Funding a Trust

What Does "Funding" Mean?

Funding a trust means putting your assets into it. The word "funding" sounds fancy, but it just means changing the ownership of your property from your name to your trust's name.

If you create a trust but do not put anything in it, you have an empty box. A trust without funded assets does not do anything. It cannot avoid probate, it cannot manage your property, and it cannot protect your family.

Why Funding Matters

The whole point of a trust is to control what happens to your property. But the trust can only control what it owns. If your house is still in your name, the trust has no say over it.

Here is what happens with a funded trust vs an unfunded one:

How to Fund Different Asset Types

Each type of asset needs a different transfer method. Here is how to fund the most common ones.

Real Estate

To transfer a house or land into your trust, you need a new deed. The deed changes ownership from "John Smith" to "John Smith, Trustee of the Smith Family Trust."

Steps:

1. Get a new deed prepared (usually a warranty deed or grant deed)
2. Sign it in front of a notary
3. Record it at the county recorder's office
4. Update your homeowner's insurance to reflect the new ownership

Bank Accounts

To transfer checking or savings accounts, visit your bank. Tell them you want to change the account title to your trust.

Steps:

1. Bring a copy of your trust (or the Certificate of Trust)
2. Ask the bank to retitle the account in the name of your trust
3. Get new checks and debit cards with the trust name
4. Update any automatic payments linked to the old account

Investment Accounts

Brokerage and mutual fund accounts work like bank accounts. Contact your broker or financial institution.

Steps:

1. Call your broker or visit their office
2. Request a title change to your trust
3. Sign any required paperwork
4. Update beneficiary designations if needed

Business Interests

If you own an LLC, corporation, or partnership interest, you need to assign your ownership to the trust.

Steps:

1. Check your operating agreement or bylaws for transfer rules
2. Prepare an assignment document
3. Update the company's ownership records
4. If you are the only owner, update the company's tax filings

Personal Property

Items like furniture, jewelry, art, and electronics can be transferred with a simple assignment document. No deed is needed.

Steps:

1. Make a list of personal property going into the trust
2. Sign an assignment of personal property
3. Keep the list with your trust documents

Vehicles

Transferring vehicles into a trust is trickier. Some states allow it, others do not. Check with your DMV.

Steps:

1. Ask your DMV if vehicles can be titled in a trust
2. If yes, get a new title in the trust's name
3. Update your auto insurance

Common Funding Mistakes

• Creating the trust and forgetting to fund it. This is the most common mistake. A trust without assets is just paper.
• Funding some assets but not others. If you forget an account, it goes through probate.
• Not updating after buying new things. Every time you buy something new, make sure it goes into the trust.
• Using the wrong deed for real estate. Different states require different deed types.
• Not telling your bank or broker. They will not do this automatically. You have to ask.

Keeping Your Trust Funded

Funding is not a one-time thing. You need to keep your trust funded as your life changes. Review your assets every year and make sure new purchases go into the trust.