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Living Trust Funding Guide: A Step-by-Step Guide to Funding Your Trust

Writer: Amber Hansen
Amber Hansen
10 minutes ago
3 min read

Creating a living trust is an important step in estate planning, but signing the trust document is only the beginning. The trust must also be properly funded to help ensure your assets are handled according to your instructions.


Funding a trust generally means changing ownership of certain assets so they are owned by the trust. However, not every asset should be transferred to the trust.

Important: This is a general educational guide and is not legal, tax, or financial advice. Your attorney should review your specific assets and estate plan before you make ownership or beneficiary changes.

Step 1: Gather Your Trust Documents

Start with:

  • Signed trust agreement and amendments

  • Certification of trust

  • Current bank and investment statements

  • Property deeds

  • Business ownership documents

  • Retirement and insurance information

Your trust documents should be reviewed before making any transfers.


Step 2: Make a List of Your Assets

Review your assets by category:


Real Estate

  • Primary residence

  • Vacation homes

  • Rental properties

  • Land

  • Other real estate

Real estate may require a new deed to transfer ownership to the trust.


Bank & Investment Accounts

  • Checking and savings accounts

  • Money market accounts

  • CDs

  • Brokerage accounts

  • Other non-retirement investments

Contact each financial institution to determine its requirements for retitling an account to the trust.


Business Interests

  • LLC interests

  • Corporation stock

  • Partnership interests

Business ownership can have transfer restrictions, so review your operating, shareholder, or partnership agreements before making changes.


Personal Property

Consider significant assets such as:

  • Vehicles

  • Jewelry

  • Tools

  • Artwork

  • Firearms

  • Collections

  • Other valuable property

Your attorney can explain which personal property should be transferred, assigned, or addressed through other estate-planning documents.


Step 3: Review Beneficiary Designations


Not every asset needs to be owned by the trust. Some assets pass through beneficiary designations.

Review beneficiaries for:

  • Life insurance

  • IRAs

  • 401(k)s, 403(b)s, and other retirement plans

  • Annuities

  • Payable-on-death accounts

  • Transfer-on-death accounts

Do not automatically name your trust as beneficiary of every account. Retirement accounts, in particular, have special rules and should be reviewed with your estate planning attorney and, when appropriate, your financial or tax professional.


What Should NOT Go Into the Trust?


Some assets generally should not simply be transferred into a revocable living trust, including:


Retirement Accounts

IRAs, 401(k)s, Roth IRAs, and similar accounts generally remain in the individual's name and are coordinated through beneficiary designations.


Life Insurance

Life insurance policies generally don't need to be retitled in the trust simply because you have a living trust. Beneficiary designations should be reviewed instead.


Assets With Special Restrictions

Be careful with assets subject to:

  • Loans or mortgages

  • Business transfer restrictions

  • Contracts

  • Special tax considerations

  • Other ownership requirements

Always get professional advice before transferring these assets.


Step 4: Confirm Everything Was Completed


Don't assume an asset was transferred simply because paperwork was submitted.

Keep records that confirm in writing:


☐ Real estate deeds

☐ Bank and investment account changes

☐ Business ownership changes

☐ Beneficiary designations

☐ Other completed transfers


A pour-over will may help address assets that were not transferred to the trust, but it does not replace properly funding the trust.


Keep Your Trust Properly Funded


Funding your trust doesn't have to be overwhelming. Work through your assets one category at a time and keep a record of what has been completed.

Most importantly, remember to review your trust regularly and whenever you acquire significant assets or experience a major life change.


A properly funded trust helps ensure that the estate plan created on paper is also reflected in the ownership of your assets.


This is for educational purposes only. It is not to be construed as legal advice. You should contact a competent legal, tax, and financial advisors.


Compass Rose Law Firm 1830 W. Fulton St. #102 www.CompassRoseLawFirm.com

 
 
 

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