Fund Your Trust

Transferring real property to a trust requires a deed, typically a quit claim deed. The deed must be executed as required by law in the state where the property is located — with the required witnesses, notary provision, and recording with the appropriate agency. You may need to file a copy of the trust document or a summary called a memorandum or certificate of trust; the summary is preferable because it keeps the trust's details out of the public record. If your property is subject to a mortgage or homeowners association, you may need the permission of the lender and the association.

If personal property has a title document (cars, trucks, motorcycles, RVs, ATVs, boats, airplanes), you'll need a new title showing the living trust as the owner. Some states let you designate your trust as a beneficiary on a vehicle title, keeping it in your name but transferring it automatically at death. Caution: find out if transferring ownership triggers substantial taxes or fees, get lender approval for any lien, and ask your insurer whether a transfer affects your premiums.

Personal property without a title document (furniture, books, jewelry, tools, collectibles, etc.) can be transferred with an assignment of ownership document, which must be signed and dated. It is important to adequately describe the property so there is no doubt about its identity.

Your bank can tell you how savings, checking, and money market accounts can be titled in your trust. It may require closing the account and opening a new one in the name of the trust. For a certificate of deposit (CD), be sure your bank won't treat this as an early withdrawal and assess penalties — you can wait for the CD to mature, then open a new CD for the trust.

Your broker can advise how to retitle a brokerage account or get stock and bond certificates reissued (a complex process). A nonqualified annuity can be retitled, or the trust can be made a beneficiary. Caution: for brokerage accounts that are qualified retirement accounts, see the final step on making the trust a beneficiary.

Interests in partnerships and LLCs, and shares in a corporation, can be retitled in the name of the trust. Check the partnership agreement, LLC operating agreement, or articles of incorporation for transfer restrictions or procedures.

Your trust can be the owner and/or beneficiary of a life insurance policy. Making the trust the owner lets the trustee manage the policy if you become mentally incapacitated, such as borrowing against it for your care. Caution: in many states the cash value is exempt from creditors only if owned by the individual, so protection may be lost if ownership is transferred — instead, you could use a power of attorney to allow someone to manage the policy.

Whoever pays the royalties can advise what is required to transfer the interest to your trust. Consult the United States Copyright Office for copyrights, and the United States Patent and Trademark Office for patents and trademarks.

The nature of these rights varies. If the rights are part of property you own, you can use a deed. If you own rights in property you don't own, or have a lease or royalty agreement, an assignment of rights document is necessary and may need to be recorded. This is a complicated area, so you may want to consult an attorney.

An assignment of rights — a legal document changing who has the right to a debt — can make your trust the recipient of payments received on loans you have made to anyone, such as an unsecured personal loan or a loan secured by a mortgage.

Some assets may not be transferred to a trust, but you can make the trust the beneficiary upon your death. Do not retitle qualified retirement accounts (IRAs, 401(k)s, 403(b)s, or qualified annuities), as this is treated as a withdrawal subject to income tax and possible penalties — change the beneficiary designation instead. Medical savings accounts (MSAs) and health savings accounts (HSAs) should likewise designate the trust as the primary or secondary beneficiary.