It’s a new year and the perfect time to make sure your living trust is properly funded. Creating your living trust was the first step, but funding your trust is just as important to keep your family out of probate court. Here are three things you must do to properly fund your living trust:

Record Property Deeds: If you own property, it must always be owned by your trust. This is usually done via quitclaim or grant deed, depending on the state the property is located in. You must make sure the County Recorder receives and records your deed.

TIP: if you refinance your property, your lender may require you to transfer title back to yourself as an individual. If so, you should request they draft the deed transferring the property back to your trust after the re-finance is complete to be sure title returns to the trust. 

Update Bank/Credit Union/Brokerage Accounts: Your financial institution accounts must either be owned by your trust OR your trust or other person must be named as a beneficiary of your accounts. Bring a Certificate of Trust (and in some cases, the Trust itself) to your local branch and request to update your account information. Every financial institution handles this process differently, so calling ahead will likely save you time and insure you have the proper documents.

TIP: if another person is listed on your account as a joint owner/joint tenant, he or she will own the balance upon your death and the account will NOT fund your trust.

Update Retirement Plan Beneficiaries :  If you are married, you generally want to name your spouse as the first beneficiary and your trust or other person as the second beneficiary of your retirement plan. If you are unmarried you should name your trust or other person as your first beneficiary. If you have an IRA or other deferred benefit, determine if there are any tax consequences of naming your trust as a beneficiary before doing so.

TIP:  if you name your minor child as beneficiary of the account, he or she will receive control of the funds outright and NOT according to the distribution instructions in your trust.

Happy Planning!


Disclaimer: The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. Brittany Britton is licensed to practice law in the state of California only.