Personal Finance & Estate › Wills, trusts & estate planning › Revocable living trust
Funding the trust (retitling assets into it)
· Concept or strategy
Watch outA common mistake, trap or scam.
Retitling assets into a living trust's name, such as recording a new deed, so the trust actually controls them.
See it on the Personal Finance & Estate map →How it works
A signed trust with nothing in it does nothing. Funding means deeding real estate to yourself as trustee, assigning LLC interests, retitling bank and brokerage accounts, and naming the trust or individuals on accounts that can't be retitled. In California, a deed to your own revocable trust doesn't trigger Prop 13 reassessment, but file the county's change-in-ownership form. Assets bought later must be added too. Unfunded assets usually go through probate, though a court 'Heggstad' petition can sometimes rescue them.
Why it matters for you
Watch out. It is the most common estate-planning failure: families pay for a trust, skip funding, and the heirs end up in probate anyway.
Think of it like
Like signing a management agreement but never handing over the keys: the paperwork exists, but nothing has moved.
Red flags and protection
Estate of Heggstad (California Court of Appeal, 1993) lets courts confirm assets listed on a trust schedule as trust property, via a Probate Code Sec. 850 petition; county recorder deeds show funding.
Watch out for
How far courts will stretch Heggstad, for example to assets covered only by a general assignment, varies by court; it is a rescue, not a plan.
Connections (2)
▸Funding the trust (retitling assets into it) activates Revocable living trustWatch out
How they connect
A living trust controls only what it owns. Funding moves assets into the trust's name: a recorded deed for the building, assignments of LLC interests, retitled accounts. Until then, the successor trustee has no authority over those assets, and the trust's probate-avoidance and incapacity benefits don't reach them.
When it applies
Done when the trust is signed, often by the drafting attorney for real estate, then by the owner with each bank and broker.
How sure?
California Probate Code Sec. 15200 creates a trust only over property declared or transferred to it; recorded deeds show title held by the trustee.
Watch out for
Whether to retitle bank and brokerage accounts or just name the trust as payable-on-death beneficiary is debated: the shortcut avoids probate but gives the successor trustee no authority during incapacity.
▸Funding the trust (retitling assets into it) if skipped, sends assets to Probate in California (court process & statutory fees)Watch out
How they connect
Assets the trust never received, such as a building still deeded to you personally, fall back into the probate estate if they have no beneficiary form. If their value exceeds the small-estate limit, heirs face court, delay and statutory fees on gross value, despite having paid for a trust.
When it applies
Discovered after death, often when a successor trustee finds a deed or account was never retitled.
How sure?
Probate Code Sec. 13100 sets the small-estate limit; Heggstad petitions under Sec. 850 are the partial fix courts allow.
Watch out for
Which rescue fits, a Heggstad petition, a small-estate affidavit or the $750,000 primary-home petition, depends on the asset, its value and the date of death; ask the attorney.