Having a trust does little good unless it actually holds the assets you want to protect or transfer to loved ones. As soon as you set up your trust structure, you should fund it as quickly as possible. The sooner the assets are inside the structure, the sooner they’ll be protected.
But how do you put assets into a trust? Asset Protection Planners has created a guide to help you answer this question. We’ve created thousands of trusts since 1991 and know exactly how to put assets into a trust, regardless of the type of asset.
- What Does It Mean to Fund a Trust?
- Titled vs. Untitled Property
- How to Transfer Bank and Investment Accounts to a Trust
- How to Transfer Non-Titled Property Into a Trust
- How to Transfer Real Estate to a Trust
- How to Transfer Vehicles to a Trust
- Real World Example: Why It’s Important to Fund Your Trust
What Does It Mean to Fund a Trust?
“Funding a trust” means transferring your assets into it, so the trust (or trustee) legally owns them. This allows the trust to function as intended, whether for protection or for future distribution.
Unlike a simple asset transfer, funding a trust requires its creator (grantor or settlor) to sign over the assets completely. When you transfer assets to a trust, you are changing legal ownership of the asset. For example, if a settlor wished to place a specific bank account in a trust, they would have to change the account title to the name of the trust.
Given how complex funding a trust can become, we recommend working with experienced professionals, such as Asset Protection Planners, to ensure you transfer all of your assets properly.
Titled vs. Untitled Property
Before you learn how to transfer assets to a trust, you need to understand that different assets are transferred in different ways. Most notably, there’s a distinct process for transferring titled property versus untitled property.
In general, transferring untitled property takes less time and effort than transferring titled property. Items that require titles, like vehicles and real estate, need to have the title changed to reflect the new owner. We’ll do a deep dive into how to transfer titled assets further down.
Before you start moving your assets around, take some time to make a complete list of everything you want to put in the trust. Take care to note whether the asset is titled or untitled while doing this exercise. To help you identify the items that fall into each category, use these lists:
Examples of Titled Property
- Vehicles (cars, boats, etc.)
- Real estate
- Stocks
- Bonds
- Copyrights
- Patents
Examples of Untitled Property
- Liquid currency (cash)
- Jewelry
- Art
- Precious metals
How to Transfer Bank and Investment Accounts to a Trust
To transfer bank or investment accounts into your trust, contact your financial institution and request the appropriate form. You will likely need to provide a certificate of trust as well.
When you’re ready to transfer your account, call your bank and tell them you want to put your account(s) into a trust. Follow their instructions. Then sit back, relax, and let them do the rest. If you are moving investment accounts, you can also take this opportunity to transfer checking and savings accounts to your new trust.
How to Transfer Non-Titled Property Into a Trust
You probably own many items that don’t have formal ownership documents, such as jewelry, furniture, collectibles, and other household items. To transfer these into your trust, follow these steps:
- Create a property schedule, which is an attachment to your trust document.
- Name the schedule something easy to remember, such as “Schedule A” if you plan to use multiple schedules.
- In the property schedule, create a complete list of the assets you want to transfer into your trust.
- Add a note in the trust document where any assets are listed. The note should say something to the effect of “See attached Schedule A.”
This process is a bit more complex than transferring a bank account. It’s often helpful to have a trust creation professional or asset protection attorney handle this for you. They’ll understand exactly where the schedule document needs to be referenced in the trust document.
How to Transfer Real Estate to a Trust
When transferring property with a title, such as a house, into a trust, you need to update the title to reflect this change. For real estate, this usually requires a deed, such as a grant deed.
Grant deeds have two key parties: the grantor who transfers the property and the grantee who receives the property. If you’re moving a piece of real estate to a trust, you are the grantor, and the trust is the grantee.
Here’s an example of how this process works in practice: Say you and your spouse, John and Mary Smith, own a house that you want to place into a trust. As the current owners, you are the grantors in this transaction.
To transfer real estate ownership to a trust, you’ll need to file a deed with the public records office. Since this is a legal document, it’s important to ensure your names are listed correctly. Even though you are “John and Mary Smith” together, on the deed, your legal names must be listed separately as “John Smith” and “Mary Smith,” identifying both of you as grantors. Be sure to reference the current deed and use the exact names listed there.
Now, when transferring the property to a trust, you’ll need to list both the name of the trust and the names of the trustees as the new grantees. You can choose to list the parties in either order. Here are a couple of examples of how the title might appear:
- The John and Mary Smith Revocable Living Trust, John Smith and Mary Smith, Trustees
- John Smith and Mary Smith, Trustees of The John and Mary Smith Revocable Living Trust
After preparing the deed form, the next step is to file the real estate deed. This is typically done at the county recorder’s office (or its equivalent) in the county where the property is located. When you record the deed, you must pay a filing fee, which usually ranges from $25 to $150. However, since there are over 3,000 counties in the U.S., it’s best to check the specific fee with your local office.
Transferring your deed into a trust should not affect your mortgage. This is true even if you have a due-on-sale provision. The Garn Saint Germain Depository Institutions Act of 1982 says that you can transfer one to four dwelling units into an “inter vivos” trust, such as a living or land trust. In simpler terms, this means that when you transfer your real estate to a trust, the bank cannot call the loan due.
When you complete the transfer, the mortgage holder must be listed as a beneficiary of the trust.
At this point you should also inform your homeowner’s insurance company of the transfer. You may need to update your homeowners’ insurance policy to list the trust as the property owner.
Finally, if you receive a real estate tax exemption, you need to ensure that the county properly applies it. You may need to show documentation of the trust to the taxing authority. This might include a certificate of trust (a document your attorney can create that certifies the structure’s existence). After viewing the trust documents, the county will determine if the exemptions still apply.
How to Transfer Vehicles to a Trust
The process for transferring vehicles into a trust varies from state to state. In most cases, you’ll need to contact the DMV to receive specific instructions. You should also call your auto insurance company to ensure that they will continue to cover your vehicle after you make the transfer.
Typically, once you get in touch with the DMV, you’ll follow these steps to transfer the vehicle:
- Gather your current vehicle title and proof of the trust, such as the trust certificate.
- Visit the DMV with the above documents in hand.
- Sign the back of the title, indicating the “sale” of the vehicle to the trust.
- Have the trustee sign the title, showing their acceptance of the sale.
- Pay any transfer fees for your local DMV.
- Request a new title that lists the trust as the owner.
If you own a boat, you’ll usually need to follow a similar procedure with whichever department is in charge of nautical vessels in your county. If it’s a Coast Guard-registered vessel, you’ll contact the Coast Guard’s National Vessel Documentation Center.
Real World Example: Why It’s Important to Fund Your Trust
Jane and her husband, Tom, had worked their whole lives to build a comfortable life. They owned a beautiful home, had a couple of rental properties, solid bank accounts, and even a few valuable family heirlooms.
To protect their hard-earned assets and make things easier for their two kids, Jane and Tom created a living trust. After creating it, they figured they were set. They imagined their assets would be protected, and that their children would receive inheritances without going through a time-consuming probate process.
However, Tom and Jane made a critical mistake. After going through all the work of setting up a trust, they forgot to fund it. Before anyone noticed this oversight, Tom passed away in a car accident.
At this point, Jane expected that the trust would naturally activate, passing money along to her and her children. Sadly, because the trust was empty, those beneficiary payments never came, putting everyone in a difficult financial position.
Several years later, Jane passed away while the trust was still unfunded. Her children, who knew a trust existed but had no idea that it was empty, believed their parents’ careful planning would allow them to avoid the legal frustrations that often accompany probate.
When the couple’s son and daughter went to their parents’ attorney, they were hit with a shock: None of the assets were inside the trust. The house, the bank accounts, the rental properties—everything was still in Jane and Tom’s name.
Instead of a smooth transition, the family was thrown into the legal nightmare of probate court. For two years, Tom and Jane’s children were trapped in a maze of paperwork, court hearings, and legal fees. They even had to hire probate lawyers, who charged a portion of the estate’s value, just to navigate this process.
Each asset had to be evaluated, appraised, and properly accounted for. Instead of immediately transferring to the children, the house and rental properties were tied up for months.
By the time they exited the two-year probate window, Tom and Jane’s children were exhausted, frustrated, and left with less than they should have received. They even had to sell off a rental property to cover the costs of probate.
Had Tom and Jane simply taken one more step and funded the trust with all the assets they wished to pass to their children, this whole situation could have been avoided.
Fund Your Trust With Help From Asset Protection Planners
To ensure that your trust gets funded correctly, enlist the help of Asset Protection Planners! We’ve set up trusts for decades and know exactly how to transfer every type of asset.
Schedule a free consultation with us today and get your trust funded fast!
