How to Fund a Revocable Living Trust

A revocable living trust allows for the management and distribution of assets to beneficiaries. It provides a framework for controlling property during your lifetime and streamlines its transfer after death, often avoiding probate. For a revocable living trust to serve its purpose, assets must be formally transferred into it, a process known as “funding.” This ensures the trust, rather than you, legally owns the assets, enabling its provisions to govern them.

Key Steps for Funding

Before transferring assets into a revocable living trust, several preparatory steps are necessary to ensure a smooth process. Begin by compiling a comprehensive list of all assets for transfer. Review the trust document to understand titling requirements and the trust’s exact legal name, as this naming convention is paramount for all transfers. Gather specific data points for each asset, such as:
Account numbers
Property addresses
Legal descriptions
Vehicle identification numbers
Serial numbers

Changing asset ownership from individual names to the trust’s legal name is foundational to funding. This change allows the trust to control assets and bypass probate. Different institutions, including banks, brokerage firms, motor vehicle departments, and county recorders, have specific forms and procedures for asset transfers. Obtain these forms beforehand to prevent delays and ensure compliance.

Funding Real Estate

Transferring real estate into a revocable living trust involves a legal procedure to ensure proper ownership. The primary step requires preparing a new deed (e.g., quitclaim or warranty deed) that formally transfers ownership from the grantor(s) to the trust’s trustee(s). The new deed must include the property’s legal description, the current owner(s) as grantor(s), and the trust’s exact legal name and trustee(s) as the grantee(s).

Once prepared, the deed must be signed by the current owner(s) before a notary public to be legally valid. After notarization, the deed must be recorded with the county recorder’s or clerk’s office where the property is located. Recording fees apply and vary by county, often ranging from $10 to $50 per page or document. Property owners should check for property tax reassessment implications, though transferring property to a revocable living trust often does not trigger reassessment if the original owner remains the beneficiary and retains control.

Funding Financial Accounts

Transferring financial accounts into a revocable living trust requires interaction with financial institutions to re-title assets. For bank accounts (e.g., checking or savings), contact the bank and complete their forms to change the account title to the trust’s name. If the trust has its own tax identification number (EIN), provide it to the bank.

For brokerage and investment accounts, contact the firm to request transfer forms. These forms facilitate re-titling the account in the trust’s name, often allowing “in kind” transfer of investments without liquidation. Certificates of Deposit (CDs) can also be retitled, but be aware of potential early withdrawal penalties if a new CD is opened in the trust’s name before an existing one matures.

Retirement accounts (e.g., IRAs and 401(k)s) generally cannot be owned by a revocable living trust during the grantor’s lifetime due to significant tax implications, including immediate taxation upon transfer. Instead, the trust is typically named as a primary or contingent beneficiary of these accounts by updating beneficiary designation forms directly with the plan administrator. Life insurance policies can have ownership transferred to the trust, or more commonly, the trust can be named as the primary or contingent beneficiary, ensuring proceeds are distributed according to trust provisions.

Funding Other Assets

Transferring other assets into a revocable living trust involves specific procedures tailored to each asset’s nature. For vehicles (e.g., cars, boats, or RVs), ownership change typically requires updating the title with the state’s Department of Motor Vehicles (DMV) or equivalent agency. This often involves completing forms, signing the existing title over to the trust, and submitting transfer fees, which can range from $15 to $100 depending on the state.

Tangible personal property (e.g., household furnishings, jewelry, or art) often lacks formal titles. A “general assignment” document can transfer broad categories of these items to the trust without individually listing every piece. For particularly valuable or unique items, specifically list them within the assignment or on a schedule attached to the trust for clarity.

For business interests (e.g., partnerships, LLCs, or corporations), transferring ownership to a trust requires careful consideration and often involves amending organizational documents like partnership agreements, LLC operating agreements, or corporate bylaws. Consent from other owners may be required; consult with legal counsel to ensure compliance with existing agreements and avoid triggering buy-sell provisions. Intellectual property (e.g., copyrights, trademarks, and patents) can also be transferred to a trust through specific assignment documents filed with relevant government offices, such as the U.S. Copyright Office or the U.S. Patent and Trademark Office.