Trust funding — how to actually do it
An unfunded trust is paperwork. Funding — actually retitling assets into the trust's name — is the half of trust planning that most attorneys skip. Here's how funding really works.
We see this on probate intakes regularly: the family has a trust, signed years ago. The trust paperwork looks great. But the assets are still in the decedent's individual name. Result? Probate runs anyway. The trust did nothing.
Trust funding — actually retitling assets into the trust — is the half of trust planning that most attorneys skip and most clients don't follow through on. Below: how to fund each asset class properly, what to skip, and the ongoing maintenance that keeps a trust effective.
What 'funding' means
Funding a revocable living trust means changing the title (legal ownership) of an asset from your individual name to the name of the trust. After funding, the asset is owned by the trustee 'as trustee of [the trust]', not by you personally.
- Real estate: deed transfers from 'John Smith' to 'John Smith, Trustee of the Smith Family Trust dated [date]'.
- Bank account: account titling changes; trust's tax ID may be used (or your SSN if grantor trust).
- Brokerage account: account retitling at the brokerage.
- Vehicle: title transfer at the DMV.
- Business interests: assignment of interests via membership-interest assignment or stock transfer.
Funding by asset class
Real estate is the asset most often the reason for the trust — and most often the asset most poorly funded.
- Florida primary residence (homestead): deed transfer. Use a careful Florida-form deed that preserves homestead protections (we draft these).
- Vacation or rental real estate: deed transfer; no homestead concerns.
- Out-of-state real estate: deed transfer in that state, by an attorney licensed in that state. Coordinate with your Florida attorney.
- Mortgage on the property: most mortgages have due-on-sale clauses, but federal Garn-St. Germain Act exempts transfers to revocable trusts where the grantor remains a beneficiary. Confirm with the lender; don't surprise them.
- Title insurance: existing title policy generally continues; some lenders require a new endorsement for trust ownership.
- Property tax & homestead exemption: usually continue uninterrupted with proper drafting. Notify the property appraiser to confirm.
Bank and brokerage accounts
- Checking and savings accounts: simplest path — change the account titling at the bank. Bring trust certification + ID.
- Brokerage accounts: similar — provide trust certification, complete the brokerage's transfer-to-trust forms.
- Tax ID: revocable trusts typically use your SSN as the tax ID (it's a grantor trust); the funding doesn't change that during your life.
- Wire and check authority: confirm trustee can transact day-to-day. Most banks require a 'certificate of trust' (a short summary) rather than the full trust document.
- Direct deposits and auto-pays: stay attached to the account; you don't need to redo them.
Retirement accounts — don't fund the trust
IRAs, 401(k)s, 403(b)s, pensions should NOT be retitled into a revocable trust. Doing so triggers immediate taxation as a distribution. Instead:
- Name the trust as beneficiary (or a specific sub-trust within your trust) — this preserves tax-deferred status while still flowing into the trust at death.
- SECURE Act considerations: post-2019, most non-spouse beneficiaries (including trusts) must distribute inherited IRAs within 10 years. Trust beneficiary designations should be reviewed with these rules in mind.
- Spouse as beneficiary: surviving spouse retains full rollover rights. Many couples leave retirement to spouse outright with the trust as contingent.
Life insurance
- Don't transfer ownership of the policy to a revocable trust during your life — no benefit, and may complicate things.
- Name the trust as beneficiary of the policy. Death benefit flows into the trust, then distributes per trust terms.
- Irrevocable Life Insurance Trusts (ILITs) are different — they're separate trusts designed to remove insurance from your taxable estate. Specialized planning.
Business interests
- LLC member interests: assignment of membership interest to the trust; update the operating agreement to recognize the trust as member.
- Corporation shares: stock transfer to trust; update the stock register.
- Sole proprietorship: trickier — trust holds the assets, but the business itself isn't 'transferred' the same way. Often involves restructuring.
- S-corporation considerations: revocable trusts are eligible S-corp shareholders during the grantor's life and for 2 years after death. Plan accordingly.
- Partnership interests: assignment with partner consent (often required by partnership agreement).
Vehicles and personal property
- Vehicles: title transfer at the DMV. For Florida, this is straightforward but takes a trip and a small fee.
- Boats over 26 feet: titled separately at the DMV; same process.
- Aircraft: registered with the FAA; specific procedures apply.
- Furniture, art, jewelry: a 'general bill of sale' or 'assignment of personal property' is sufficient for non-titled items. Common practice: sign one such document at trust execution covering all unscheduled tangible personal property.
- Collectibles of value: list them in a schedule attached to the trust to reduce ambiguity at death.
What we deliver at trust execution
When we draft a revocable living trust, the package includes funding instructions and (for many assets) the actual funding documents:
- Recorded deed for the Florida homestead (we draft and record).
- Bill of sale / assignment of personal property signed at the same meeting.
- Letter to the bank/brokerage confirming the trust and identifying the trustee.
- Beneficiary designation forms for retirement accounts (drafted; client submits to custodian).
- Funding checklist with a step-by-step list of what to do for each remaining asset.
- 6-month follow-up: we check in to confirm funding is complete.
Ongoing maintenance
A funded trust isn't 'done'. It needs maintenance over time:
- New assets: title them in the trust at acquisition (new car, new house, new brokerage account).
- Beneficiary designations: review every 3 years and after major life events.
- Sold assets: just remove from the schedule; no further action needed.
- Inherited assets: if you inherit something, decide whether to retitle into your trust.
- Annual review: 30-minute check-in with your attorney to identify anything stray.
Most clients we set up call us once a year for a quick review. Funding lapses are easy to spot and quick to fix.
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