A Revocable Living Trust alone does not avoid Probate
Read this article to understand the importance of Trust Funding in Arizona
Key Takeaways
Proper trust funding in Arizona is essential to ensure your assets avoid the probate process and are managed according to your wishes.
A revocable living trust alone does not avoid probate unless the trust is properly funded by transferring ownership of assets into the trust.
Different asset types require specific steps to transfer ownership or update beneficiary designations, including real property, bank accounts, investment accounts, and retirement accounts.
Failure to fund your trust can lead to costly probate proceedings, family stress, and potential legal issues.
Regular reviews and updates to your trust are necessary to account for life changes such as new assets, marriages, divorces, or changes in tax law.
Working with an experienced Arizona estate planning attorney can help ensure proper trust funding, compliance with Arizona law, and protection of your family’s future.
Family trusts provide benefits such as avoiding probate, protecting assets from creditors, maintaining privacy, and allowing flexibility in asset distribution.
Understanding the costs involved in creating and funding a trust can help you make informed decisions and avoid surprises during the estate planning process.
What is Trust Funding in Arizona?
Revocable Living Trust can be a fantastic tool to use in your Estate Planning Portfolio. A well-designed, unique to your circumstances trust can provide probate avoidance, protection from incapacity, and privacy and liability control for your heirs. A Revocable Living Trust is a fantastic option for most people, and it can be the lynch pin to a Complete Estate Plan.
However, even well-designed trusts can fail to achieve the above benefits if the Trustmaker fails to fund their trust. Funding your trust is the process of transferring ownership of your assets from your name to the name of your trust account.
Trust Funding is the next step after signing all of the trust documents. Funding is the act of moving or retitling your assets into the name of the trust. Without this necessary step, our trust will be empty, and all our assets may have to go through probate court. A trust that isn’t funded is powerless and cannot shield your assets from probate.
Failing to fund a trust can lead to your family facing the probate process you hoped to avoid. A Pour-Over Will can ensure that your assets still make it to your designated heirs, but if we are using a Pour-Over Will to make this happen, we are likely in Probate Court, depending on the level of assets at death. A better alternative is to simply make sure that your assets are conveyed to the trust while you are alive and have capacity, or to make sure that your assets have a proper beneficiary designation making sure that they avoid probate.
How to Start the Funding Process in Arizona?
To fund a trust, although out of the ordinary, isn’t terribly difficult.
The first thing to do is to make a list of all your assets. This will include Real Property, Vehicles, Checking and Savings Accounts, Brokerage and investment Accounts, Shares of Stocks, Bonds, Life Insurance Policies, Retirement Accounts, and any other assets that you own or will acquire that have value, including digital assets and miscellaneous possessions. Each type of asset may require a different process to transfer ownership or update beneficiary designations.
Next, you will go directly down the list to make sure that all items get retitled in the name of the Trust. We do this by moving the title of your asset from your name as an individual, to your name as a Trustee of your trust. Tangible personal property can be transferred to the trust using a general assignment of property.
For example. If you own a residential property, once your trust is signed and executed according to the law, you will execute a new deed on your property that will move the home ownership from your name as individual to your name as Trustee. Real property must be transferred to the trust by preparing and recording a new deed. Arizona law requires that a deed transferring real estate to a trust must disclose the beneficial owners of the property.
This will usually be done via a Quit Claim Deed, or a Special Warranty Deed. Your attorney will usually do this for you as part of the Trust creating process. This does not change anything with regards to taxes, nor does it change your rights to sell or occupy the property. The property, the loan, and all the equity are still in your name and associated with your Social Security Number. Once the deed is recorded, we have successfully funded that deed into the trust. Thus, if you pass away, we will simply file an affidavit along with your death certificate, and just like that, the trust now owns your property without need for us to go to Probate Court.
Another example can be a Checking Account at your local bank. You will need to go to the bank and let them know you have a brand-new trust, and you would like the bank to move the account to the name of the trust. Bank accounts should be retitled in the name of the trust to ensure they are part of the trust assets. You will need to provide the bank with either a copy of the trust or a Certificate of trust. The bank is supposed to simply change the name on the account and that would be it. The statements would start coming to you as Trustee of your trust, and you have successfully funded this asset into the trust without having to open a new account, get new checks, or reschedule any automatic transfers.
At most banks it is this easy. For some banks, instead of renaming your current account, they will require that you put a Pay on Death designation on the account. This is an agreement with you and the bank that states that when you pass away, the account then changes ownership to whomever you designate. You will want to go ahead and designate the trust as your Pay on Death Beneficiary. This will also keep you from having to close your account and will ensure that the account is funded to your trust at your death.
For brokerage and investment accounts, you will need to contact your financial institution to transfer ownership to the trust. Investment accounts must be transferred to the trust to allow the successor trustee to manage them without court intervention. This ensures these accounts are properly included as trust assets.
If you have U.S. savings bonds, these can also be transferred into your trust. The process involves reissuing the bonds as electronic bonds in TreasuryDirect and registering them in the name of the trust. Proper registration is important for trust asset management and to ensure the bonds are officially recognized as part of the trust.
Should I move my Retirement Accounts to my Revocable Living Trust?
One question we are often asked is “Should I move my Retirement Accounts to my Revocable Living Trust?” The answer is unfortunately not as easy as a quick yes or no. The short answer is that it will depend on your assets, your circumstances, and current law.
The SECURE Act changed the way in which we plan for Retirement assets. A spouse can step into a decedent’s shoes and still get the tax deferral benefit, as can some disabled beneficiaries, but anyone else, including a trust, is going to have to pay income taxes on the balance of the Retirement Account within 10 years.
Retirement accounts should not be retitled in the trust; instead, the beneficiary designation should be updated to name the trust. Careful planning is essential for ensuring proper trust funding of retirement benefits, including meticulous analysis and strategic designation of beneficiaries to maintain tax advantages and asset protection. There will be planning aspects to your unique plan, and you should certainly discuss this with an estate planning attorney. Our Attorneys have years of tax experience and especially suited to answer these types of questions within the scope of your unique circumstances.
For married couples in Arizona, joint trusts are commonly used to manage shared assets and comply with community property laws. Joint trusts help facilitate inheritance procedures and provide a streamlined approach to estate planning for couples.
To fully fund the trust, you will address each asset and make sure that it is retitled or otherwise moved to the trust. Assets must be properly transferred and recorded to be officially recognized as trust assets. As stated above, although it is out of the ordinary for you, the banks should have no problem with your requests and the whole funding process should be quite simple. If you did your Living Trust with we will also be available to answer your questions and help you through the process.
Establishing and funding a trust in Arizona provides significant benefits, such as asset protection, probate avoidance, and peace of mind for your family. Revocable trusts can also impact eligibility for government benefits like Medicaid, as assets in the trust may be considered in net worth assessments. Any person with significant assets should consult an attorney to ensure proper trust funding and legal compliance. The process to create a trust involves establishing legal documents and properly funding the trust to ensure it operates as intended. A pour-over will serves as a safety net, directing any assets left outside the trust at your death to be transferred in. Regular estate plan reviews should be included in the estate planning process to help keep your plan current with your family or financial situation. Properly funding your trust ensures that your assets are managed according to your wishes after you pass away. An unfunded trust does not avoid probate and may lead to the very legal complications the trust was meant to prevent.
A family trust helps avoid the probate process, protects assets from creditors, provides increased flexibility in managing assets during the grantor’s lifetime and after death, maintains privacy since it does not become public record, and allows the grantor to dictate when and how beneficiaries receive their assets. In Arizona, a family trust can also help protect assets from federal estate taxes. Arizona allows for the creation of dynasty trusts that can last up to 500 years, providing long-term asset protection. Arizona does not impose state estate or inheritance taxes, simplifying trust planning. The legal framework for trusts in Arizona is governed by the Arizona Revised Statutes Title 14, which outlines the requirements for trust creation and management.
Probate in Arizona is triggered when the value of your personal property exceeds $200,000 or your real property is worth more than $300,000.
Creating a basic revocable living trust in Arizona typically costs between $2,000 and $3,000 for individuals and $2,500 to $3,500 for married couples. Comprehensive estate planning packages range from $2,500 to $5,000. Irrevocable trusts start at $5,000 and can exceed $10,000. DIY trust kits can cost under $100 but carry risks. Attorney assistance with funding a trust can cost $500 to $1,500. Arizona counties charge $30 to $50 per deed document for recording. Amendments cost $300 to $500, restatements can exceed $2,000. Most attorneys prefer flat fees for trust creation.
In summary, a well-drafted Estate Plan Utilizing an irrevocable trust Revocable Living Trust is a fantastic tool for most people. However, a Trustmaker must follow through with the Funding process to ensure that their Estate Plan avoids the need for Probate Court. If you fail to fund your trust, Probate may take anywhere from 6 months to 2 years and will delay your heirs inheritance. Further, hiring a probate attorney can cost anywhere from $5,000.00 to $10,000.00 or more, depending on how much work needs to be done, if there is any fighting or contest to the estate, or if there are special circumstances. Estate litigation can be prohibitively costly. The alternative of having a well-designed, Complete Estate Plan that is fully funded is by far a better option. Please click the SCHEDULE button to initiate your free consultation with one of our experienced Chandler Estate Planning Attorneys. If you prefer call (480) 565-8020 and we will be pleased to help you.
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Regular Reviews and Updates to your Revocable Living Trust agreement
I want you to know that creating a trust is a wonderful first step in safeguarding what matters most to you—your assets and your family’s future. But here’s something many of my clients don’t realize initially: the real work of protecting your loved ones continues well beyond that initial trust creation. Think of your trust as a living document that needs regular care and attention to stay healthy and effective. Life has a way of throwing us curveballs—marriages, divorces, new babies, exciting property purchases, or growing business ventures—and each of these changes can significantly impact what you need from your estate plan. That’s exactly why I always recommend taking a step back periodically to review your trust agreement and make sure it still reflects who you are and what you want today.
Here in Arizona, I’ve seen firsthand how keeping your trust current isn’t just good practice—it’s absolutely essential for what we call proper trust funding, which is simply making sure your assets actually end up where you want them to go instead of getting tangled up in probate court. This means we need to regularly review and update something called beneficiary designations on your bank accounts, retirement funds, mutual funds, and life insurance policies. I know this might sound like a lot of paperwork, but trust me when I say that forgetting to update these can create real heartache for your family. When these designations are outdated, your assets might completely bypass your carefully crafted trust, potentially sparking family conflicts or legal headaches that no one wants to deal with during an already difficult time.
One thing I always emphasize with my clients is keeping your successor trustee—that’s the person who will step in to manage things if you can’t—fully informed about any changes you make to your trust or your assets. Think of them as your estate planning partner who needs to understand your current wishes and the terms you’ve set up. The Internal Revenue Service, or IRS as we commonly call them, also has specific rules about trust updates, especially when it comes to tax implications and how inherited assets, mutual funds, and other investments should be handled. I know taxes aren’t anyone’s favorite topic, but staying on top of these regulations through regular reviews can save you and your family from unnecessary complications and potentially costly mistakes down the road.
Here’s one of the aspects I love most about revocable trusts: you maintain complete control over everything you own during your lifetime. It’s your trust, your assets, your decisions. However, as your wealth grows or your life evolves—and I hope both happen for you—it becomes surprisingly easy to forget about new assets like additional properties, business interests, or investment accounts that should be moved into your trust’s name. Regular check-ins ensure that everything you own is properly titled and that your estate plan continues to work the way you intended it to when we first set it up together.
I’ve walked many families through the unfortunate consequences of neglecting trust updates, and I can tell you it’s something we definitely want to avoid. Picture this scenario: you buy a beautiful new home or open an exciting new investment account, but in the midst of life’s busyness, you forget to transfer ownership into your trust. Those assets could end up in probate court, which defeats one of the main reasons you created your trust in the first place. Most of my clients are pleasantly surprised to learn that the cost of regular reviews is quite modest, especially when compared to the tremendous benefits of a properly maintained trust—protection from creditors, avoiding the probate maze, and providing crystal-clear guidance for your successor trustee.
If you and your spouse have what we call a joint trust—essentially a shared trust that covers both of you—changes in your relationship, whether that’s a new marriage or unfortunately a divorce, can significantly affect how your assets are managed and distributed to your beneficiaries. I find that regular reviews help us determine the best path forward for updating your trust structure and ensuring that all your beneficiary designations and asset transfers reflect your current circumstances and wishes.
When it comes to navigating these important updates and making sure your trust stays in compliance with Arizona’s legal requirements, I strongly encourage you to work with an experienced estate planning attorney who understands both the law and your personal situation. Here at Citadel Law Firm, we genuinely enjoy helping our clients assess where they stand today, update their trust documents thoughtfully, and ensure their estate plans continue protecting the people they love most. Taking that first step to schedule a review with us can truly make all the difference in securing your family’s future and giving you the peace of mind you deserve.
Let me leave you with this thought: regular reviews and updates aren’t just a legal formality—they’re the heartbeat of effective estate planning. By keeping your trust properly funded and aligned with your current life and wishes, you’re actively protecting your loved ones from unnecessary legal battles, safeguarding your assets, and ensuring your family will be cared for exactly as you envision. Don’t let life’s inevitable changes or overlooked assets undermine all the thoughtful work you’ve already put into your estate plan—reach out to an attorney who can review your trust with you and keep everything running smoothly for the people who matter most to you.
Frequently Asked Questions about Trusts in Arizona
How much should a trust cost in Arizona?
It’s also important to factor in additional costs associated with trust funding and maintenance. Transferring assets into the trust, such as real estate, bank accounts, and investment accounts, may incur fees ranging from $500 to $1,500, depending on the complexity and number of assets.
Recording fees for deeds typically range from $30 to $50 per document in Arizona counties.
Furthermore, trust amendments or updates, which are necessary to keep your estate plan current with life changes or tax law updates, can cost between $500 and $1000 for simple changes and may exceed $2,000 for complete restatements.
While DIY trust kits are available for under $100, they carry significant risks and often lack Arizona-specific legal protections, making professional attorney services a worthwhile investment for most families seeking to protect their assets and avoid costly probate or family disputes.
To learn more about Trust costs read our blog about “Cost to Create a Living Trust in Arizona?”
How to get funding for your trust?
Funding your trust involves the crucial step of transferring ownership of your assets from your individual name into the name of your trust. This process ensures that your assets are legally recognized as trust property, which is essential for the trust to function as intended and to avoid probate court after your death. To begin, create a comprehensive list of your assets, including real estate, bank accounts, investment accounts, stocks, bonds, vehicles, and personal property. Each asset type may require a specific method to retitle ownership or update beneficiary designations. For example, real estate requires a new deed recorded with the county, while bank accounts need to be retitled with your financial institution using a certificate of trust or a copy of the trust document. Working with an experienced estate planning attorney can simplify this process, ensuring proper handling and compliance with Arizona law.
Proper funding of your trust not only protects your assets but also provides peace of mind for you and your loved ones. Without funding, even the most carefully drafted trust remains ineffective and your estate may be subject to the probate process, which can cause delays, added expenses, and family stress. Regular reviews of your trust are also important, as life changes such as new acquisitions, marriages, divorces, or changes in tax law may require updates to your trust or beneficiary designations. Maintaining open communication with your successor trustee and estate planning attorney ensures that your trust stays current, fully funded, and aligned with your wishes, ultimately safeguarding your family’s future and minimizing legal complications.
How to get funding for your trust?
Funding your trust in Arizona involves transferring ownership of your assets from your individual name into the name of the trust, ensuring that these assets are legally recognized as trust property. This step is crucial because, without proper trust funding, even a well-drafted trust cannot avoid the probate process, leaving your estate vulnerable to delays and additional costs. To get your trust funded, start by listing all your assets, including real property, bank accounts, investment accounts, stocks, bonds, vehicles, and personal property. Each asset type requires specific procedures, such as recording a new deed for real estate or updating beneficiary designations for retirement accounts and life insurance policies. Working with an experienced Arizona estate planning attorney can simplify this process, ensuring compliance with Arizona law and protecting your family’s future by making sure your trust is properly funded and effective.
Is Arizona a trust-friendly state?
Yes, Arizona is considered a trust-friendly state due to its well-established laws that support the creation and management of trusts, including revocable living trusts and irrevocable trusts. The state’s legal framework, governed by Arizona Revised Statutes Title 14, provides clear guidelines for trust formation, funding, and administration, making it easier for individuals to protect their assets and avoid the probate process.
Arizona also allows for the creation of dynasty trusts that can last up to 500 years, offering long-term asset protection and flexibility. Additionally, Arizona does not impose state estate or inheritance taxes, simplifying trust planning and making it an attractive option for residents seeking to secure their family’s future through effective estate planning.
How much money do you need to get a trust fund?
The amount of money needed to establish a trust fund varies depending on your individual goals, the type of trust you want to create, and the complexity of your estate. In Arizona, there is no minimum dollar amount required to set up a trust; however, creating a trust with very few or low-value assets may not be cost-effective due to legal fees and administrative costs.
Typically, individuals with significant assets, such as real property, investment accounts, or business interests, benefit most from establishing a trust to avoid probate and protect their estate. It is important to consider that the costs of creating and funding a trust—including attorney fees, recording deeds, and retitling assets—can range from a few thousand dollars to higher amounts depending on the complexity of your estate planning needs.
Consulting with an experienced estate planning attorney can help determine the appropriate trust structure and funding strategy that aligns with your financial situation and family goals.