So, how do you put assets into a trust? Here is the BIG reason this is important. Having a trust does little good unless it actually holds the assets you mean it to protect or the assets you intend to transfer to loved ones after your passing. We’ve drafted thousands of trusts from 1991 until today; and in order for a trust to work, you have to put your assets into it.
By the time you finish reading this article, you’ll know exactly how to do that. “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.
Here’s what we’ll cover:
- How to title the assets properly and which documents to use.
- How to transfer real estate, including your personal residence, into a trust.
- How to transfer bank accounts, vehicles, and personal property such as jewelry and antiques.
- What types of assets you cannot put into a trust.
- What happens to items you forgot to put into a trust.
- A real-life story of a wealthy couple who didn’t put their assets into a trust—and the nightmare it created for them and their children.
Putting Assets Into a Trust
When you transfer assets to a trust you are changing legal ownership of the asset. In most cases, you transfer the assets from your name to that of the trust. Most people who have us create a living trust name themselves as both the trustee and the initial beneficiary of the trust. So, you’ll still generally be able to use assets. However, the trust/trustee will hold the assets for you. Here are the steps, and the law makes us tell you this isn’t legal advice, just helpful information. So, seek an attorney before doing any of this.
Step 1. Make a List
To get started, you’ll want to make a complete list of the assets you want to transfer into the trust. Hence, you want to be sure you don’t leave anything out. Now you’ve made your list, move on to step two.
Step 2. Put Assets Into the Trust
Next, you will put your assets into the trust. There are two categories. Assets with titles, like a house, car or bank account. Then, there are assets without titles, such as jewelry, art and precious metals. For things with titles, you change the title. For things without titles, you make a list that describes those things on a piece of paper called a schedule. You want to be sure to refer to the schedule on the trust document. Then you attach it to the trust. Here’s how.
How to Transfer Titled Property into 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. The grant deed has two key parties: the grantor and the grantee. Here’s a memory trick to help: The grantor, ending in “OR,” is the ORiginal owner—the one transferring the property. The grantee is where you want the property to be. In this case, we want it to be in the trust, making the trust/trustee the grantee.
Putting Real Estate Into a Trust
Let’s walk through an example: 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. It’s crucial to look at the current deed and use the exact names listed there. On that original deed, you were the grantees when you acquired the property.
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 trust first or the trustees first—either order is generally acceptable. 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
- Fred Williams and Sally Williams, Trustees of The Fred and Sally Williams Revocable Living Trust
Land Trusts
We set up land trusts for privacy, so we’ll often set up a Wyoming LLC to serve as trustee and title the property like this:
123 Main Street Trust, ABC Holdings, LLC (Wyoming), Trustee
Notice in all cases, we named both the trust and the trustee. We also clearly stated that the person or company is holding the asset in acting his, her or its capacity as trustee, and not individually.
For land trusts, we like to name the trust first for privacy purposes. This is because some public records displays only hold so many characters. Thus, the name of the trustee may not be so easy to find online.
Types of Real Estate Deeds
What type of deed should you use to transfer real estate into a trust? We already mentioned a grant deed.
One of the most valuable assets many people own is their home. Again, you can transfer ownership of your home (or any real property) to a trust using a deed, which is a legal document that facilitates the transfer. A quitclaim deed is the simplest and most commonly used method, particularly between related parties.
A quitclaim deed essentially says, “I’m not guaranteeing I have ownership, but whatever interest I do have, I’m transferring to the next party.” It’s commonly used when placing a home into a living trust. If privacy isn’t a major concern, a quitclaim deed is a simple and acceptable option.
However, a grant deed or, especially, a warranty deed provides greater assurance. A grant deed essentially states, “I have the legal right to transfer this property, and I transfer it to you.” A warranty deed goes further, saying, “I have the legal right to transfer this property, I guarantee that the title is clear, and I transfer it to you.” These options can offer more protection and may make it easier for your trust beneficiaries to sell the property in the future.
You can check with an attorney about which type of deed is best in your situation. A few states, such as North Carolina, require that all deeds be prepared by attorneys. So, in some cases, you may not have a self-help option.
Step 3 File the Deed
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. A filing fee is required, which in most counties is relatively affordable, ranging 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.
A deed transfer 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. Examples of such trusts are the living trusts and land trusts we create. The bank cannot, by law, call the loan due. So this is a single family home, duplex, triplex or fourplex that people actually live in. The owner of the house, which is usually the mortgage holder, must be a beneficiary of the trust.
Step 4 Update Insurance Policies
You should also inform your homeowner’s insurance company just so they are aware that you have transferred the title. So, once the deed is transferred, you may need to change your homeowner’s insurance. On the policy, you will indicate that the trust is the owner of the property.
Step 5 Update Property Tax Exemption
If you receive a real estate tax exemption, you will want to make sure the county properly applies it. You many 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 existence of the trust).
So, those are the steps to transfer real estate into a trust.
How to Transfer Bank & Investment Accounts to a Trust
To transfer assets such as bank accounts, stock, or other investments into your trust, you will need to contact the institution and complete a form. You will likely need to provide a certificate of trust as well. No, you won’t have to sell your stock and rebuy it. Don’t sweat the details. It’s simple. Just call and tell then you want to put your account(s) into a trust. Follow their instructions. Then sit back, relax and let them do the rest. You may want to put your personal checking and savings account into the trust as well.
How to Transfer Vehicles to a Trust
How do you transfer vehicles into a trust? Each state is different, but you’ll usually need to contact the DMV. You also should call your insurance company. As such, you can be certain they will continue coverage once you make the transfer.
We set up a lot of title holding trusts for vehicles so people can own their cars privately. Again, we’ll often set up a Wyoming LLC to serve as trustee. This is because of the privacy. protection and low cost in Wyoming. To transfer ownership, you will typically need to obtain a title change form from your DMV. You complete it, naming the trustee (as trustee of your trust) and the name of the trust. Sales tax should not apply to the transfer. Should the clerk try to apply it, ask to speak to a supervisor.
If you own a boat, you’ll usually need to follow a similar procedure to transfer title. If it’s a coast guard registered vessel, you’ll contact the Cost Guard’s National Vessel Documentation Center.
How to Transfer Non-Titled Property into a Trust
Now, let’s discuss assets without titles—known as non-titled personal property.
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. This is essentially a list of items that you’re transferring to the trust, and it will be referenced in the trust itself.
First, name the schedule. If it’s the first one, you might call it “Schedule A.” Then, list all the items you want to transfer. In the trust document, be sure to include a reference like, “See attached Schedule A,” to ensure it’s clear that these assets are now part of the trust.
This process applies only to items without titles. For assets that do have titles (such as cars or real estate), simply listing them on the schedule is not enough. You’ll also need to formally change the title to reflect the trust as the owner. Adding titled assets to the schedule is still helpful because it informs your heirs of their existence, but to legally transfer them into the trust, the title must be updated.
Lastly, if any of these items are insured, don’t forget to contact your insurance company and transfer the insurance policy into the name of the trust as well.
What Can You Not Place Into a Trust?
There are some things that you cannot or should not place into your trust. You cannot put an Individual Retirement Accounts (IRAs) into a trust. So, these must remain in your own name. However, you can contact your IRA custodian and name the trust as a primary or secondary beneficiary. People often name trusts as beneficiaries of life insurance policies. It’s a good idea to talk to an accountant to understand any tax implications of doing so.
Assets You Forgot to Put into a Trust
What about things you forgot to put into the trust? Let’s say you purchase or inherit items after you create the trust. You’ll probably want to transfer those items to the trust ASAP. If possible, place them in the trust right when you acquire the items. Thus, purchase them as trustee of the trust so they are automatically placed in the trust.
Pour-Over Will
To further protect yourself, you’ll want a pour-over will. When we set up living trusts, our in-house attorneys generally also create a last will and testament. This will indicate that any items left in your name are transferred to the trust upon your death. That way, that your trust will be complete and provide all the benefits you created it for.
What Is a Trust, Really?
Now, keep in mind that a trust is merely a contract. It can be drafted however the person who wrote it wants to arrange the words on the pages. There are trusts for estate planning, so when you die those you care about get your assets. There are trusts that can protect assets from lawsuits. Then, there are trusts that protect your privacy or care for the needs of future generations.
The bottom line is this. In order to take advantage of the advantages you will need to properly put the assets into the trust.
Tragic Story: Someone Who Didn’t Put Property Into a Trust
As promised, here’s a quick story to really drive this home. You need to understand why it’s so important to take action on what we just discussed. And the best way to do that? A story. So, let me tell you about the trouble that unfolded with a couple who had a trust but failed to actually fund it.
Imagine this. 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.
Wanting to protect their hard-earned assets and make things easier for their two kids, Jane and Tom did what they thought was the responsible thing: they created a living trust. They figured they were set. Their kids would avoid the hassle of probate. Thus, everything would seamlessly transfer to them when the time came.
Uh Oh, They Didn’t Put Their Assets Into the Trust
But here’s the tragic twist—Jane and Tom never funded the trust.
They never transferred their home, bank accounts, or properties into it. The trust existed, but it was an empty shell. To make matters worse, Tom unexpectedly passed away in a car accident, leaving Jane devastated. She thought the trust would take care of everything. It didn’t.
A few years later, Jane passed away too. Their children, Amy and David, were grief-stricken but confident that at least their parents’ careful planning would mean they could avoid legal headaches. After all, there was a trust, right? Well, not so fast.
When Amy and David 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.
Probate Nightmare
Instead of a smooth transition, the family was thrown into a legal nightmare. Welcome to probate court.
For the next two years, Amy and David found themselves trapped in an endless maze of paperwork, court hearings, and legal fees. They had to hire probate lawyers, who charged hefty fees—sometimes a percentage of the estate’s value—just to navigate the process.
Each asset had to be evaluated, appraised, and properly accounted for. The house and rental properties, instead of immediately transferring to Amy and David, were tied up for months in legal wrangling.
And it wasn’t just about the money or the legal battles—though that was bad enough. The emotional toll was just as painful. Amy and David had to sit through court hearings, discussing their deceased parents’ finances in front of strangers. Their family’s personal matters became a public spectacle.
There was the added stress of family tension, too. Amy and David had differing opinions on how to manage the estate and its mounting legal bills. At one point, they even considered selling one of the rental properties just to cover the probate costs. The trust their parents thought would protect their legacy instead turned into a source of frustration, anxiety, and resentment.
Heart Wrenching Delays
What’s worse, because of the probate process, it took over two years for Amy and David to get full access to their inheritance. During that time, some assets lost value, bills piled up, and valuable family heirlooms were mishandled.
The once well-intentioned plan Jane and Tom had made to ease their children’s burden had become a nightmare. What went wrong? Quite simply, Jane and Tom didn’t understand that having a living trust isn’t enough. You have to fund it.
Without transferring their assets into the trust, everything they worked for was left vulnerable to the legal system. All the trust’s potential benefits—avoiding probate, protecting assets, ensuring a smooth inheritance—vanished the moment they failed to fund it.
Changing Ownership to a Trust
When you transfer assets to a trust, you’re changing legal ownership. If you are a beneficiary, you still have beneficial ownership. But the trustee has legal ownership.
Conclusion
In summary, double-check your list of assets. Then, be certain you have moved them to your trust. Ensuring that your trust is properly funded will provide you with the protection you seek and the peace of mind that your affairs are in order. If you need help setting up a trust or have questions, fill out our a consultation form on this page.