Estate Basics: Funding Your Living Trust

The biggest benefit of a living trust is that unlike many assets that are typically held in a will, the assets in a revocable living trust do not have to be probated. Oftentimes this will save the family or loved ones of the grantor considerable time, money and potential conflict. That being the case, the process of estate planning does not end at merely signing the document; in order to activate the trust, it must hold some amount or type of assets.

Funding Living Trust

Real Estate/Untitled Property

One way to fund a living trust is by changing the title or ownership of the asset. For instance, if it is a house or bank account, it can be placed into the trust by transferring the ownership from the individual to the living trust. In the case of a house, this is achieved by transferring a deed to the trust. In the case of jewelry or artwork, if it does not have a legal title, it can still be added to the trust by creating an assignment of ownership from the individual to the trust. It is necessary to obtain a new title if you own assets such as a car or a boat to show the trust as the new owner.

Life Insurance/Policies with Beneficiaries

In the case of assets such as life insurance or a retirement account, retitling them is unnecessary. Instead, the owner of the policy should make the trust the beneficiary of the policy (or account.) This added benefit here is that the trustee will be in charge of the policy.

Natural Resources Rights

If you own the rights to a natural resource, like gas or oil, the rights can be transferred with a deed if they are on land that is owned by the rights holder. If they are on land that isn’t owned by the rights holder, an assignment of rights is required.

Securities and Business Interests
As far as securities go, brokerage accounts can be retitled, or the stock/bond certificates can be reissued. Similarly, business interests, like shares in a corporation, can be retitled in the name of the trust.

Intellectual Property

When dealing with intellectual property such as copyrights or patents, transference can be achieved by consulting the US Copyright Office or the US Patent Office, respectively. It is also useful to note that the exact process of transferring deeds, titles, and other assets as well as tax policy vary from state to state. For instance, a property transfer generally has taxes and various fees attached to it, and depending on the state in which the transfer to a living trust occurs, they may either require all taxes and fees paid in full, a token fee, or it may be exempt altogether.

Although transferring a life insurance policy or financial account to a trust can be as simple as changing the beneficiary of the account (the company with which you hold this account will usually provide this feature), other assets can require significantly more steps. If you or a loved are looking to transfer assets into a living trust, or set up any kind of trust in general, we highly recommend consulting with a licensed estate planning professional to make sure your assets are properly dealt with.