A Revocable Living Trust is like a beautiful, expensive safe. If you don't put your valuables inside the safe, it cannot protect them. If you die with an unfunded trust, your assets will still go through probate, rendering the trust completely useless.
Retitling Real Estate
Your home is likely your largest asset. To put it in the trust, you must execute a new deed (usually a Quitclaim or Warranty Deed) transferring ownership from 'John Doe' to 'John Doe, Trustee of the John Doe Revocable Trust.' This deed must be recorded with your county clerk.
Important
The Mortgage Myth
Transferring your primary residence into a Revocable Living Trust does not trigger the 'due on sale' clause of your mortgage, thanks to the federal Garn-St. Germain Act.
Retitling Bank and Brokerage Accounts
You must contact your bank and brokerage firms and instruct them to change the name on your accounts to the name of your trust. They will usually require a 'Certificate of Trust' (a summary document proving the trust exists) to process the change.
The Exception: Retirement Accounts
Never retitle a 401(k) or IRA into the name of your trust while you are alive. Doing so is considered a fully taxable distribution by the IRS, and you will owe income tax on the entire balance immediately. Instead, you name the trust as the primary or contingent beneficiary of the account.