What Is Trust Funding —and How Do You Do It?

July 1, 2025
Paramus Estate Planning

When clients create a trust as part of their estate plan, they often think the hard part is done. The documents are signed, notarized, and stored safely. However, without proper trust funding, even the most carefully drafted trust may fail to accomplish its goals.

In this article, we’ll explain what trust funding is, why it matters, and how to properly fund a trust.

What Is Trust Funding?

Trust funding is the process of transferring your assets into your trust. In simple terms, it means titling property in the name of the trust rather than in your personal name.

Think of a trust like a safe: If you don’t put anything inside the safe, it can’t protect your valuables. Similarly, if you don’t transfer your assets into your trust, the trust can’t control or distribute those assets according to your wishes.

Why Is Trust Funding Important?

If your trust is not funded, the assets may remain subject to probate—the very process most people create a trust to avoid. Unfunded or partially funded trusts often lead to:

  • Probate court involvement

  • Delays in asset distribution

  • Additional legal fees

  • Family disputes

  • Assets not passing according to your intentions

By contrast, proper trust funding helps ensure your wishes are carried out smoothly, privately, and efficiently.

What Types of Assets Should Be Funded Into a Trust?

Almost any asset can be funded into a trust, depending on your goals. Below are key categories with specific steps and New Jersey considerations.

Note: Retirement accounts (IRAs, 401(k)s) generally should not be retitled to the trust, as doing so can trigger adverse tax consequences. Instead, you may designate the trust as a beneficiary depending on your estate goals.

How to Fund a Trust

Here are the general steps to fund your trust:

1. Real Estate

  • Execute a new deed (e.g., a quitclaim or warranty deed) transferring the property from your name to the trust.

  • Record the deed with the county recorder.

  • Update your homeowner’s insurance policy to reflect the trust ownership.

Pro Tip: Don’t forget to notify your homeowners insurance carrier and update the insured party to include your trust.

2. Bank and Financial Accounts (Checking, Savings, CDs)

  • Visit your bank or financial institution.

  • Request to change the account title to the name of your trust.

  • Some banks may require a certificate of trust or trust summary.

Some banks may allow Payable-on-Death (POD) designations naming your trust.  While direct titling is often more effective, if you have a lot of automated payments coming into or out of your account, a POD might be more practical.

3. Investment Accounts (Brokerage, Mutual Funds)

  • Contact your broker or financial advisor.

  • Complete their required paperwork to retitle the account in the trust’s name.

  • Update any transfer-on-death (TOD) or payable-on-death (POD) designations if needed.

4. Business Interests

  • Review any corporate, partnership, or LLC agreements for any restrictions or specific transfer procedures

  • Obtain waivers and/or follow any specific transfer procedures outlined in corporate or LLC agreements.

  • Prepare and sign assignments or other paperwork

  • Amend ownership documents (e.g., operating agreements, stock certificates) to reflect the trust’s ownership.

5. Personal Property

  • Create a general assignment document transferring miscellaneous personal property (like furniture, jewelry, art) to the trust.

  • For particularly valuable items (e.g.fine art, antiques, collectibles, designer handbags and watches), consider including an itemized inventory attached to your trust or general assignment, or even a separate assignment specifically for that item.

Pro Tip: For high-value assets, keep appraisals and proof of ownership for potential insurance or legal purposes.

6. Life Insurance Policies and Annuities

Talk to your attorney to determine if you should retitle the life insurance to the Trust, or only make the Trust the beneficiary of the policy.

  • Talk to your attorney to determine if you should retitle the life insurance to the Trust, or only make the Trust the beneficiary of the policy.

  • Contact the carrier for the proper forms for a change of beneficiary, and, if appropriate, a change of ownership.  Inform the carrier that it involves a Trust, as some carriers will have different or additional forms

7. Vehicles (Cars, Boats, RVs)

Typically, ordinary vehicles are not transferred to a Trust, for several reasons.  Placing a vehicle in a trust may trigger insurance and registration issues, create liability concerns, and offer little practical estate planning advantage—especially since vehicles generally depreciate and are not considered high-value assets.

However, high value or unique vehicles, or vehicle collections, can be funded into your trust, but it must be done carefully to avoid complications with insurance and registration.

To transfer a vehicle in New Jersey:

  • Complete a Vehicle Registration Application with the New Jersey MVC (Motor Vehicle Commission)

  • Bring your trust documents and identification

  • Have the title reissued to the name of your trust (e.g., “John Smith, Trustee of the Smith Family Trust”)

  • Notify your auto insurance carrier of the change

8. Timeshares

Timeshares, especially in other states or countries, are often overlooked in trust funding, but can be particularly burdensome to transfer through probate.  Importantly, properly funding a timeshare avoids ancillary probate in another state.

  • Contact the timeshare company or management firm

  • Request their procedure for transferring title to a trust

  • Sign a new deed or assignment agreement, depending on the ownership structure, and if appropriate, record the deed in the proper jurisdiction

9.  Retirement Accounts (IRA, 401(k), 403(b), etc.)

Retirement accounts are handled differently than other assets when it comes to trust funding. In most cases, you should not retitle retirement accounts (like IRAs, 401(k)s, or 403(b)s) into the name of your trust, as doing so could trigger immediate taxation and destroy the tax-deferred status of the account.

Instead, consider naming the trust as a beneficiary, if appropriate.

Trusts need to be specifically drafted to receive retirement assets in a tax-efficient manner (often called a “see-through” or “conduit” trust). Improper drafting can accelerate income tax liabilities under federal rules.

Consult your estate planning attorney and tax advisor before changing retirement account beneficiaries.

Get Professional Guidance

Trust funding is not a one-size-fits-all process. Different assets require different steps, and errors can lead to probate, tax issues, or legal disputes. Working with an experienced estate planning attorney ensures that your trust is properly funded and aligned with your estate planning goals.

A trust is only as good as the assets it controls. Don’t let your estate plan fall short because of an unfunded trust.

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