What does “funding” my Revocable Trust mean, and is it worth the work?

A Revocable Trust controls only the property that is in it. Moving your property into the Revocable Trust is called funding it.

This article explains what funding involves, which property usually goes in, and what happens to property you leave out. It can help you judge how much work a Revocable Trust will be for you.

What funding means

Funding means changing the owner of each asset from you to the Revocable Trust. There is no single document that moves everything at once, so each account and each property is retitled on its own.

The new owner is the Trustee, not the Revocable Trust itself. While you are your own Trustee, the title reads something like “Jane Smith, Trustee of the Jane Smith Revocable Trust”

You keep full control. The accounts usually keep using your Social Security number.

Banks and other companies will want proof that the Revocable Trust exists. Most accept a short summary called a Certification of Trust. Some ask for a copy of the Revocable Trust document.

How much work each kind of property takes

Some property moves easily. Some takes more steps. Some is usually left out of the Revocable Trust on purpose.

Usually simple

• Personal belongings: Household items, jewelry and similar belongings have no title. A short assignment, often signed with your plan, moves them into the Revocable Trust in one step.
• Bank and investment accounts: You give the bank or brokerage a Certification of Trust and ask it to change the owner. Some will open a new account in the Revocable Trust’s name instead.

Takes more steps

• Real estate: A new deed is signed and recorded in the county where the property is. If the property has a mortgage, the lender’s consent may be needed. Your title insurance and homeowner’s insurance should also reflect the Revocable Trust.
• Business interests: Shares in a company or an LLC may need the consent of the other owners or managers, under the company’s own documents.
• Other property: Timeshares, savings bonds and valuable digital assets each follow the rules of the company or agency that holds them.

Some property should be moved only after tax advice. Examples include stock options, shares in a closely held company and a tax-deferred annuity.

Usually left out

• Retirement accounts: An IRA or 401(k) is never retitled to a trust. Instead, the beneficiary form decides who receives it.
• Life insurance and annuities: These also pass by beneficiary form. The form may name your Revocable Trust or name people directly.
• Vehicles: Most people leave their cars out of the Revocable Trust. A vehicle can usually be transferred after death with a simple form from the state licensing office.
• An everyday checking account: Some people keep one account in their own name for convenience.

Updating your beneficiary forms is part of funding. For more, see this article.

Some couples each have their own Revocable Trust. If you do, each of you moves your own share of jointly owned property into your own Revocable Trust.

What happens to property you leave out

A plan built around a Revocable Trust has safety nets for property that never makes it into the Revocable Trust:

• If you become unable to act: Your financial power of attorney can let your Agent move property into the Revocable Trust for you.
• At your death: Most Revocable Trust plans include a Will that leaves anything outside the Revocable Trust to the Revocable Trust. Property that passes this way may need probate, which the Revocable Trust was meant to avoid.

For smaller amounts, each state has a simpler process:

Is it worth the work?

The more fully a Revocable Trust is funded, the more it does what you set it up to do. Property in the Revocable Trust passes without probate, stays private and can be managed by your Successor Trustee if you become ill.

A partly funded Revocable Trust still works for the property that is in it, and the safety nets above handle small leftovers. But in Washington, a large asset left out, such as a house, will usually need probate. In Oregon, the simple estate affidavit described above may avoid that.

If funding seems like more work than it is worth, discuss it with your attorney before you choose a Revocable Trust over a Will. For the differences between the two, see this article for Washington or for Oregon.

After your Revocable Trust is funded

Funding is not a one-time task. Title new accounts and property in the Revocable Trust’s name when you acquire them, and check your titles from time to time. Property bought in your own name later is outside the Revocable Trust.

Want to read more?

These articles are optional.

• Beneficiary designations: How retirement accounts, life insurance and other property outside your Will fit with your plan. See this article.
• Financial power of attorney: What your Financial Agent can do and how to choose one. See this article.
• Without a plan: What happens to property that is not covered by a plan. See this article.
• Glossary: Common estate planning terms. See this article.