicles to be owned by the trust
2. Updating beneficiary designations on accounts like life insurance and retirement plans to name the trust
3. Assigning personal property like jewelry, art, and furniture to the trust according to a schedule

Why funding a trust matters

A trust only controls the assets it owns. An unfunded trust—sometimes called an “empty” trust—provides little to no benefits and may even defeat the purpose of creating it in the first place. Some key reasons to fund your trust include:

1. Avoiding probate: One of the main reasons to establish a revocable living trust is to avoid probate, which can be time-consuming, expensive, and public. But only assets titled in the name of the trust (or those passing via another method, such as beneficiary designation) bypass probate.
2. Protecting your assets: Trusts can provide protection against creditors, lawsuits, divorce, or mismanagement by beneficiaries. Plus, unlike wills, which become public documents during probate, trusts generally maintain privacy. However, this privacy and protection advantage only extends to assets properly placed in the trust. Assets that pass through probate may become part of the public record.
3. Maintaining control: With a trust, you can specify exactly how and when your assets should be distributed to your beneficiaries. But the trust can only control the assets you’ve placed into it.
4. Planning for incapacity: If you become incapacitated, your trustee can typically seamlessly step in to manage the trust assets on your behalf — but only for assets that were properly funded into the trust.

What to know about funding a revocable trust

It’s important for clients to understand that funding a revocable trust does not remove the assets from their taxable estate—unlike many irrevocable trusts which do often remove assets from the taxable estate. Your clients typically still maintain control over the assets placed in the revocable trust and can amend or revoke the trust at any time.

Some clients may worry that transferring assets to a revocable trust means giving up ownership of those assets. Reassure them that this is not typically the case—they will likely maintain full control, but the trust now holds legal title.

Not all assets should be placed in a revocable trust. Assets that already have named beneficiaries, like retirement accounts and life insurance policies, can often be left out of a trust without being subject to probate. Of course, it’s always smart to consult an estate planning attorney to determine if a particular asset should be moved into the trust. Wealth.com’s Attorney Network can be a valuable resource for these decisions.

When to fund a trust

Most assets can and should be transferred into the trust as soon as possible after the client creates it. Funding the trust promptly ensures the assets are protected in the event something happens to the client. It may also be easier for clients to follow through on funding sooner rather than later.

This approach immediately provides probate avoidance benefits and allows for simpler management if the individual were to become incapacitated. Funding during the grantor’s lifetime also gives them time to address any complications that arise and offers a chance to refine any funding strategies.

Some assets cannot or should not be placed in a revocable trust during life but can be directed to the trust at death through a “pour-over” will that catches any unfunded assets, beneficiary designations that name the trust or TOD/POD designations to the trust.

For certain assets like IRAs and 401(k)s, the tax implications of transferring to a trust during life may outweigh the benefits. These assets typically remain outside the trust during the grantor’s life but may name the trust as a beneficiary upon death, depending on the specific situation.

How to fund a trust: by asset type

Different asset types require different approaches to funding. Let’s examine the most common assets and how to effectively transfer them into a trust.

Real estate

Real estate is often among a client’s most valuable assets, making proper transfer into their trust particularly important.

How to fund:

• Create and record a new deed transferring the property to the trust
• Update title insurance policies
• Notify homeowner’s insurance companies of the change in title
• For properties with mortgages, check for due-on-sale clauses (though most residential mortgages exempt transfers to revocable trusts)

While transferring real estate to a trust doesn’t typically impact your mortgage or insurance, it’s smart to check with your attorney and providers to confirm. For out-of-state properties, you may want to work with a local attorney familiar with that state’s requirements. When transferring real estate to a trust, always make sure that property tax exemptions won’t be affected.

Bank accounts and brokerage accounts

Financial accounts are typically simple to transfer to a trust but require the right documentation.

How to fund:

• Complete the financial institution’s account retitling forms
• Provide the Certification of Trust or similar document
• Update direct deposits and automatic payments as needed

Keep in mind that some institutions may require a new account number. For joint accounts, the couple should decide whether to maintain joint ownership or separate into individual trust accounts. You’ll also want to pay attention to FDIC insurance limits, as trust ownership can sometimes increase coverage. The current FDIC limit is $250,000 per person, per account, per ownership category.

Personal property

Tangible personal property includes furniture, jewelry, art, collectibles, and other household items.

How to fund:

• Execute an assignment of personal property to the trust
• For high-value items with titles (boats, cars), retitle into the trust name
• Create an inventory of items for the trust records

Keep in mind that vehicles may be difficult to transfer in some states due to registration issues. You’ll also want to make sure you’re updating insurance policies for items transferred to the trust. For valuable collections or artwork, consider getting an appraisal before transferring to the trust. This establishes a baseline value and can help with later tax decisions.

Business interests

Transferring business interests requires extra consideration of any tax implications, operating agreements, and succession planning.

How to fund:

• For sole proprietorships, execute an assignment to the trust
• For partnerships, LLCs, or corporations, transfer ownership interests according to the entity’s governing documents
• Update stock certificates, membership certificates, or partnership records

Before transferring any business interest to a trust, review the operating agreement or bylaws with the client’s attorney to make sure the transfer won’t trigger unintended consequences or buyout provisions.

Retirement accounts

Retirement accounts like IRAs and 401(k)s present an extra challenge due to their tax treatment.

How to fund:

• Generally, retirement accounts should NOT be transferred to a trust during the owner’s lifetime, as this can trigger immediate taxation
• Instead, consider naming the trust as a beneficiary

Keep in mind that the SECURE Act has significantly changed the rules for inherited retirement accounts. Trust provisions must be carefully drafted to optimize tax treatment for trust beneficiaries. For married couples, spousal rollovers often provide better tax treatment than having the account flow through a trust.

When naming a trust as a beneficiary of retirement accounts, there are various considerations to take into account that could affect the administrative burden and tax liabilities that could result. For example, one consideration is making sure the trust includes a ‘see-through’ provision that allows for required minimum distributions to be calculated based on the beneficiaries’ life expectancies.

Life insurance and annuities

Life insurance and annuities pass by beneficiary designation and typically remain outside the trust during the owner’s lifetime.

How to fund:

• Consider naming the trust as beneficiary rather than transferring ownership
• For specific estate planning needs, a specialized irrevocable life insurance trust (ILIT) may be more appropriate

Keep in mind that changing ownership of policies may have gift tax implications, and that some annuities may have surrender charges if ownership is transferred. Make sure you review life insurance beneficiary designations regularly, as many clients inadvertently nullify trust planning by naming individuals directly rather than their trust.

What if a couple has individual trusts?

For married couples who have decided to create individual trusts rather than a joint trust, they’ll need to decide how to divide their assets between the two trusts.

There may be strategic considerations when dividing assets — like if one spouse is more susceptible to litigation or creditor issues (like a business owner) or if one is more likely to need long-term care (and may want to plan for Medicaid eligibility).

Here are a few additional tips:

• Community property may need to be converted to separate property before being funded into individual trusts
• The division of assets should align with each spouse’s estate planning goals
• Make sure beneficiary designations on non-trust assets align with the overall estate plan

How financial advisors can help with trust funding

While an attorney may have been involved in the drafting of the trust documents, they may not provide the full guidance on funding. Many clients are left with the impression that their estate plan is complete after signing the trust, not realizing that funding is a separate and crucial step. Financial advisors can help by:

1. Creating an inventory of assets. Help clients identify all assets that should be considered for trust funding.
2. Developing a funding strategy. Work with the client’s attorney to determine which assets should be transferred to the trust and which should use beneficiary designations.
3. Assisting with financial account transfers. Guide clients through the process of retitling bank and investment accounts.
4. Monitoring funding progress. Create a tracking system to ensure all intended assets are properly transferred.
5. Conducting periodic reviews. As clients acquire new assets or experience life changes, review and update the funding plan accordingly.

If questions arise, you can always help the client consult an attorney, such as one through Wealth.com’s national Attorney Network.

Conclusion

Trust funding is an essential part of estate planning, yet it remains one of the most frequently overlooked aspects. By understanding the processes of trust funding, advisors can provide more robust assistance to their clients, helping them avoid costly mistakes and make sure their estate plans work as intended.

Remember that trust funding is not a one-time event, but an ongoing process that requires regular monitoring. By incorporating trust funding reviews into your service model, you can strengthen client relationships and deliver more holistic financial guidance.