A trust can hold many different types of property, but not every asset belongs in one. Real estate, business interests, investment accounts, and valuable personal property are commonly transferred to a trust, while certain retirement accounts and other assets are often better handled through beneficiary designations.
Choosing the right assets depends on your estate planning goals, the type of property you own, and Louisiana law. Creating a trust is only the first step. To receive the benefits of your trust, it must be properly funded by transferring ownership of the appropriate assets into it.
What Does It Mean to Fund a Trust?
Funding a trust means transferring ownership of assets from your name to the trust’s name. Simply signing a trust agreement does not automatically move your property into it.
For example, if you create a revocable living trust but leave your home titled solely in your name, that property generally remains outside the trust until you transfer ownership. The same principle applies to many financial accounts and other assets.
Each type of property has its own transfer requirements. Depending on the asset, funding a trust may involve preparing a new deed, changing an account title, assigning ownership interests, or completing other legal documents.
Which Assets Are Commonly Placed in a Trust?
The right assets vary from one estate plan to another, but several categories are commonly transferred into trusts.
Real Estate
Real estate is one of the most common assets placed in a trust. This may include:
- Your primary residence
- Vacation homes
- Rental properties
- Undeveloped land
For Louisiana real estate, transferring property into a trust typically requires preparing and recording a new deed. Properly completing this process helps ensure the property becomes part of the trust rather than remaining individually owned.
Investment and Bank Accounts
Many non-retirement financial accounts can also be transferred into a trust, including:
- Brokerage accounts
- Non-retirement investment accounts
- Certain checking and savings accounts
- Certificates of deposit
Retitling these accounts allows the trustee to manage them according to the terms of the trust.
Business Interests
If you own a family business, limited liability company (LLC), partnership interest, or shares in a closely held corporation, those ownership interests may also be appropriate for a trust.
Placing business interests into a trust can complement a broader business succession plan by helping provide continuity if you retire, become incapacitated, or pass away. Before transferring ownership, it is important to review operating agreements, shareholder agreements, or partnership documents that may restrict transfers.
Valuable Personal Property
Certain personal assets may also be transferred into a trust, including:
- Jewelry
- Artwork
- Collectibles
- Antiques
- Other high-value personal property
The appropriate method for transferring these assets depends on the type of property and your overall estate plan.
Are There Assets That Usually Should Not Be Placed in a Trust?
Not every asset should be retitled in the name of a trust.
Retirement accounts, such as IRAs and 401(k)s, are generally not transferred into a revocable living trust during the account owner’s lifetime because doing so may trigger unintended tax consequences. Instead, these accounts often pass according to their beneficiary designations, which should be reviewed as part of your overall estate plan.
Similarly, life insurance policies typically pay proceeds directly to designated beneficiaries rather than to a trust, although there are circumstances in which trust planning may play a role. Health Savings Accounts (HSAs) also generally remain individually owned.
Determining how these assets fit into your estate plan requires considering your financial goals, family circumstances, and applicable tax rules.
Why Proper Trust Funding Matters
A trust can only control assets that have actually been transferred into it. If property remains outside the trust, it may not receive the benefits you expected when the trust was created.
Properly funding your trust can help:
- Simplify asset management if you become incapacitated.
- Provide a smoother transfer of trust assets after your death.
- Coordinate your assets under a single estate planning strategy.
- Reduce the likelihood that important assets are overlooked.
Reviewing your trust periodically is also important. Purchasing new property, opening financial accounts, or acquiring a business interest may require additional transfers to keep your trust up to date.
Make Sure Your Trust Works as Intended
A trust is most effective when it is properly funded and regularly reviewed as your circumstances change. Taking the time to transfer the right assets today can help avoid unnecessary complications for your loved ones in the future.
Buhrer Law Firm helps individuals and families throughout Metairie, New Orleans, and Southeast Louisiana create and maintain estate plans tailored to their needs. If you have questions about trusts or would like to review your current estate plan, contact us to schedule a consultation.