Funding your trust: the step people miss
How each kind of property gets into a trust, or points to it, and what happens to anything left out.
Why funding matters
Signing a trust is the first step. Funding is the second: putting your property in the trust's name, or naming the trust to receive it. Property left in your name alone may still go through probate, even with a well drafted trust.
How common property is handled
- Your home: a new deed transfers it to you as trustee, recorded at the registry of deeds. In Massachusetts a homestead declaration may also be recorded again so the protection continues.
- Bank and investment accounts: retitled in the trust's name, or set to pass to the trust at death, depending on the institution.
- Retirement accounts such as IRAs and 401(k) plans: not retitled, since changing ownership can trigger taxes. The beneficiary designation is updated instead, and whether to name the trust is a decision to make with your attorney.
- Life insurance: the beneficiary designation is updated as the plan calls for.
- Household belongings: an assignment of personal property places them in the trust.
Keeping it funded
Funding is not a one time event. When you buy a home, open an account, or refinance, the new property should be titled the same way. A short funding checklist, reviewed every year or two, keeps a plan working.
Common questions
Does refinancing undo funding?
Sometimes a lender asks for the home to be deeded out of the trust to close a refinance. If that happens, it should be deeded back afterward.
Do I need to retitle my car?
Practices vary. A car is often handled another way rather than retitled. Your attorney can explain what fits your plan.
Check your understanding
Three quick questions. Nothing is saved or sent.
1Which of these is usually not retitled into a revocable trust?
Retirement accounts keep their ownership and use beneficiary designations instead.
2How does a home move into a trust?
A recorded deed transfers the home to the trustee.
3What can happen to property left in your name alone when you die?
Unfunded property may need probate, even when there is a trust.
Official sources
Keep learning
Everything here is general education about Massachusetts law, written by WisePath Estate Planning. It is not legal advice for your situation, and reading it does not make you our client.