⚖️ What Does It Mean to “Fund” a Living Trust?
Funding a trust means transferring ownership of assets — or updating beneficiary designations — so those assets legally fall under the trust’s control.
Before funding:
Owner = You (individually)
After funding:
Owner = Your trust (with you still in control as trustee)
Nothing changes in how you use your property. You can still:
- Spend money
- Buy and sell assets
- Refinance property
- Update instructions
- Revoke the trust entirely
The difference is legal ownership — which allows your trust to function during incapacity and after death.
⚖️ The Six Asset Categories You Must Review
Most families can organize trust funding by walking through these six categories.
1. Real Estate (Homes, Rentals, Land)
Real estate is the most important asset to fund — and one of the most commonly missed.
Common Examples
- Primary residence
- Rental properties
- Vacation homes
- Family land or inherited property
Why Real Estate Belongs in Your Trust
- Avoids probate
- Allows management during incapacity
- Simplifies transfers to beneficiaries
- Prevents court involvement
How Real Estate Is Transferred
Your attorney prepares a new deed transferring ownership from you to your trust. The deed is signed, notarized, and recorded with the county.
If you refinance, lenders may temporarily remove the property from the trust — it must be transferred back afterward.
Do not attempt to prepare or record deeds yourself. Errors can create title, insurance, or inheritance problems later.
2. Bank Accounts (Checking, Savings, CDs)
Bank accounts are typically funded in one of two ways.
Option A: Retitle the Account to the Trust
This gives your successor trustee immediate access if needed and avoids probate.
Option B: Use Payable-on-Death (POD) Designations
This avoids probate but does not allow trust management during incapacity.
Practical Guidance
- Primary household accounts → often best titled to the trust
- Secondary accounts or CDs → POD may be appropriate
Common Mistakes
- Leaving large balances outside the trust
- Assuming POD handles incapacity
- Forgetting updates after life changes
3. Investment & Brokerage Accounts (Non-Retirement)
Taxable investment accounts generally belong inside the trust.
Common Examples
- Brokerage accounts
- Stocks, bonds, ETFs
- Mutual funds
How Transfers Work
Your financial institution retitles the account into the trust using a trust certification or account conversion form.
This keeps investment management centralized and avoids probate delays.
What Stays Out
- Retirement accounts (covered next)
4. Retirement Accounts (401(k), IRA, Roth IRA)
Retirement accounts cannot be retitled into a living trust during your lifetime without triggering tax consequences.
Instead, these accounts are handled through beneficiary designations.
Common Structure
- Primary beneficiary → spouse or individual
- Contingent beneficiary → the trust
This allows tax-efficient transfers while still providing trust-based protection if the primary beneficiary cannot inherit.
Common Mistakes
- Naming the estate as beneficiary
- Forgetting contingent beneficiaries
- Failing to update designations after marriage, divorce, or death
Some situations justify naming the trust as primary beneficiary, but this requires professional guidance.
5. Life Insurance & Annuities
Life insurance is typically funded by naming the trust as beneficiary, not owner.
When Naming the Trust Makes Sense
- Minor beneficiaries
- Desire for structured distributions
- Ongoing financial management needs
When It May Not
- When immediate, direct payout is preferred
- When no trustee management is needed
Key Reminder
Old employer policies and forgotten coverage are frequently missed — all policies should be reviewed.
6. Personal Property & Miscellaneous Assets
Personal property is transferred using an Assignment of Personal Property, usually prepared with your trust documents.
Common Examples
- Jewelry and heirlooms
- Artwork and collectibles
- Firearms
- Tools or equipment
Many trusts also include a personal property memorandum, allowing you to name who receives specific items without amending the full trust.
