by Kristen Ishihara and Chris Parker with Ishihara & Parker Law Firm PLLC

So, you’ve heard about revocable living trusts, and you’re thinking, “Hey, that sounds like a smart move!” And you’d be right—when used correctly. But here’s the thing: a lot of people make critical mistakes when setting up and managing their trusts, which can totally defeat the purpose of having one in the first place.

Let’s talk about what a revocable living trust is, why people use it, and the common (but costly) mistakes you should avoid.

What Is a Revocable Living Trust?

A revocable living trust is basically a legal document that holds your assets while you’re alive and directs where they go when you pass away—without the headache of probate. Think of it as a private way to pass down your property, unlike a will, which is public and has to go through a lengthy court process.

The key benefit? You stay in control. You can add or remove assets, change beneficiaries, or even dissolve the trust entirely if you want. It’s flexible, but only if you use it correctly.

The Big Mistakes People Make

A revocable living trust is only effective if it’s properly set up and funded. Here are the biggest mistakes that could cause problems down the road:

1. Not Funding the Trust

This is the #1 mistake people make. A trust is like a safe—you can have the strongest, most secure safe in the world, but if you don’t put anything inside it, what’s the point? If you create a trust but don’t transfer assets into it, those assets will still have to go through probate.

Fix it: Make sure your home, bank accounts, investments, and any other valuable assets are actually titled in the name of the trust.

2. Thinking a Trust Covers Everything Automatically

A trust isn’t magic. It doesn’t automatically include all your assets just because you signed a document. Some assets, like retirement accounts and life insurance, have their own beneficiary designations that override the trust.

Fix it: Check all your accounts and update beneficiary designations to align with your estate plan.

3. Forgetting to Update the Trust

Life changes—marriages, divorces, new kids or grandkids, new properties, changing financial situations. If your trust isn’t updated, it might not reflect your current wishes.

Fix it: Review and update your trust every few years or whenever a major life event happens.

4. Naming the Wrong Trustee

The trustee is the person (or institution) who manages the trust when you can’t. Many people name a family member without considering if they’re actually the right fit. Managing a trust can be complicated, and if the person isn’t financially responsible or doesn’t have the time, it could lead to serious issues.

Fix it: Choose someone who is responsible, organized, and financially savvy. If that’s not a family member, consider a professional trustee.

5. Not Telling Anyone About the Trust

A trust is only helpful if the right people know it exists and can access the necessary documents. If your trustee doesn’t know they’re the trustee, or your family has no idea where to find your trust documents, it can cause confusion and delays.

Fix it: Make sure your trustee and key family members know about the trust and where to find the paperwork.

The Bottom Line

A revocable living trust is an incredible estate planning tool—but only if you use it correctly. Avoid these common mistakes, and you’ll save your loved ones time, money, and unnecessary stress.

Got a trust set up already? Take a few minutes to double-check that it’s properly funded, up to date, and that your trustee knows what to do. If you haven’t set one up yet, talk to an estate planning attorney to make sure you get it right from the start!

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