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What Are the Procedures for Funding a Trust?

Changing Ownership, Assigning Rights and Updating Beneficiaries

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In order for a Revocable Living Trust to function properly, it's not enough for the Trustmaker to simply sign the trust agreement. After the agreement has been signed, the Trustmaker must “fund” his or her assets into the trust. There are three general procedures that should be followed in order to properly fund a Revocable Living Trust which depend on the type of property being funded: change of title/ownership, assignment of ownership rights, or change of beneficiary.

1. Change of Title/Ownership

For assets such as bank accounts; non-IRA and non-401(k) investment and brokerage accounts; stocks and bonds held in certificate form; and real estate, these types of assets are funded into a Revocable Living Trust by changing the owner of the asset from the Trustmaker's individual name into the name of the trust:

  • Current Title: “William Sample”
  • New Title: “William Sample and Jane Sample, Trustees, or their successors in trust, under the William Sample Living Trust, dated January 1, 2009, and any amendments thereto”

2. Assignment of Ownership Rights

For assets such as personal effects without a legal title (jewelry, art work, antiques and the like); monies owed to you (personal loans that you've made and mortgages that you've taken back); royalties, copyrights and patents; certain types of oil, gas and mineral rights; and partnership interests and membership interests in limited liability companies, these types of assets are funded into a Revocable Living Trust by assigning ownership rights from the Trustmaker's individual name into the name of the trust:

  • Current Title: “William Sample”
  • Assignment Language: "I, William Sample, hereby assign all of my right, title and interest in and to that certain Promissory Note dated January 31, 2008 in the principal amount of $40,000 by and between William Sample as lender and John Smith as borrower, to William Sample and Jane Sample, Trustees, or their successors in trust, under the William Sample Living Trust, dated January 1, 2009, and any amendments thereto."
  • New Title: “William Sample and Jane Sample, Trustees, or their successors in trust, under the William Sample Living Trust, dated January 1, 2009, and any amendments thereto”

3. Change of Beneficiary

For assets such as life insurance; retirement accounts, including IRAs, 401(k)s and 403(b)s; certain pension benefits; and Health Savings Accounts (HSAs) and Medical Savings Accounts (MSAs), these assets aren't actually retitled into the name of a Revocable Living Trust. Instead, the primary and/or secondary beneficiaries of these types of assets are changed to the trust:

  • Current beneficiary: “Jane Sample”
  • New beneficiary: “William Sample and Jane Sample, Trustees, or their successors in trust, under the William Sample Living Trust, dated January 1, 2009, and any amendments thereto”

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