How Do I Fund My Trust?
One of the most important steps after creating a trust is properly funding it. Depending on the types of assets you own, the process for funding your trust will vary. Here's an overview of how different assets are typically transferred into a trust to ensure they avoid probate court.
Real Estate
For real estate, your estate planning attorney will usually draft a deed that transfers the property from your name as an individual into your name as trustee of your trust. This is how real estate is positioned to avoid probate.
If you own property in a state where your attorney is not licensed, coordination with a real estate attorney in that state is usually required. For example, if your estate planning attorney is licensed in New Hampshire but not Maine, and you own a vacation home in Maine, they will likely work with a Maine attorney to draft the appropriate deed. That way, when you sign your documents, the out-of-state property is also transferred into your trust.
Financial Accounts
When it comes to financial accounts, you generally have two options. For non-retirement accounts, you can either retitle the account in the name of your trust or use a Pay on Death (POD) or Transfer on Death (TOD) designation. Retitling means the account ownership is changed to the name of the trust. A POD or TOD designation allows the account to pass directly to the trust upon your death, avoiding probate.
Retirement Accounts
For retirement accounts, if you are married, you may still want your spouse listed as the primary beneficiary. However, it is a good idea to name your trust as the secondary or contingent beneficiary.
Life Insurance
Life insurance policies should generally name your trust as the death beneficiary. The exception to this rule is if you have an irrevocable life insurance trust (ILIT), in which case the policy should be owned by the trust itself.
Vehicles
Vehicle transfer practices vary by state. In New Hampshire, for example, if a vehicle is paid off, it is common to transfer it into the trust. In other states, like Massachusetts, doing so may cause complications with your insurance, so clients sometimes choose not to transfer their vehicles into their trust.
Business Interests
If you have an ownership interest in an LLC or corporation, your estate planning attorney will often draft an Assignment of Interest to transfer that business interest into your trust.
Tangible Personal Property
For items like artwork, furniture, jewelry, and other household belongings, your attorney will typically prepare a General Assignment of Interest. This document transfers all such personal property into your trust. It’s important to confirm this with your attorney rather than assume it’s already been done.
Want to learn more about how to properly fund your trust to avoid probate?
I help families create thoughtful, legally sound estate plans that actually work the way they’re intended to. If you’ve already established a trust or are considering creating one, it’s essential to make sure your assets are correctly transferred into the trust. If you have questions about trust funding or want to review your current plan to ensure everything is in order, I can walk you through the process and help you avoid common oversights. Whether you’re just getting started or want peace of mind that your plan is complete, click the link below to schedule a call with me. I’m always happy to help.
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