5 Common Mistakes Families Make With Revocable Living Trusts (and How to Fix Them)
Why Most Trusts Fail When Families Need Them Most
A revocable living trust is one of the most powerful estate planning tools available — but only if it’s done correctly. Many South Carolina families create a trust to avoid probate and protect their loved ones, only to discover later that it doesn’t actually work as intended.
In this video, Charleston estate planning attorney JP Rankin breaks down the five most common mistakes families make with revocable living trusts and how to fix them under South Carolina and North Carolina law.
🎥 Watch the full video here:
AVOID These 5 Mistakes Made With a Revocable Living Trust
Mistake #1: Not Funding the Trust
This is the number-one reason most trusts fail.
A trust only controls what’s actually in it. If your home or bank accounts are still titled in your name, those assets must still go through probate court, even if your trust is perfectly written.
The fix: retitle your home, bank accounts, and investment accounts into the name of your trust — for example:
John and Jane Doe, Trustees of the Doe Revocable Living Trust, dated October 15, 2025.
Taking this simple step can save your family 6–12 months of probate delays and thousands in court costs.
Mistake #2: Naming the Wrong Trustee
Your trustee is the person who manages your trust when you’re incapacitated or after your death. Too often, people simply pick their oldest child, even if that person isn’t organized or responsible.
The fix: choose a trustee who’s trustworthy, detail-oriented, and fair — or name a professional trustee.
Both North Carolina and South Carolina allow trustees to be removed for violating their fiduciary duties, but that process can be costly and stressful for families. It’s far better to choose wisely from the start.
Mistake #3: Forgetting About Taxes
A revocable trust does not automatically reduce your estate taxes or protect against creditors.
Under IRS Code Section 2038, any assets you control are still part of your taxable estate. However, you still receive a step-up in basis under Section 1014, meaning your heirs can sell inherited assets without paying capital gains on appreciation.
The fix: married couples can include a credit shelter trust or disclaimer trust — both recognized under the Uniform Trust Code in South Carolina and North Carolina. These strategies can preserve estate tax exemptions and potentially save millions for high-net-worth families.
Mistake #4: Not Updating the Trust
Life changes — your trust should too.
Divorce, death, new children, or new assets can make your estate plan outdated or even harmful. Outdated beneficiaries or an ex-spouse listed in your trust can create massive problems down the road.
The fix: review your trust every 3–5 years or after any major life event. Keeping your plan current ensures your assets go where you intend — not where your old paperwork says they should.
Mistake #5: Believing a Trust Protects Assets During Your Lifetime
A revocable living trust does not shield your assets from creditors, lawsuits, or divorce while you’re alive. Because you can revoke or amend it, those assets remain under your control — and thus accessible to creditors.
The fix: for lifetime asset protection, you’ll need an irrevocable trust or an entity such as an LLC. After you pass away, the revocable trust becomes irrevocable and provides spendthrift protections for your heirs.
Bonus: Your Trust Must Be Funded and Managed
JP Rankin sums it up best:
“A revocable living trust is like a Ferrari with no gas. It looks great, but it won’t get your family anywhere unless it’s properly funded, updated, and managed.”
If your family already has a trust, it’s wise to have it reviewed by an experienced estate planning attorney in Charleston. Many trusts look solid on paper but fail in execution due to missing titles, old information, or unfunded assets.
Schedule a Trust Review or Consultation
If you live in South Carolina or North Carolina and already have a trust, Rankin Law Firm can review it to ensure it actually protects your family the way you intended.
Schedule your consultation:
https://www.rankinestatelaw.com/book-a-consultation
Free resource: 6 Mistakes Families Make With Estate Planning
About JP Rankin
JP Rankin is an estate planning attorney in Charleston, South Carolina, licensed in South Carolina, North Carolina, and California. He has helped hundreds of families avoid probate and build plans that reflect their values through customized wills and trusts.
Disclaimer
This article and video are for informational purposes only and do not constitute legal advice. Viewing or interacting with this content does not create an attorney-client relationship.