What Happens to Property Left Out of a Trust?

When someone passes away and their property is not in a trust, these assets must typically go through probate. Probate is a court-supervised process that can delay distribution, increase costs and expose private matters to the public.

A financial advisor can help manage your assets and guide you in making decisions that support your estate plan and reflect your legacy goals.

The Role of a Trust in Estate Planning

A trust is a legal entity that holds and manages assets on behalf of beneficiaries. One of the primary benefits of a trust is that property can pass directly to heirs without the need for probate.

When someone sets up a revocable living trust, they typically name themselves as the trustee during their lifetime. This allows them to retain control of the assets while simplifying the transfer process after death.

For the trust to be valid, the individual must retitle their property in the name of the trust. This includes various types of assets, such as real estate, financial accounts and even vehicles in some cases.

If you do not formally transfer assets into the trust, they are considered outside the trust. They then become subject to standard estate procedures, which usually means probate.

Leaving property outside the trust does not necessarily invalidate your estate plan, but it can create complications. Without proper titling or backup documents, these assets can trigger legal delays. This can result in higher administrative costs and lead to potential disputes among heirs.

What Happens to Property Not in a Trust

Probate is the legal process by which a court oversees the verification of the will. It handles the distribution of its assets, as well as payments for any outstanding debts. When someone passes away with property outside of their trust, those assets typically become part of the probate estate.

If there is a pour-over will, this will instruct any remaining assets to be transferred into the trust upon death. A pour-over will is a legal document that acts as a safety net for assets not formally transferred into a trust. It directs any property outside the trust at time of death to be “poured over” into the trust. It can then be distributed according to its stipulated terms.

However, even with a pour-over will, those assets still go through probate first. The probate process can take several months to over a year, depending on the estate’s complexity and state probate rules.

If there is no will, the distribution of the estate follows state intestacy laws. These laws prioritize spouses, children, parents and other close relatives, often in fixed shares. With this arrangement, property may go to someone the deceased did not intend to inherit. This can especially be the case in blended families or unmarried partnerships.

In any case, assets not titled in the trust can create unexpected challenges for heirs. This is especially the case when an estate includes a home, business or other illiquid assets.

How to Transfer Property into a Trust

A trustee is a person or institution responsible for managing and carrying out the terms of a trust.

To fund a trust, you must transfer assets into the trust’s name:

Real estate. Draft a new deed listing the trust as the legal owner.
Bank and brokerage accounts. This may require opening new accounts or updating title forms provided by the institution.
Life insurance and retirement accounts. For these accounts, it may be more appropriate to name the trust as a contingent beneficiary, depending on the estate’s structure and tax implications. Each asset class has its own procedures, and errors in titling can invalidate parts of the estate plan.

A financial advisor can help inventory assets, identify those not yet titled correctly and coordinate with the necessary financial institutions. This ensures that you fully fund your trust, allowing your estate plan to function properly.

What Heirs Should Know if Property Was Left Out

If you are an heir that discovers property is missing from a trust, first determine whether a pour-over will or other estate document can clarify the decedent’s intent. From there, the estate may require probate court.

You may need to work with an estate attorney or financial advisor. They can help you gather documents, retitle property and file necessary court petitions.

Some smaller estates may qualify for informal property distribution if they are eligible for a summary probate process. However, this varies by state.

It is also important to look for conflicting beneficiary designations or title issues. For example, a joint bank account could pass directly to the co-owner, regardless of what the will or trust says.

Common Types of Property Often Left Out of Trusts

Despite best intentions, many individuals overlook certain types of property when funding a trust:

Real estate. Real estate, particularly vacation homes and rental properties, is a common example. If the deed has not been updated to reflect ownership by the trust, the property will not be covered.
Vehicles. Vehicles are another item frequently missing. This is often due to state registration requirements or the perception that they are not high-value assets. However, a car or boat can still trigger probate if not titled correctly.
Financial accounts. Bank accounts and brokerage accounts may be outside the trust for several reasons. This could happen if there was never any retitling, there is joint ownership or the beneficiary designations are sufficient. Retirement accounts and life insurance policies typically pass outside of probate through named beneficiaries. However, you should still review these designations to ensure alignment with your overall estate plan.

How a Financial Advisor Can Help

Whether you are setting up a trust or dealing with a loved one’s estate, a financial advisor can help reduce complexity and prevent costly oversights.

Here are five general ways they provide hands-on support:

Proper trust funding. Advisors help ensure assets correctly transfer into the trust. They also coordinate with custodians and estate attorneys to avoid gaps in ownership or unintended probate exposure.
Trust auditing. They review how accounts are titled and verify that beneficiary designations align with the broader estate plan. This can include retirement accounts, insurance policies and brokerage holdings.
Ownership restructuring. If certain assets were unintentionally left out of the trust, an advisor may recommend retitling. You may also add payable-on-death (POD) or transfer-on-death (TOD) designations or create a pour-over will that captures any missing property.
Probate support. Financial advisors provide beneficiaries with guidance throughout the probate process. They can help manage inherited assets and assist with decisions about whether to hold, sell or reinvest the proceeds.
Balance liquidity and family dynamics. In larger estates, advisors often model liquidity needs for taxes or debts. They also recommend strategies to preserve asset values and help mediate financial decisions between heirs to avoid conflict.

Bottom Line

A financial advisor can help you review titles, accounts and beneficiary designations so your assets align with your trust and reduce the chance of probate.

When property is left out of a trust, it often must go through probate. However, this can lead to delays, expenses and legal hurdles. Even with a pour-over will, these assets are still subject to court supervision. To avoid these issues, it is essential to fund the trust completely, coordinate titles and beneficiary designations and keep documents updated.

Estate Planning Tips

A financial advisor can help you coordinate your estate plan with your assets, beneficiaries and long-term goals so everything works together as your situation changes. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
While it may be tempting to save some money and plan your estate by yourself, you should still be careful with these DIY estate planning pitfalls.