💼 Funding a Trust: What It Means and How to Do It Right

You created a revocable living trust—great! But unless you fund it, it won’t do what it’s supposed to do.

One of the most common (and costly) estate planning mistakes is creating a trust... and then forgetting to fund it. When that happens, your assets may still go through probate, your loved ones may face delays, and your plan won’t work the way you intended.

In this guide, we break down what “funding a trust” means, why it matters, and how to do it right—with practical examples for real-life assets.

What Does It Mean to “Fund” a Trust?

• Funding a trust simply means transferring ownership of your assets into your trust—or naming the trust as a beneficiary.

• Until you do that, your trust is like an empty box. It might be well-designed, but if there’s nothing in it, it won’t help your loved ones when it matters.

Why Funding a Trust Is So Important

Even if you have a beautifully drafted trust:

• Assets not transferred into the trust may still go through probate

• The wrong people may gain control of your estate

• Your successor trustee can’t manage the assets properly

• Your beneficiaries may face tax or legal issues

Unfunded or partially funded trusts are one of the top reasons estate plans fail.

How to Fund a Trust (By Asset Type)

🏠 Real Estate

What to do:

• Execute a new deed transferring ownership to your trust

• Record the deed with the county clerk or recorder’s office

• Update property insurance to reflect the trust as owner

Tip: Use a title company or attorney to help avoid errors that could cloud title or violate mortgage terms.

🏦 Bank Accounts (Checking, Savings, CDs)

What to do:

• Visit the bank to retitle the account in the name of the trust

• Some banks may require a certification of trust

• Consider consolidating small accounts to simplify tracking

Alternative: For accounts you use daily, you can name the trust as the payable-on-death (POD) beneficiary instead.

📈 Investment & Brokerage Accounts

What to do:

• Contact your financial advisor or custodian to retitle brokerage accounts into the trust

• Sign any required trust certification or internal forms

Tip: Check tax implications or trading restrictions before transferring highly active investment accounts.

💰 Retirement Accounts (IRAs, 401(k)s)

You cannot transfer retirement accounts directly into your trust during your lifetime—but you can update the beneficiary designations.

What to do:

• Name individual beneficiaries OR your trust, depending on your goals

• If naming the trust, ensure it’s structured as a “see-through” or conduit trust to preserve tax deferral

Warning: Naming a trust as the beneficiary of an IRA can cause tax issues if not drafted properly. Get legal and tax advice first.

👨‍⚕️ Business Interests (LLCs, Corporations, Partnerships)

What to do:

• Update the membership certificate or stock ownership records to reflect the trust

• Amend the operating agreement or buy-sell agreement if required

• Notify any partners or co-owners

Tip: This is especially important if your business makes up a large part of your estate. It helps ensure continuity and protect your heirs.

🚗 Vehicles

What to do:

• In some states, you can retitle cars into a trust using DMV forms

• Alternatively, leave vehicles out and rely on a pour-over will to capture them later

• You are not legally required to transfer vehicle title to your trust in Arizona

Check with your insurance provider before transferring vehicle ownership.

📝 Life Insurance

What to do:

• Update your primary or contingent beneficiary to your trust

• Be careful if you have a large policy—consider an Irrevocable Life Insurance Trust (ILIT) for estate tax protection

Beneficiary forms override wills or trusts—so don’t forget this step.

Common Funding Mistakes to Avoid

• Not funding the trust at all

• Forgetting newly acquired assets (e.g., a new home or investment)

• Not updating beneficiary designations to reflect trust-based planning

• Failing to work with financial advisors to retitle accounts correctly

• Thinking your attorney or advisor already did it automatically

Practical Tips for a Smooth Funding Process

• ✅ Make a checklist of all your titled and untitled assets
  ✅ Work with your attorney and financial advisor to complete transfers
  ✅ Follow up with banks and institutions to confirm updates
  ✅ Keep a copy of all deeds, transfer forms, and confirmation letters
  ✅ Review funding annually—or when major life changes occur

Final Thoughts

Your trust is the foundation of your estate plan—but it only works if it’s properly funded. Take the time to move your assets into the trust now, and your loved ones will thank you later.

Need help funding your trust, reviewing your asset list, or avoiding common mistakes? We can walk you through the process—step by step.

Hurley Law Group
Estate Planning for Families, Professionals & Small Business Owners
📞 308-383-1867
🌐 hurleylawgroup.com
✉️ eric@hurleylawgroup.com