How Funding a Trust Works, and Why It Matters

Funding a Trust is a big part of how you make your estate plan work the way you intended. Setting up a Trust creates the container for the assets, and funding it is how the assets actually get into the Trust.

You may have the Trust document signed, saved, and ready to go, but if your home, accounts, or other assets are still only in your name, the Trust may not control what happens to them. We don’t want you dealing with this issue on your own! We’ve laid out some basics on how estate plans keep problems like this from happening.

Why funding your Trust matters

Signing a Trust document is an important step, but it doesn’t automatically move your assets into the Trust. In many cases, those setting up Trusts have to formally retitle, assign, or connect their assets to the Trust by naming someone who will receive them (the beneficiary) before the Trust can control them.

That’s why funding a Trust matters. Without the funding step, the Trust may exist on paper, but the assets you meant to include could still be sitting outside of it. That can create confusion for loved ones.

How to fund a Trust

The type of asset, the Trust document itself, state rules, and the involved institutions can all change the steps you take to fund a Trust. At a high level, though, it usually involves reviewing what you own, deciding what belongs in the Trust, and connecting those assets to the Trust.

Here are some common tasks and responsibilities involved in funding a Trust:

Taking inventory of your assets

Putting pen to paper can help when you’re taking inventory of your assets. Your written inventory may include real estate, bank accounts, investment accounts, business interests, personal property, life insurance policies, and any other assets that might be a part of your estate plan.

Working with your lawyer or financial institution

Real estate and complex assets often involve a lawyer’s review at minimum, and you’ll usually find yourself talking to financial institutions when you’re dealing with bank and investment accounts. You’ll typically need to communicate with these folks throughout the Trust funding process.

Retitling assets in the Trust's name

Retitling means changing the legal owner of the asset from an individual person to the Trust. The process and documents involved can vary, but this is common with real estate, bank accounts, and certain financial accounts. In some cases, retitling assets may require permission from a financial institution or, in the case of business interests, the other owners. So before retitling assets, be sure that you don’t need to get permission. Transferring assets without required permissions can result in an invalid transfer or breach of a contract.

Updating beneficiary designations

There’s no title for financial accounts and life insurance like there is for a home or car. So those assets pass through beneficiary designations rather than title changes. Updating beneficiary designations is an easy step to miss, so it may be worth reviewing with a financial pro or a LegalShield® Provider Lawyer if you’re not sure what to do.

Keeping your Trust funded over time

As major life changes — home purchases, new accounts, new businesses, inheritances, and so on — happen, the Trust is less likely to be up to date with everything you want funding it. Life events are a natural reminder to revisit your estate plan with a lawyer. That way, your Trust stays funded the way you want it to be.

What assets can go into a Trust?

What assets should be in a Trust depends on the estate plan, but these are the types of assets people commonly add:

Real estate

Primary homes, vacation homes, investment properties, and land are all real estate assets, and they’re among the most common assets people consider. Funding a Trust with real estate usually means updating the deed so the state titles the property in the Trust’s name. If you have out-of-state property, you may need to navigate different state rules or recording requirements.

Provider lawyers can discuss your options for leaving real estate to your family.

Bank and financial accounts

It’s possible to put checking accounts, savings accounts, and investment accounts into a Trust, but the process for doing this varies by financial institution.

Keep in mind that many banks are going to have their own forms and review steps for Trust-owned accounts. Some might even ask you for a copy of the Trust document before they approve changes.

Business interests

Believe it or not, business interests can also be part of a Trust plan. For instance, you could transfer a membership interest in an LLC into a Trust.

“Complex” is an understatement when describing this process. The company’s operating agreement, ownership rules, tax issues, and other agreements can all affect this process. That said, a lawyer can help review those details to cut down on confusion.

Personal property

It’s possible to put personal valuables into a Trust, too. This is part of the Trust plan that can be easy to overlook, though, because most people focus first on the things with obvious value (the house and the bank account).

Still, jewelry, art, collectibles, antiques, and even furniture can matter a lot to the one creating the plan and the loved ones who might handle the estate later on. A Trust may refer to a Memorandum of Personal Property, where you list these personal assets and who receives them. The Trust can even set out conditions for personal property that is not specifically assigned, such as in what order items can be selected or what happens to items that are not selected.

What assets don't belong in a Trust?

Some assets may not be owned by a Trust due to laws or restrictions. But there are other options that can be used to cause the asset to transfer to a Trust or direct beneficiary upon the owner’s death. This area can get complex, so it’s helpful to review federal rules, state rules, account documents, and plan terms before making changes.

Common examples of assets that may not be owned by a Trust:

• Retirement accounts: Beneficiary designations more commonly control retirement accounts and accounts for the benefit of others, like a 529, but check with a legal professional to see if there are exceptions.
• Health savings accounts: HSAs usually can’t go into a Trust, but it’s sometimes possible to name a Trust as a beneficiary of an HSA.
• Certain vehicles: Cars, boats, trailers, RVs and other titled vehicles can be transferred to a Trust by title, by Assignment, or by Transfer on Death forms that are available in many states. Each state is different though, so check with a legal professional.
• Everyday personal items: Higher value personal property like artwork, collections, firearms, furniture and jewelry are considered personal property and are usually addressed in some way within the Trust itself via a personal property list or general assignment. Lower value items, such as furniture, photo albums or dishes can be addressed this way as well.
• Life insurance: Life insurance accounts that are already active will likely not be able to be transferred into the trust, but the Trust can be listed as a beneficiary of the policy. For new policies, there may be options for the Trust to be the owner. Discuss this with your insurance agent and attorney when creating your Trust.

Get legal help planning your estate through  a LegalShield Membership

Funding a Trust is key, but it’s only one part of a broader estate plan. If you’re still comparing documents, we have a guide to estate planning basics that explains how Trusts, Wills, Powers of Attorney, and other tools can work together.

With a LegalShield Premium Plan, a provider lawyer can prepare a Revocable Trust for an additional flat fee. We can connect you with a LegalShield Provider Law Firm that can answer your estate planning questions and help you better understand whether a Trust may fit your needs.

Explore how LegalShield Plans can help you protect your family with smarter estate planning.