Creating a trust in California does not complete the estate planning process. To make a trust effective, it must be properly funded.
Funding a trust means transferring ownership of assets into the trust’s name. Without this step, the trust may not help avoid probate or protect assets as planned.
Changing titles in the trust’s name
The first step in funding a trust involves changing the title of certain assets. With real estate, for example, you must retitle the property from your name to the name of the trust. In California, this process usually requires a new deed filed with the county recorder. For bank accounts, financial institutions may require specific forms to move the accounts into the trust. Each account must clearly reflect that the trust owns it.
Transferring investment accounts
You can also move investment accounts, including stocks and bonds, into the trust. Some brokerage firms allow ownership changes online, while others may require paperwork. You must follow the institution’s guidelines precisely to ensure the trust holds the asset legally.
Assigning ownership of personal property
Personal property, such as jewelry, furniture and art, often requires an assignment of ownership. This involves listing the property in a legally-recognizable document and stating that it now belongs to the trust. While this process is less formal than transferring titles, it remains important to include valuable personal items in the trust to avoid confusion later.
Using beneficiary designations for certain assets
Retirement accounts, life insurance policies and certain similar assets do not go directly into a trust but can still connect to the trust through beneficiary designations. In California, naming the trust as a beneficiary can ensure the assets follow the estate plan’s goals.
Keep in mind that funding a trust is not a one-time event. You must continue transferring new assets into the trust as you acquire them if you wish to include them in your probate-proof estate plan. Leaving assets outside the trust may lead to delays, court involvement and unintended outcomes.