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What Does it Mean to Fund a Trust?

Changing the Ownership or Beneficiary of Your Assets to Your Trust

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In order for a Revocable Living Trust to function properly, it's not enough for the Trustmaker to simply the sign trust agreement. After the agreement has been signed, the Trustmaker must “fund” his or her assets into the trust.

What Does "Funding a Trust" Mean?

What does it mean to “fund” a trust? This refers to taking assets that are titled in the individual Trustmaker’s name or in joint names with others and retitling them into the name of the Trustmaker's Revocable Living Trust, or taking assets that require a beneficiary designation and naming the Trustmaker's Revocable Living Trust as the primary or secondary beneficiary of those assets.

The ultimate goal of funding a Revocable Living Trust is to insure that the Trustmaker’s property is governed by the terms of the trust agreement. This, in turn, will allow the Disability Trustee to manage accounts held in the name of the Trustmaker's trust in the event the Trustmaker becomes mentally incapacitated and the Death Trustee to easily manage and then transfer accounts held in the name of the Trustmaker's trust to the ultimate beneficiaries named in the trust agreement after the Trustmaker’s death.

Why Should You Fund Your Trust?

Why is it so important to fund your Revocable Living Trust? For the following reasons:

  • Assets held outside of a Revocable Living Trust can't be managed by the Trustee - The Trustee of the Revocable Living Trust has no power whatsoever over the Trustmaker’s property that hasn't been retitled into the name of the Trustmaker's trust. Thus, if the Trustmaker becomes mentally incapacitated, then the Trustmaker's loved ones will need to establish a court-supervised guardianship or conservatorship to manage the Trustmaker's assets that aren't held in the name of the Trustmaker's trust.


  • This results in probate of the assets held outside of the Revocable Living Trust - This means that the Trustmaker's property that hasn't been retitled into the name of the Trustmaker's Revocable Living Trust will have to be probated after the Trustmaker’s death. This, in turn, will defeat one of the main benefits of a Revocable Living Trust - avoiding probate.


  • Assets may not go to the Trustmaker's intended beneficiaries - After the Trustmaker’s death, property held outside of the Trustmaker's Revocable Living Trust may not go to the Trustmaker’s intended beneficiaries. Instead, assets held outside of the Trustmaker's trust will pass by right of survivorship if they're jointly owned or to the beneficiary named in the beneficiary designation form.
The bottom line is that after you've taken the time to work with your estate planning attorney to create a Revocable Living Trust that fits your particular needs, you won't be done with your estate plan. Instead, you'll need to make sure that after you've signed your trust agreement that you continue on and take the steps necessary to properly retitle your assets into the name of your Revocable Living Trust and update the beneficiaries of assets that require a beneficiary designation.

10 Steps to a Solid Estate Plan - Step #9 - Fund Your Revocable Living Trust

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