Trust funding
Trust funding is the transfer of accounts or property to a trustee or the trust, so the trust owns those assets. For owners of businesses, real estate and private investments, funding describes how ownership is changed for a revocable living trust. A revocable living trust controls assets it owns, and trustee authority covers property transferred to it.
How it works
Funding a revocable living trust changes ownership of money or property. The Consumer Financial Protection Bureau guide describes transferring some or all money and property into the trustee's name, subject to state law.
Ownership generally switches to the trustee, and the trustee's authority covers property actually transferred to the trust. Accounts may be transferred or property retitled.
Where it shows up for owners of businesses, real estate and private investments
A business interest, real estate holding or investment is within a revocable living trust's ownership when it is transferred to the trust or retitled in the trustee's name.
Beneficiary designations are another funding mechanism described for a California revocable living trust.
Points that are easy to confuse
Signing a trust and funding it are distinct steps. Practitioners describe funding after signing as retitling assets from an individual's name into the trustee's name.
Legal title passing to a trustee is distinct from property merely associated with a trust. Property in a special needs trust is not effectively transferred until legal title passes to the trustee.
Common questions
Does a revocable living trust control every asset associated with its creator?
Trustee authority covers property transferred to the trust, and ownership generally switches to the trustee, subject to state law.
What does funding a trust mean?
For a California revocable living trust, practitioners also describe beneficiary designations that transfer assets into the trust at death.