A client recently came to our Manhattan office after his mother passed away. She had a valid will, leaving everything to him and his sister. But when he went to her bank to close her accounts, he was stopped cold. The bank manager explained that without a formal “Letter of Testamentary” from the New York Surrogate’s Court, the accounts—containing over $200,000—were frozen. The will was not enough. That family is now at the beginning of a nine- to twelve-month probate process, just to access funds their mother intended for them.
This situation is common. It highlights a fundamental misunderstanding of how estate plans work. A will directs where assets go, but it does not avoid the court process required to transfer them. A trust does. But a trust is only effective if you put your assets into it. This process is called “funding,” and it is the most critical step in making your plan a reality.
An Unfunded Trust is Just an Expensive Document
I’ve seen many clients who spent significant money creating a sophisticated trust, only to leave it as an empty legal shell. They never took the final step of re-titling their assets in the name of the trust. When this happens, the trust is useless for those assets. They will still go through probate, defeating one of the primary purposes of creating the trust.
Think of a trust as a vessel. Its job is to hold, manage, and distribute your assets according to the rules you’ve established. For bank accounts, funding means changing the legal owner of the account from you, as an individual, to you, as the trustee of your trust. For example, an account titled “Jane Smith” would be changed to “Jane Smith, Trustee of the Jane Smith Revocable Trust dated January 1, 2024.”
Once the account is owned by the trust, the terms of the trust agreement—not your will—govern it. When you pass away or become incapacitated, your chosen successor trustee can step in immediately and manage those funds without court intervention. They can pay bills, make distributions to beneficiaries, and handle financial affairs without delay. The courthouse doors remain closed.
The Practical Side of Funding Bank Accounts
A common question I get is, “Will I lose control of my money?” For a standard revocable living trust, the answer is no. During your lifetime, you are the grantor, the trustee, and the beneficiary. You retain complete control. You can deposit money, write checks, and close the account just as you did before. Your Social Security number remains the tax ID for the account. Your day-to-day financial life does not change.
We generally advise clients to fund their significant liquid assets into their trust. This includes:
- Savings accounts
- Money market accounts
- Certificates of Deposit (CDs)
- Brokerage accounts
For a daily checking account with a low balance, it may be simpler to leave it outside the trust and use a beneficiary designation. For the bulk of your savings, however, the trust provides more deliberate protection and management.
A Trust Offers More Than a Beneficiary Designation
Many bank accounts offer a “Payable on Death” (POD) or “Transfer on Death” (TOD) designation. These are simple tools that can transfer an account directly to a named beneficiary and avoid probate. While they are better than nothing, they are a blunt instrument.
A POD designation simply transfers the cash outright. It offers no control or contingency planning. What if your beneficiary is a minor? Or has special needs and relies on government benefits? What if they are not financially responsible or are in the middle of a divorce? In these cases, a direct inheritance can cause serious problems. A trust, by contrast, allows your successor trustee to manage the funds, protect them from creditors, and distribute them over time, according to your specific instructions.
The authority for a trustee to perform these acts is grounded in New York law. Estates, Powers and Trusts Law (EPTL) § 11-1.1 grants a trustee broad powers to manage trust property, including the authority to deposit funds in a bank account and make distributions. This statutory backing gives your trustee the clear legal right to act on your behalf—a right that a court process would otherwise have to grant.
Stewardship Requires Deliberate Action
Putting your bank accounts into your trust is not a passive act. It requires you to work with your bank to change the account titles. It is an administrative task, but it is the action that breathes life into your estate plan. It transforms the plan from a theoretical document into a functional tool for your family’s future.
Failing to fund a trust is one of the most common and costly errors in estate planning. It leaves families like my client’s stuck in the court system, waiting for access to assets that were meant to support them. A well-drafted plan is the blueprint; funding is the construction. Both are necessary to build a lasting legacy.
The first step toward a functional plan is understanding what you own and how you own it. If you have an existing trust or are considering one, we can begin by conducting a thorough review of your current asset titling to see which accounts might be exposed to probate and design a clear funding strategy.
