Why It’s Essential and How to Do It

At Ishihara & Parker Law Firm PLLC, we guide clients through the estate planning process to ensure their assets are properly protected and distributed according to their wishes. One of the most critical but often overlooked steps in setting up a revocable living trust is funding it. Simply signing a trust document isn’t enough—you need to legally transfer your assets into the trust for it to be effective.

What Does It Mean to Fund a Trust?

A trust is like a bucket—you need to place your assets into it for the trust terms to control them. If you fail to transfer assets into the trust, they will remain in your individual name and may be subject to probate, defeating one of the primary benefits of having a trust.

Common Misconception: Listing Assets in the Trust Document is Not Enough

Many people mistakenly believe that simply listing an asset in the trust document is sufficient. However, unless title to the asset is legally transferred to the trust, it remains outside the trust and will be subject to probate upon your passing.

Key Assets to Transfer Into Your Trust

1. Real Estate (Including Your Home and Out-of-State Properties)

For most people, their home is their largest single asset. It is crucial to transfer the title of your home into the trust by preparing and recording a new deed. Our law firm assists clients in this process by verifying ownership records and ensuring the correct transfer of title.

• Out-of-state real estate: If you own property outside of Texas, transferring it into your trust can prevent the need for multiple probate proceedings in different states.
• Homestead Exemptions: In Texas, your homestead exemption remains intact when you transfer your home into a revocable trust, as long as the trust contains the necessary qualifying language.
• Agricultural or Timber Exemptions: These may need to be recertified with the county tax appraisal office after the transfer.

2. Bank Accounts

All non-retirement financial accounts should be retitled in the name of the trust. This includes:

• Checking and savings accounts
• Certificates of deposit (CDs)
• Money market accounts

Most banks allow account retitling with a Certificate of Trust, which confirms the trustee’s authority without requiring the full trust document.

3. Investment and Brokerage Accounts

• Non-retirement investment accounts should be titled in the name of the trust to allow for seamless management and succession.
• Retirement accounts (IRAs, 401(k)s, etc.) generally should not be transferred into the trust because of tax implications. Instead, you should ensure that your beneficiary designations are correct.

4. Business Interests

If you own a small business or an LLC, transferring your ownership interest into the trust ensures continuity of management in the event of incapacity or death. This may involve executing an assignment of interest and updating corporate records.

5. Personal Property & Valuables

• High-value personal property (art, jewelry, collectibles) should be assigned to the trust.
• General household items can be included in a broad personal property assignment.

6. Vehicles: Special Considerations

Generally, we do not recommend transferring vehicles into a trust due to potential liability concerns and the frequency with which people buy and sell cars. However:

• Texas allows for a Transfer on Death (TOD) designation on vehicle titles, which can achieve a similar estate planning goal without trust ownership.

7. Life Insurance & Retirement Accounts: Beneficiary Designations Matter

While life insurance policies and retirement accounts typically do not need to be owned by the trust, beneficiary designations should be reviewed carefully. Depending on your estate plan, you may designate individual beneficiaries or list the trust as the contingent beneficiary.

Why Proper Trust Funding Matters

A well-drafted trust only works if it is properly funded. Failing to transfer assets into the trust can result in:

• Unintended probate proceedings
• Confusion and delay for your heirs
• Increased legal costs to correct mistakes later

Need Help Funding Your Trust? We’re Here for You.

At Ishihara & Parker Law Firm PLLC, we don’t just create trusts—we ensure they are properly funded so your estate plan works as intended. If you need assistance with transferring assets into your trust or reviewing your existing plan, contact us today at www.longviewestateplan.com.

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