Funding A Living Trust

Below is a brief description of the processes involved in transferring titled assets into a living trust. Consult the attorney who prepared your living trust for detailed instructions. You agree not to hold the publisher of this website liable for any actions you take from this website.

First, living trusts have a page assigning all non-titled personal property into the living trust. Here are the remaining steps to take:

Selling an asset or removing an asset from a living trust is often just the reverse process of putting the asset into the living trust.

Real estate - a new deed will be required transferring real estate into the living trust. The deed should be recorded at the county recorders office. If real estate is in other states, it may be more cost effective to have someone in that county prepare the deed rather than the attorney researching how to prepare the deed.

Bank accounts - visit financial institutions where checking and savings accounts are held. Bring all living trust documents along for the financial institution to view and potentially photocopy. Many institutions do not require account numbers to be changed when re-titling accounts into the living trust and it is not always required to put the living trust name on checks. Contact your financial institution ahead of time if you have concerns.

Stocks / mutual funds  ( non-qualified ) - contact the financial institution and determine which documents in the living trust will be required to transfer title of the accounts into the living trust.

IRAs, 401(k)'s  ( qualified ) - these accounts are not transferred into the living trust for tax reasons. Changing the owner on these accounts is a taxable event. One could list the living trust as a beneficiary though check with the attorney and financial advisor whether beneficiaries may lose the ability to stretch an IRA. Because these assets typically have beneficiaries, they will avoid probate.

Vehicles - talk to the attorney preparing the living trust whether transferring the vehicles into the living trust is worthwhile.

Life insurance - life insurance can be left in the owner's name but many people choose to list a living trust as the beneficiary. By doing so, the payout goes into one of the trust's bank accounts and the money is distributed in a controlled manner as dictated by the trust. Contact the life insurance company and request a change of beneficiary form (which may be available on their website).

Create and maintain a checklist of assets and liabilities

Put yourself in the shoes of your successor trustees. If you passed, would your successor trustees know where to start? Is it possible they would not find certain accounts or assets?

Your debts must be repaid before the estate is distributed to beneficiaries. If the estate is distributed before debts are repaid, it can cause many problems for your successor trustees and beneficiaries.