Estate planning guide
How to Fund Your Living Trust
A trust controls only what it holds. A category-by-category checklist for moving your property into it.
Why it matters
Signing is only half the job
Signing a living trust is only half the job. A trust controls only the property that is titled in its name or that names it as beneficiary. Anything left in your individual name may still have to go through probate, which is the very thing most people set up a trust to avoid.
Moving property into the trust is called funding. Use this checklist to work through it, one category at a time.
Before you start, gather three things: the exact name and date of your trust and the names of the trustees, as they appear in the trust document; a certification of trust, which is a short summary that banks and other institutions accept instead of your full trust (ask us for one); and a list of everything you own and how each item is titled today.
1. Your home and other real estate
Real estate is moved into a trust with a new deed from you, as an individual, to you as trustee of your trust. Our estate plans include preparing this deed for your California home. Your home is usually the most valuable item in the trust, so it is the one to get right.
Transferring your home into your own revocable trust generally does not trigger a property tax reassessment.
Federal law generally prevents a lender from calling your home loan due just because you moved your home into your own revocable trust and continue to live there.
Tell your homeowner’s insurance company about the transfer and ask that the trust be added to the policy.
Property in another state needs its own deed, prepared under that state’s rules.
2. Bank and credit union accounts
You can retitle each account into the name of the trust, or keep the account in your name and add the trust as the payable-on-death beneficiary. Each bank has its own forms. Many people keep an everyday checking account in their own name with the trust named as the beneficiary, which works well as long as the beneficiary designation is in place.
3. Brokerage and investment accounts
Retitle the account into the trust, or name the trust as the transfer-on-death beneficiary. Your brokerage firm will have a form for either option.
4. Retirement accounts
Do not retitle an IRA, 401(k), 403(b), or similar account into your trust. Changing the owner of a retirement account can be treated as a full withdrawal, with income tax due. Instead, review the beneficiary designation. Whether to name individuals or the trust as beneficiary has real tax consequences, so make that decision with your attorney.
5. Life insurance and annuities
These pass by beneficiary designation. Naming the trust as beneficiary is often the right choice when your children are minors, because it lets the trustee manage the money under the terms you set.
6. Business interests
An interest in an LLC or a corporation can usually be moved into the trust with a written assignment or a stock transfer. Check the operating agreement or bylaws first, since some require the consent of the other owners.
7. Vehicles and personal belongings
Cars are often left out of the trust, because the California DMV has simpler procedures for transferring a vehicle after death. Household items, jewelry, and other belongings are usually covered by a general assignment that you sign along with the trust.
8. Everything you acquire later
Funding is not a one-time event. When you buy a new home, open a new account, or start a business, title it in the name of the trust or add the trust as beneficiary from the start.
What usually stays out of the trust
Retirement accounts (covered by beneficiary designations instead)
Health savings accounts
Vehicles, in most cases
Accounts already set up for a child under a custodial arrangement
Keep a list for your trustee
Keep a list of every asset in the trust, a copy of each deed, and the confirmations you receive from banks and insurance companies. Your successor trustee will need this list, and it will save your family time when they need it most.
Not sure whether you need a trust in the first place? Start with our guide, Trust or Will in California: Which Do You Need?.
Talk with us
Montanez Yu prepares complete estate plans for individuals and families throughout California, including revocable living trusts, wills, powers of attorney, and advance health care directives. Estate planning consultations are free, and every plan is a flat fee, quoted in writing before we begin. Call (951) 444-7407 or request a free consultation.
This guide is general information about California law, not legal advice for your situation. Reading it does not create an attorney-client relationship.