Common Trust Mistakes (And How to Avoid Them)
Where good plans quietly break down.
Discover the most common trust mistakes families make—and how small oversights can undo even the best estate planning intentions.
At a Glance
Estate Planning Series → Phase 2 Article 4 of 8
Introduction: Common Trust Mistakes
A revocable living trust is one of the most effective tools for protecting your family, avoiding probate, and creating clarity during difficult moments. But here’s the part many families don’t realize:
A trust only works if it’s set up, funded, and maintained correctly.
Even small oversights — like forgetting to retitle an account or failing to update beneficiaries — can weaken your entire plan. This article walks through the most common trust mistakes families make and explains exactly how to avoid them.
Mistake #1: Not Funding the Trust
This is the number one reason trusts fail.
Creating a trust document alone does nothing. If assets remain titled in your individual name, they may still go through probate and may not follow your trust’s instructions.
Why This Matters
- The trustee may have no authority to act
- Assets can be frozen during incapacity
- Probate delays and costs still apply
How to Avoid It
- Retitle bank and brokerage accounts
- Transfer real estate into the trust
- Review beneficiary designations
- Complete a personal property assignment
If an asset has a title, registration, or beneficiary form, it likely requires a specific funding step.
Mistake #2: Forgetting to Update Beneficiaries
Beneficiary designations override your trust and your will.
If they are outdated, assets can pass to the wrong person — or to your estate, which triggers probate.
Accounts That Use Beneficiaries
- Retirement accounts (401(k), IRA, Roth IRA)
- Life insurance and annuities
- Some bank and investment accounts (POD/TOD)
How to Avoid It
- Review beneficiaries every 2–3 years
- Add contingent beneficiaries
- Ensure designations align with your trust plan
Major life events should always trigger a review.
FREE DOWNLOAD
📘 Trust Setup Mistakes Checklist
If you want to catch issues early, the Trust Setup Mistakes Checklist highlights common errors families make before they become costly or irreversible. View resource →
Mistake #3: Choosing the Wrong Trustee
Your trustee is responsible for managing assets, communicating with beneficiaries, and following legal requirements. A poor choice can lead to delays, mistakes, or family conflict.
Common Trustee Selection Errors
- Choosing someone who is disorganized or overwhelmed
- Naming co-trustees who don’t work well together
- Selecting based on obligation rather than ability
How to Avoid It
- Choose someone responsible, organized, and calm under pressure
- Consider a professional trustee if family dynamics are complex
- Talk to your trustee before naming them
Integrity and reliability matter more than financial expertise.
Mistake #4: Not Transferring Real Estate Correctly
Real estate is often the largest asset in an estate — and one of the most commonly mishandled.
Common Errors
- Failing to record the new deed
- Forgetting rental or vacation properties
- Not updating insurance after transfer
- Removing property during refinancing and forgetting to retitle it back
How to Avoid It
- Have your attorney prepare and record deeds
- Keep proof of trust ownership with your estate documents
- Confirm all properties are properly titled
An untransferred property can undo much of your planning.
Mistake #5: Leaving Out Key Assets
Some assets require extra attention and are frequently overlooked.
Often Missed Assets
- Business interests
- Digital assets
- Safe deposit boxes
- Collectibles and heirlooms
- Specialty or out-of-state property
Leaving these out can cause delays, confusion, or court involvement.
How to Avoid It
- Create a complete asset inventory
- Review less obvious assets carefully
- Ask specifically about items that don’t fit neatly into accounts
Mistake #6: Conflicts Between the Will and the Trust
If your will and trust don’t align, confusion and disputes can follow.
Common Issues
- The will names different beneficiaries than the trust
- Guardianship instructions conflict
- Assets are left outside the trust with no clear direction
How to Avoid It
- Use a pour-over will to capture leftover assets
- Ensure both documents reflect the same intentions
- Update them together after major changes
Your documents should reinforce — not contradict — each other.
Mistake #7: Not Planning for Incapacity
Trusts aren’t only about what happens after death. They are critical if you become unable to manage your finances during your lifetime.
Without Proper Incapacity Planning
- Accounts may be frozen
- Loved ones may need court approval
- Guardianship or conservatorship proceedings may be required
How to Avoid It
- Fully fund your trust
- Include clear incapacity instructions
- Maintain aligned financial and medical powers of attorney
- Ensure your successor trustee understands their role
For many families, incapacity planning is the most valuable part of the trust.
Mistake #8: Never Reviewing or Updating the Trust
Life changes — your trust should too.
Review After:
- Marriage or divorce
- Birth or adoption
- Death of a beneficiary or trustee
- Buying or selling property
- Significant financial changes
- Moving to another state
Most professionals recommend reviewing your trust every 2–3 years, even if nothing major has changed.
What a Well-Maintained Trust Looks Like
A strong trust-based plan is:
- Fully funded
- Regularly reviewed
- Aligned with beneficiary designations
- Managed by the right trustee
- Supported by updated companion documents
When these pieces work together, your plan functions smoothly and privately.
Final Takeaway
A trust is a powerful estate planning tool — but it doesn’t run on autopilot.
Avoiding these common mistakes ensures your trust:
- Works when it’s needed
- Avoids probate
- Reduces conflict
- Protects your assets
- Supports your loved ones during difficult transitions
A small amount of attention now can prevent significant stress later.
🛠️ Downloadable Resources
Start with one or two of these simple tools which are designed to help you feel informed, empowered, and ready to take meaningful next steps.
FREE DOWNLOAD
📘 Trust Setup Mistakes Checklist
A preventative checklist highlighting common trust setup and execution errors to help you identify risks before they cause costly issues. View resource →
Looking for more estate planning tools?
Explore the full collection on our Estate Planning Resources page.
Next Up: 5 Things You Should Never Put in a Revocable Living Trust
Learn which assets can cause tax issues, legal problems, or lost protections if placed inside a revocable living trust—and what to do instead.
🔍 External Resources & Related Articles
Explore trusted, expert sources or related articles for deeper guidance on the topics covered in this phase.
📚 Trusted External Resources
These organizations provide reliable, plain-language information on trusts, estate planning, and asset protection. Content may change over time, but these hubs are regularly maintained and searchable.
🌐 NOLO — Wills, Trusts & Estate Planning Hub
🌐 Fidelity — Estate Planning & Trusts Resource Center
🌐 Charles Schwab — Estate Planning Insights
🌐 ElderLawAnswers — Estate Planning Basics
NOTE: These links are provided for additional education and exploration.
🎯 All Phase 2 Articles
Learn how trusts work, when they’re needed, how to fund them, and the key decisions that help families avoid probate and protect assets.
📘 What Is a Revocable Living Trust (and Why Most Families Need One)
📘 Revocable vs. Irrevocable Trusts: Which One Fits Your Goals?
📘 How to Fund Your Living Trust (6 Asset Categories Explained)
📘 Common Mistakes with Trusts (And How to Avoid Them)
📘 Revocable Living Trust Asset Rules
📘 Choosing the Right Trustee
📘 How to Transfer Property into a Trust (and Avoid Costly Mistakes)
📘 Life Estate vs. Living Trust: Which Is Better for Your Home?
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About the Author
Written by Tonya Harris, founder of Elevated Sand. Tonya creates culturally grounded financial and digital education that helps people understand complex topics and make informed decisions for the future.
Disclaimer: Information is for educational purposes only and should not be considered legal or financial advice. Estate planning involves complex legal and tax considerations. You should consult a qualified estate planning attorney to determine the best approach for your situation and ensure compliance with your state’s laws.