How Often Should You Review Trust Funding?
By Heirloom · · 7 min read
A trust that was fully funded at signing does not stay that way. Ordinary financial events pull assets back out, and nothing in a closed file is watching. Here is how to build a review that catches it.
Suppose everything went right. The inventory was verified rather than remembered. Someone at the firm owned the transfers and confirmed each one. Every asset got the correct action for its class, and nothing was retitled that should have been designated.
The trust was fully funded on the day the file closed. It will not stay that way.
Funding Has a Shelf Life
What you completed was a set of transfers that were accurate on one particular date, sitting on top of a financial life that keeps moving.
Clients change jobs. They refinance. They open accounts. They inherit money, sell a business, move to another state, divorce, remarry, and outlive the people they named. Any of those can pull an asset out of the trust, or create one that was never in it. None of them feel like estate planning decisions at the time, so nobody calls the firm.
Nobody at the firm calls either. The file is closed, the fee was spent on drafting, and there is no open matter, no responsible attorney, and no calendar entry. The client believes the plan is finished, because you told them it was and handed them a binder.
So neither of the two people who could notice is looking. The gap opens quietly and widens for years, and usually the next person to examine the plan is the one administering it.
How a Funded Trust Comes Undone
Job changes strand retirement accounts. Median employee tenure is 4.1 years, so a client who signed in their fifties has likely changed employers since. Most people never deal with the old plan. Capitalize and the Center for Retirement Research count 31.9 million forgotten 401(k) accounts holding $2.1 trillion, an average of $66,691 each and nearly a quarter of all 401(k) assets. A left-behind plan still carries whatever beneficiary the client named on their first day at a job they have since left.
Rollovers reset designations. This one catches careful clients. A rollover does not carry the old designation over. It creates a new account that needs a new one. A client who updated their designation in 2015 and rolled that account over in 2022 may have no designation at all today.
Refinances deed property out. Lenders often require property to leave the trust to close, and the deed putting it back is left to the client to request. In the San Francisco data, one in ten funding failures was property that went in, came out for a refinance, and never went back.
New accounts open in individual names. Nobody opens a brokerage account in a trust's name by accident. Individual registration is the default, and it stays that way unless someone intervenes.
Dormant accounts escheat. An account nobody touches eventually goes to the state. Unclaimed property programs returned $4.25 billion in fiscal 2025, and roughly one in seven Americans has unclaimed property waiting. Dormancy periods are shorter than clients expect.
Why Designations Are the Bigger Risk
Miss a retitling and you get a probate problem. Expensive, but fixable. Miss a beneficiary designation and there is nothing to fix, because the form will be enforced exactly as written.
How strictly that holds depends on which body of law governs the account, so it helps to be clear about the dividing line.
ERISA is the federal statute that governs employer-sponsored benefit plans. For these purposes it covers 401(k) plans, private 403(b) plans, pensions, and employer-provided group life insurance. It does not cover IRAs, which are creatures of the tax code and run on a custodial agreement with the institution. Government and church plans are carved out too, and so are solo 401(k) plans with no employees besides the owner.
That line matters for a funding review, because a rollover crosses it. Money leaves an ERISA plan and lands in an IRA, and the rules that decide who receives it change on the way.
Where ERISA does apply, two Supreme Court cases set the rule, and both are worth knowing cold.
Egelhoff v. Egelhoff (2001) held that ERISA preempts state statutes that revoke a spouse's designation on divorce. ERISA tells a plan fiduciary to follow "the documents and instruments governing the plan," and a state revocation statute overrides that instruction. The ex-wife was still the named beneficiary, so she took the benefits.
Kennedy v. Plan Administrator for DuPont (2009) went further. There the divorce decree expressly divested the ex-wife of any interest in her husband's retirement plans, and he simply never updated the form. The Court held the administrator was right to pay her anyway, since the claim "stands or falls by the terms of the plan." It refused to look behind the form at what the client had clearly intended.
So on an ERISA account, the form on file wins. Not the divorce decree, not the trust, not what everyone in the room knows the client wanted.
An IRA sits outside ERISA, which is less comfort than it sounds. The custodial agreement tells the institution to pay the named beneficiary, and custodians apply that about as literally as a plan administrator does. The one real difference is that your state's revocation-on-divorce statute can reach an IRA, where it cannot reach a 401(k).
That statute deserves a close look, because attorneys lean on it as a backstop. It is preempted as to ERISA plans, and federal benefits answer to their own preemption rules. Virginia learned this the hard way in Hillman v. Maretta (2013). Its revocation statute was preempted as to a federal employee's life insurance, and so was the separate remedy the state had written as a fallback. The backstop misses exactly the accounts most likely to be stale.
Building the Review In
A funding review is less a new service than an acknowledgment that funding goes stale. Setting one up comes down to four decisions.
Pick a cadence and calendar it at closing. Every two or three years is defensible. What matters is that the date goes on the calendar when the file closes, not when somebody remembers. Set it as a task with an owner and a trigger, the same way you would calendar a statute of limitations.
Define the trigger events in writing and give them to the client. A scheduled review catches a problem late. Trigger events catch it early. Name the specific events that break funding, in plain language, in the closing letter and again in every review: job change, rollover, refinance, property purchase or sale, new account, move to a new state, marriage, divorce, death of a named beneficiary, inheritance, business sale. Clients cannot report what they do not know is relevant.
Verify with documents, not conversation. This is where reviews succeed or fail. "Is the house in the trust?" is not a review question, because the client's answer is unreliable in both directions. Pull the title record. Read the current statement. Get written confirmation of each designation from the custodian. A transfer the institution rejected looks exactly like a completed one from the client's side.
Price it as its own engagement. A review done as an unbilled courtesy will be done badly or not at all, for the same economic reason funding gets converted into a letter. Charge for it as a flat-fee review, as part of a maintenance program, or hourly with an estimate. Firms that treat ongoing work as a practice model rather than a favor find that the relationship after signing is where the value is.
It is also a defensive move. A firm that offered a review every two years, documented the offer, and wrote down what the client turned down is in a very different position in 2051 than a firm whose file ends with a funding letter.
Client: _______________________ Trust dated: _______________ Review date: _______________ Reviewer: _______________ Date of last review: _______________ SECTION 1: TRIGGER EVENTS SINCE LAST REVIEW Ask the client directly. Do not infer from the file. [ ] Changed jobs, retired, or left an employer [ ] Rolled over or consolidated a retirement account [ ] Bought, sold, or refinanced real property [ ] Opened any new bank, brokerage, or investment account [ ] Moved to a different state [ ] Married, divorced, or was widowed [ ] Had or adopted a child or grandchild [ ] Received an inheritance, settlement, or large gift [ ] Started, bought, sold, or closed a business [ ] Had a named beneficiary die or become incapacitated [ ] Experienced a significant change in health or capacity Any box checked above means the asset-by-asset review below is required, not optional. SECTION 2: REAL PROPERTY For each parcel: Address | Current record owner | Deed recorded? | Recording number | Refinanced since last review? _______________________________________________________________ _______________________________________________________________ [ ] Pulled current title or tax records to confirm how title actually reads [ ] Confirmed any refinance did not leave the property deeded out of the trust [ ] Checked for property acquired in another state since the last review [ ] Confirmed homestead, exemption, and assessment status are intact Verification standard: a recording number or a current tax record showing the trustee as owner. A client saying "that one is in the trust" is not verification. SECTION 3: FINANCIAL ACCOUNTS For each account: Institution | Account type | Registered to | Confirmed how | Date confirmed _______________________________________________________________ _______________________________________________________________ [ ] Reviewed a current statement for each account, not a client list [ ] Confirmed accounts closed and reopened during retitling show the trust as owner [ ] Identified any account opened since the last review [ ] Checked whether any account has gone dormant and is at risk of escheat SECTION 4: BENEFICIARY DESIGNATIONS This section matters most and is skipped most often. A designation is enforced as written. Account or policy | Primary beneficiary | Contingent beneficiary | Form on file? | Date of designation _______________________________________________________________ _______________________________________________________________ [ ] Obtained written confirmation of the current designation from each custodian [ ] Confirmed every rollover carried a new designation, since designations do not transfer [ ] Confirmed no former spouse remains named anywhere [ ] Confirmed no deceased person remains named as primary or contingent [ ] Confirmed a contingent beneficiary is named on every account [ ] Confirmed minor children are not named outright [ ] Reconciled each designation against the dispositive terms of the trust Verification standard: a confirmation from the custodian showing the designation as recorded. Not the client's copy of a form they believe they submitted. SECTION 5: RETIREMENT ACCOUNTS LEFT AT FORMER EMPLOYERS [ ] Asked the client to list every employer held since the last review [ ] Checked whether a plan balance remains at each former employer [ ] Confirmed the designation on each left-behind plan [ ] Discussed consolidation where it simplifies the plan SECTION 6: BUSINESS INTERESTS [ ] Confirmed the entity records show the trust as holder [ ] Reviewed any amendment to the operating or partnership agreement [ ] For S corporation stock, confirmed post-death eligibility planning is in place SECTION 7: FINDINGS AND ACTION Asset | Issue found | Action required | Owner | Target date _______________________________________________________________ _______________________________________________________________ [ ] Written findings sent to client [ ] Follow-up tasks calendared with named owner and date [ ] Next review date calendared: _______________ Reviewer signature: _________________________ Date: _______________
[FIRM LETTERHEAD] [Date] [Client Name] [Address] Re: Funding Review for the [Client Name] Revocable Trust dated [Date] Dear [Client Name]: It has been [two/three] years since we last confirmed which of your assets are held in your trust. We are writing to recommend a review. Here is why this is worth your time. Your trust governs only the assets that have actually been transferred into it, or that name it as beneficiary. That was true the day you signed, and we confirmed it then. What changes is everything around it. Ordinary financial events quietly move assets back outside a trust. Refinancing a home often requires the property to be deeded out, and the deed putting it back is frequently never recorded. Changing jobs creates a new retirement account with a new beneficiary designation, which does not carry over from the old one. A new brokerage account opens in an individual name by default. None of these feel like estate planning decisions at the time, which is exactly why they go unnoticed. We are not suggesting anything is wrong. We are suggesting that nobody has checked, and that the cost of checking is far lower than the cost of discovering a gap after a death. WHAT THE REVIEW COVERS We will confirm, with documentation rather than recollection: 1. How title currently reads on each parcel of real property you own. 2. Whether each bank and brokerage account is registered to the trust. 3. The current beneficiary designation on every retirement account, annuity, and life insurance policy. 4. Whether any retirement account remains at a former employer. 5. Whether you have acquired anything since our last review that has not been addressed. 6. Whether your designations still match what your trust says you want to happen. WHAT WE WILL NEED FROM YOU [ ] A recent statement for each financial and retirement account [ ] A list of any employer you have left since [date of last review] [ ] Addresses of any real property bought, sold, or refinanced since [date] [ ] Notice of any marriage, divorce, birth, or death in your family since [date] [ ] Your authorization for us to confirm designations directly with your custodians WHAT YOU WILL RECEIVE A written report identifying each asset as confirmed in the trust, outside the trust intentionally, or outside the trust and needing attention. Where something needs attention, we will tell you what the fix is, what it costs, and who is doing it. FEE The review is [flat fee / included in your [name] maintenance program / billed at our standard hourly rates with an estimated range of $____ to $____]. Any transfer work identified by the review will be quoted separately before we begin it. If you would like to proceed, please [sign and return the enclosed authorization / contact [name] at [phone or email] to schedule]. Very truly yours, _________________________ [Attorney Name]
Where Heirloom Fits
A careful review catches most of this. Pulling the title records, reading current statements, and confirming designations with each custodian will find the refinance that was never undone and the rollover that reset a designation.
The harder part is the asset that was never on the list. Any review that starts by asking the client what changed inherits the limits of their memory, and a plan left at a former employer is exactly the kind of thing they will not think to raise.
Heirloom makes the review repeatable. The client signs one authorization, and the platform searches more than 120 billion public and private records across 6,000+ databases: bank and brokerage accounts, retirement plans left at former employers, real property including out-of-state parcels, business interests, and unclaimed property already held by state programs. Asset discovery runs for living clients, not only decedents, so the same search that built the original inventory can be run again and compared against it. What changed becomes the agenda for the review. Schedule a demo to see one run end to end.
Heirloom is not a law firm and cannot provide legal advice. This content is for informational purposes only. Heirloom can only provide self-help services at users' specific direction.