Funding a revocable living trust — the deeds, forms and retitling that decide whether it works

A trust is a set of instructions attached to whatever the trustee holds. Write instructions for a house, a brokerage account and a share of a business, then transfer none of them, and the instructions apply to nothing: no house to sell, no account to distribute, no share to hold. Probate opens anyway, because probate is the process for property titled in a dead person's own name, and that is still what all of it is.

Why an unfunded trust fails silently

Nothing goes wrong while you are alive. You spend the money, live in the house and file the same tax return — a revocable trust you control is invisible for income tax and changes none of that. No annual filing flags the gap, no institution reconciles your trust schedule against your actual holdings, and nothing prompts anyone to check. The failure is found by the successor trustee, reading a document that gives them authority over assets nobody transferred to them.

Two transfer systems, and the trust only runs one

Property changes hands at death by one of two mechanisms, and they do not interact. Title-based transfer covers anything whose ownership is recorded in a name: land, accounts, shares, vehicles. Funding a trust means changing that name. Contract-based transfer covers anything payable to a person named on a form: retirement accounts, life insurance, annuities, health savings accounts, payable-on-death registrations. Those instruments never enter the probate estate and the trust cannot reach them by owning them, because the payer's obligation runs to the name on the form.

The designation wins even against a court order pointing the other way. In Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 555 U.S. 285 (2009), a divorce decree had divested the participant's ex-wife of any interest in his plan, but he never changed the form; the Supreme Court held the administrator "did its ERISA duty by paying the SIP benefits to Liv in conformity with the plan documents". A trust cannot outrank a form it is not named on — the same reason beneficiary designations override a will.

Real property: the deed is the whole of the transfer

A house moves into the trust when a new deed from you, individually, to you as trustee of the named trust is executed, acknowledged and recorded with the county. Nothing else does it. Listing the address on the trust's schedule of assets is a statement of intention, and the recorder's index — which is what a title company searches — will still show your own name. The instrument is usually a grant or warranty deed rather than a quitclaim, for the reason it was when you bought the place: the covenants differ.

Four worries follow that deed. Three are largely answered; the fourth is the one to check.

Accounts, and the counter staff who want the whole document

Bank and brokerage accounts are retitled rather than transferred: the institution re-registers the account in the name of the trust and the balance carries across. Vehicles are the class most often left out, and usually that is a defensible call rather than an oversight — many states offer a beneficiary registration instead, as California Vehicle Code § 4150.7 does, and a small estate affidavit will generally reach a car that was missed. Institutions run their own trust-account paperwork, and the useful thing to bring is not the trust.

It is a certification of trust — a short signed statement that the trust exists, when it was made, who the trustee is, what powers they hold, and that it has not been revoked. Under the Uniform Trust Code pattern at § 1013 the trustee may furnish that instead of the instrument, and it need not contain the dispositive terms; nobody at a branch needs to know who inherits. The statutes have teeth both ways: a person who relies on a certification without knowing it is wrong is protected, and one who demands the full instrument anyway can be liable for damages, with California Probate Code § 18100.5 adding attorney's fees where a refusal was not in good faith. A signed declaration in that form settles most counter disputes.

A business interest moves only as far as its own documents allow

An LLC membership interest or a block of shares moves by assignment, but the operating agreement is read first: transfer restrictions, consent requirements and rights of first refusal are drafted against "any transfer" and routinely catch a trust. Where the agreement has no estate-planning carve-out, the fix is a consent or an amendment signed before the assignment. One tax point sits behind it. An S corporation has a closed list of permitted shareholders, and IRC § 1361(c)(2)(A)(i) includes a trust treated as wholly owned by a US individual — a revocable trust qualifies while you are alive, and clause (ii) then allows only two years after the deemed owner's death before the election is at risk. The beneficial-ownership question that used to attend these transfers has closed: FinCEN's final rule of 14 August 2026 permanently exempts entities formed in the United States from reporting, so moving a domestic LLC interest into a trust triggers no filing.

The assets that should stay out

Retirement accounts are the important exclusion, and the reason is structural. IRC § 408(a) defines an individual retirement account as a trust "for the exclusive benefit of an individual or his beneficiaries" — there is no owner available other than that individual. Assigning it away is treated as a distribution, included in gross income under § 408(d)(1), with the additional 10 per cent under § 72(t)(1) if you are under 59½. Employer plans are barred more bluntly: 29 U.S.C. § 1056(d)(1) requires every pension plan to provide that benefits "may not be assigned or alienated".

Health savings accounts belong in the same category for a sharper reason. IRS Publication 969 says that if the spouse is the designated beneficiary the account becomes the spouse's HSA, and if the beneficiary is anyone else "the account stops being an HSA, and the fair market value of the HSA becomes taxable to the beneficiary in the year in which you die". Naming a trust turns the whole balance into income in one year. Life insurance is easier: the proceeds are already outside probate, so the only question is whether the trust should be named on the form.

The pour-over will is a net, not a plan

Every trust-based plan comes with a pour-over will, and it does one job: it devises whatever you still own at death to the trustee. The Uniform Testamentary Additions to Trusts Act, enacted in almost every state — Maine's version is at 18-C § 2-510 — validates that devise even though the trust is revocable and amendable, and provides that the property "becomes a part of the trust to which it is devised". It also contains the hole in the net: revoking or terminating the trust before death causes the devise to lapse unless the will says otherwise.

The limitation is simpler than the drafting. Property that reaches the trust through the will reaches it through probate — the filing, the creditor notice, the inventory, the public record, the months. Everything a trust is bought to avoid happens to whatever the pour-over will has to carry. It is insurance against forgetting one account, not a substitute for funding.

Staying funded is a habit, not an event

Funding decays. You refinance, the lender insists the property come out of the trust for closing, and it never goes back in. You open an account in your own name because that was the sign-up default. You inherit something. You buy a second property in another state — the one that forces an ancillary probate there if it stays in your name. None of these announce themselves.

The schedule of assets is worth keeping accurate even though it transfers nothing: it is the map the successor trustee works from, and the evidence a court looks at if a gap has to be argued later. But it records transfers that happened rather than making them. The test of a funded trust is never what the schedule says. It is what the recorder's index says, and what is printed at the top of the brokerage statement.