Putting Your Estate Plan to Work: Funding Your Revocable Trust

Lynn Gifford Bria, Esq.
Vice President, Principal Wealth Advisor and Senior Fiduciary Officer
Washington Trust Wealth Management

You have signed a revocable trust as part of your estate plan … now what?  Think of your trust as the engine of your estate plan. Drafting it builds the engine but funding it turns the key.

Why Funding Your Revocable Trust Matters

Funding may involve transferring ownership from yourself as an individual to yourself as trustee, or updating your beneficiary designations. Depending on the asset, this could mean retitling the ownership, assigning the interest, or updating a beneficiary designation form. 

Funding your revocable trust ensures your wealth is distributed according to your wishes—when you want and in the most efficient way possible. If you don’t fund your revocable trust:

• Your estate may still need to go through probate, which could create unnecessary expense and delay for your beneficiaries.
• Your successor trustee may not have authority to act on your behalf if you become disabled.

Which Assets Should Be Owned by Your Revocable Trust?

Here’s what typically belongs inside:

1. Investment accounts. Assets held in accounts with any recognized investment company, bank, trust company, or other financial institution should be retitled in the name of your revocable trust, using your home address and Social Security number if you are the current trustee.
2. Bank accounts, CDs or other cash accounts.  People sometime forget about their checking or savings accounts, but these can be transferred as well. The retitling procedure is the same as for investment accounts.
3. Real estate. Your residence, vacation homes, and investment properties can be deeded to your revocable trust. This not only avoids probate but can also streamline rental management or future sales. Any real estate is transferred to your revocable trust by the execution of a deed.
4. Promissory notes and mortgages.  These assets are assigned to your revocable trust by a special written document, with one caveat: some notes and mortgages may not be assignable by their terms. It’s important to meet with your wealth manager and estate attorney to review the note or mortgage document to determine whether the assignment is permitted, and if so, if any special steps are required.
5. Business interests. If you own an LLC, corporation, or partnership interest, you may be able to transfer ownership or assign your interest to the revocable trust. This helps maintain continuity and safeguards the business if something happens to you.
6. Personal property. Collections, furnishings, jewelry, art, and sentimental items can be assigned to the revocable trust through a simple assignment document.

What Passes to Your Revocable Trust by Beneficiary Designation?

Some assets are not typically retitled:

1. Qualified plans and retirement accounts: IRAs, 401(k)s, 403(b)s, etc.
   Federal law prevents the ownership of these assets from being changed to a revocable trust. So, while you can’t transfer ownership to the revocable trust, you might name the trust as a beneficiary in certain scenarios (such as protecting a beneficiary from overspending or protecting assets from creditors or divorce).
2. Life insurance. You can name your revocable trust as the beneficiary of your life insurance policy, which is especially useful if you want your trustee to manage proceeds for minors or to provide structured distributions.

It’s important to talk to your wealth manager and estate attorney about what belongs inside your revocable trust, what stays outside, and how to handle exceptions. 

Learn more about understanding and implementing your estate plan, including updating beneficiaries and communicating your wishes to your family. 

Washington Trust Wealth Management Can Help 

When it comes to estate planning and funding your revocable trust, our qualified wealth advisors act as quarterback of your team, making sure all the right players are on the field and working for you. We can help you determine which assets belong in your revocable trust, coordinate transfers with financial institutions, avoid triggering taxes or penalties, and walk you through the process step by step to ensure your wishes are carried out according to your intentions.