You’ve Created a Trust. Now What? The Critical Next Step Most Families Miss

At Foundational Wealth Partners, we guide families in building estate plans that reflect their values, protect their assets, and provide clarity during life’s most difficult transitions. One of the most powerful tools in that process is a Revocable Living Trust—but creating the trust is only part of the journey.

What often gets overlooked is this: a trust that hasn’t been properly funded is just a document.

Why Updating Beneficiaries After a Trust Is Non-Negotiable

After your trust has been executed, the next—and arguably most crucial—step is to ensure your pay-on-death (POD) accounts and beneficiary designations align with the trust structure.

Too often, families go through the effort of establishing a comprehensive estate plan, only to leave assets titled incorrectly or beneficiary forms outdated. The result? Assets may:

• Bypass the trust entirely
• End up in probate
• Be distributed contrary to your wishes

What Are POD and Beneficiary Designations?

Many financial accounts, such as:

• Checking and savings accounts
• Life insurance policies
• Retirement accounts (IRAs, 401(k)s)
• Brokerage accounts

…allow you to name a beneficiary or POD designee. These designations override what’s in your will or trust unless they are updated to reflect your new estate structure.

Common Mistakes We See

1. Failing to retitle accounts to the trust.
   • For non-retirement accounts, ownership should often be changed so the trust is the legal owner.
2. Naming individual beneficiaries instead of the trust.
   • This can lead to unequal or unintended distributions, especially in blended families or complex family situations.
3. Keeping outdated beneficiaries.
   • Divorced spouses, deceased relatives, or estranged family members can remain named if updates aren’t made.
4. Ignoring tax-deferred accounts.
   • While retirement accounts often should not be retitled to the trust, naming the trust as beneficiary can ensure distribution control, especially for minor or special needs beneficiaries.

So, How Do You Update Your Designations?

Once your trust is in place, here’s how to proceed:

1. Gather a complete list of your assets.
   • Include checking, savings, brokerage accounts, life insurance policies, and retirement plans.
2. Retitle appropriate accounts to the name of the trust.
   • Typically includes brokerage accounts, bank accounts, and property deeds.
   • Example: “John and Jane Smith, Trustees of the Smith Family Trust dated March 1, 2023.”
3. Update POD and beneficiary forms.
   • For life insurance and retirement accounts, consider naming:
     • The trust
     • A spouse first, with the trust as contingent
     • Or individual beneficiaries as advised in your estate plan
4. Consult with your advisor or estate attorney.
   • Proper coordination avoids tax pitfalls and ensures your intentions are carried out smoothly.

Why This Matters

A well-drafted trust is a roadmap for your legacy. But unless your assets are titled correctly and your beneficiaries updated, the courts—not your trust—may decide who gets what and when.

Updating your POD and beneficiary designations ensures:

• Your assets avoid probate
• Distributions follow your instructions
• Your family is spared unnecessary conflict and delay

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Your Plan Is Only as Strong as Its Execution

At Foundational Wealth Partners, we don’t just help families create estate plans—we walk with them through the details that make those plans effective. If you’ve already established a trust, now is the time to take the next step: align your accounts with your plan.

Need help reviewing or updating your beneficiary designations? Contact our team today. We’re here to ensure your financial legacy is protected and positioned for generations to come.