DC Living Trust Funding Mistakes to Avoid

Quick answer: the most common mistake is never recording a new deed into the trust's name for real estate. The most common DC-specific mistake is assuming a basic joint trust automatically preserves both spouses' non-portable exemptions when it doesn't. See how the numbers change in the DC probate vs living trust calculator.

Signing ≠ funding

The distinction that trips people up: a living trust is only a legal shell until specific assets are formally retitled into its name. Signing the trust document creates the shell; it does nothing on its own to move a house, a bank account, or a brokerage account inside it. Each asset needs its own transfer step.

1. Real estate deed never recorded — the #1 mechanical mistake

Moving real estate into a trust requires a new deed, signed and recorded, naming the trust as owner. This is the step most often skipped. Left undone, that property remains a probate asset — subject to the full Probate Division process, including the periodic accountings, regardless of the trust document sitting in a drawer.

2. Assuming a joint trust automatically preserves both exemptions — DC's own risk

Because DC's estate tax exemption isn't portable between spouses, simply signing a basic joint revocable trust doesn't automatically preserve both spouses' $4,988,400 exemptions. A specific credit shelter or similar structure has to be built for that purpose — without it, leaving everything to the surviving spouse can waste the first spouse's exemption entirely, the same risk that exists without any trust at all.

3. Financial accounts left titled individually

Bank and brokerage accounts don't join a trust automatically. Each one has to be retitled into the trust's name, or the institution needs a copy of the trust document plus a change-of-ownership form. Accounts opened after the trust was created are especially easy to forget.

4. Treating the small estate proceeding as a safety net

DC's small estate proceeding — $80,000 or less — is a genuine shortcut for modest, unfunded assets. It's not a backstop for a house or a sizeable account left outside the trust by mistake; those amounts require full probate, including the periodic accounting cycle.

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Funding mistakes — frequently asked questions

What's the most common DC trust funding mistake?

Never recording a new deed transferring real estate into the trust's name. Signing the trust document doesn't move title to a house — a separate deed has to be prepared, signed, and recorded, and this is the step people most often skip.

What's a mistake specific to DC's non-portable estate tax exemption?

Assuming a basic joint revocable trust automatically preserves both spouses' DC estate tax exemptions. Since the exemption isn't portable, a couple needs a specific credit shelter or similar structure — a basic joint trust doesn't do this automatically.

Can DC's small estate proceeding fix an unfunded trust asset?

Only for genuinely small amounts — $80,000 or less. A house or a larger account left outside the trust still needs full probate, including the periodic accountings.

Do bank and brokerage accounts fund a trust automatically?

No. Each account has to be individually retitled into the trust's name, or the institution needs a copy of the trust and a change-of-ownership form — a step often skipped for accounts opened after the trust was created.

Estimate for general guidance only, not legal advice. Based on D.C. Code § 20-351 and DC estate tax rules. Confirm proper trust funding steps with a licensed DC estate planning attorney.

DC Living Trust Funding Mistakes