How to Fund Your Trust: A Step-by-Step Process

Establishing a trust is a key step in estate planning, providing a structure for managing and distributing assets. While creating the trust document is important, it remains an empty framework until assets are transferred into it. This process, known as funding the trust, is necessary for the trust to control and distribute your property as intended. Without proper funding, assets may be subject to probate or distributed outside the trust’s provisions. This article guides you through transferring assets into your trust, ensuring your estate plan is operational.

Understanding Fundable Assets

Various assets can be transferred into a trust, each requiring a specific ownership change method. Real estate, including homes, commercial properties, or land, is commonly funded into a trust by formally transferring the legal title from individual ownership to the trust.

Financial accounts, such as checking, savings, CDs, and investment accounts (stocks, bonds, mutual funds), are also transferred. This involves retitling the account from your individual name to the trust’s legal name. Tangible personal property, like jewelry, art, vehicles, and household furnishings, can also be assigned to a trust.

Interests in closely held businesses or LLCs can be transferred, often requiring amendments to partnership or operating agreements. Life insurance policies are generally not owned by the trust; instead, the trust is designated as the beneficiary. Similarly, retirement accounts like IRAs and 401(k)s are typically not transferred directly due to tax implications. The trust is named as the beneficiary of these accounts to ensure distribution according to your estate plan after your passing.

Preparing for Asset Transfers

Before transferring assets, gather information and documents related to your trust. Locate your trust document to identify its full legal name, creation date, and trustee names. If your trust has an Employer Identification Number (EIN) from the IRS, this number is needed for retitling financial accounts.

Next, compile information for each asset. For real estate, you need the property’s legal description, found on your deed or tax records. For bank and investment accounts, gather account numbers, bank names, and current statements. VINs are needed for automobiles, and policy numbers for life insurance.

Obtain the correct forms. Your attorney can provide a Certificate of Trust, also known as a Trust Abstract. This document summarizes the trust’s existence and authority, and financial institutions accept it to confirm validity. For real estate, you need blank deed forms specific to the state where the property is located. These are often found at county recorder’s offices or legal supply stores.

Financial institutions provide forms for retitling accounts, and life insurance companies or retirement account administrators supply beneficiary designation forms. For tangible personal property, prepare a general Assignment of Personal Property document detailing the items. When completing forms, ensure the trust is listed as the new owner exactly as specified in your trust document, for example, “John Doe and Jane Doe, as Trustees of The Doe Family Trust dated January 1, 2025.”

Executing Asset Transfers

Once preparatory steps are complete, begin asset transfers. For real estate, the prepared deed must be signed by current owners before a notary public, a legal requirement in most states. After notarization, record the deed with the county recorder’s or clerk’s office where the property is located. Recording fees apply, and the recorded deed is mailed back within weeks to months.

For bank and brokerage accounts, submit completed retitling forms and the Certificate of Trust to your financial institution. This can be done in person, by mail, or online. After submission, the institution processes the change, and you should receive confirmation or new statements reflecting the trust as the new owner within days to weeks.

Tangible personal property is transferred by signing the Assignment of Personal Property document. This document transfers ownership to the trust and is kept with the trust’s records, not filed with any government agency. For life insurance and retirement accounts, submit completed beneficiary designation forms to the insurance company or plan administrator. This usually involves mailing or submitting online, and you should receive a confirmation of the change.

Transferring business interests often involves complex steps, such as amending corporate records, partnership agreements, or LLC operating agreements. Seek legal assistance for transferring business interests to ensure compliance with governing documents and state laws. This guidance helps avoid unintended consequences and ensures a smooth ownership transition.

Verifying and Documenting Transfers

After initiating asset transfers, confirm each transfer is complete. For financial accounts, review statements to ensure ownership reflects the trust’s name. For real estate, verify the recorded deed has been returned and shows the trust as the new owner.

For life insurance and retirement accounts, confirm with companies that the beneficiary designation has been updated to name your trust. Maintain an organized record of all assets held by the trust. Create and regularly update an asset schedule or list detailing every asset transferred, including account numbers, property addresses, and values.

Safeguard all original trust documents, recorded deeds, assignment documents, and confirmation letters from financial institutions. These documents provide proof of ownership and are important for trust administration. Store them in a secure location, such as a fireproof safe or bank safe deposit box, to protect your estate plan.