Signing your living trust feels like the finish line. You met with your attorney, reviewed the documents, signed them, and now they sit in a binder on a shelf. It is a real accomplishment, and it is also only half of the job.

The step most people skip is funding the trust. A living trust only avoids probate for the assets that are actually titled in the name of the trust. An unfunded trust, no matter how carefully it is drafted, can leave your family in probate anyway. This article walks through what funding means and how to do it in California.

What “Funding” Actually Means

Funding is the process of changing ownership of your assets from you as an individual to you as trustee of your trust. Think of your trust as a basket. Signing the trust creates the basket. Funding is the act of putting your assets into it.

Until an asset is retitled into the trust, the trust has no authority over it. If you pass away with that asset still in your own name, it may have to go through the California probate court before it can reach your loved ones, which is the exact outcome the trust was meant to prevent. For more on why trusts sometimes fail at this, see our article on Six Reasons Your Trust Will Not Avoid Probate .

Your Home and Other Real Estate

For most California families, the home is the largest asset and the most important one to fund. This is done by recording a new deed that transfers the property from you individually to you as trustee of your trust.

Real estate transfers involve specific forms and filing requirements with the county recorder, and done incorrectly they can create title or property tax issues. This is one area where it is worth having an attorney prepare and record the deed rather than relying on a form found online. If you own a vacation home, a rental, or land in another state, each parcel generally needs its own deed.

Bank and Brokerage Accounts

Retitling financial accounts is usually more straightforward. For bank accounts, you contact the institution and ask to change the account into the name of your trust. For brokerage and investment accounts, the custodian will typically have you open a trust account and move the holdings over.

Most banks and brokerages handle this routinely and have their own paperwork for it. Bring a copy of your trust, or the certification of trust your attorney prepared, and they will walk you through their process.

Business Interests

If you own a business, your ownership interest can often be transferred into your trust as well. How this is done depends on the structure. Shares in a corporation, membership interests in an LLC, or a partnership interest each have their own method, and your operating agreement or bylaws may contain transfer rules or restrictions you need to follow.

Funding a business interest the right way keeps it out of probate and helps your successor trustee step in smoothly if something happens to you.

Retirement Accounts and Life Insurance Work Differently

Not everything belongs inside the trust. Retirement accounts like IRAs and 401(k)s, along with life insurance policies, pass through beneficiary designations instead of through your trust or your will. Retitling a retirement account into a trust during your lifetime can trigger unwanted tax consequences, so that is generally not done.

For these assets, what matters is keeping your beneficiary designations current and coordinated with your overall plan. Review them after major life events such as a marriage, a divorce, a birth, or a death, because the beneficiary form controls regardless of what your trust or will says. In some situations a trust can be named as a beneficiary, but that is a decision to make with your attorney given the tax issues involved.

What Happens If You Forget, and the Pour-Over Will

If an asset is left out of the trust, it does not simply vanish. It stays in your individual name, and at your death it may need to go through probate. That can mean months of waiting and costs that often run into tens of thousands of dollars, depending on the asset.

This is where a pour-over will comes in. A pour-over will is drafted alongside your trust as a backstop. It directs that any asset left in your name at death be “poured over” into your trust. It is valuable protection, but it is a safety net, not a substitute for funding, because assets that pass through a pour-over will can still go through probate first. The goal is to fund thoroughly during your lifetime so the pour-over will has little or nothing to catch.

Funding Is Not a One-Time Task

Your life keeps moving after you sign. You open a new account, refinance the house, buy a rental, or start a business. Each new asset is a chance for something to end up outside your trust. A good habit is to ask, whenever you acquire something significant, whether it should be titled in the name of your trust.

To learn more about how living trusts work in California, visit our living trusts page and our trust overview .

Want to learn more? Watch our free estate planning webinar , or book a free 15-minute call .

This article is general information about California law, not legal advice, and does not create an attorney-client relationship.