Trust Funding Best Practices
Creating a trust fund is a smart estate planning decision for individuals and families in Los Angeles, California. But the real value of a trust doesn't come from just drafting the documents—it comes from proper trust funding. If assets aren't correctly transferred into the trust, the plan may fall apart when it matters most.
These cases require a skilled Los Angeles estate lawyer. The Law Office of Rodney Gould offers personal and dependable counsel. Read on to learn more about the best practices, common mistakes, and how an experienced trust fund lawyer can make a meaningful difference in the outcome of your process.
What Is Trust Funding?
Trust funding is the process of transferring assets into a trust fund. Without this step, the trust doesn't have anything to manage or distribute. Funding a trust means changing the legal ownership of your assets from your personal name to the name of your trust.
Common assets that are typically moved into a trust include:
Real estate
Bank accounts
Investment accounts
Business interests
Vehicles
Intellectual property
Each of these asset types has its own process for transfer. That's where many people hit a wall—they create the trust fund but don't finish the job.
Why Trust Funding Matters in Los Angeles, California
In California, if a trust isn't properly funded, those assets might still end up in probate. That defeats one of the main purposes of creating a trust fund in the first place. Probate in Los Angeles can be time-consuming, public, and expensive.
California law does allow for a "Heggstad Petition" to move assets into a trust after death if there's clear intent, but that route is uncertain and can still require court intervention. It’s far better to get it right the first time.
Best Practices for Trust Funding
Trust funding is one of the most important yet overlooked steps in estate planning. Even a well-drafted trust won't function as intended if your assets aren't properly transferred into it. By following key best practices, you can help make sure your trust works the way it should—protecting your assets, avoiding probate, and supporting your long-term goals.
Work With a Lawyer From the Start
A trust fund isn't just a document—it's a legal structure that must interact with your assets and your estate. An experienced lawyer in Los Angeles will know how to properly title assets and keep everything in line with California law. Trying to DIY this step can result in overlooked assets and unintended consequences.
Retitle Assets Correctly
To fund a trust, the legal title of the asset must be changed. For example:
Real estate deeds need to be changed at the county recorder's office.
Bank and brokerage accounts need to be retitled with the financial institution.
Business shares may require updated operating agreements or stock ledgers.
Missing even one form or filing can keep the asset outside of the trust fund.
Create a Schedule of Trust Assets
Every trust should include a written schedule that lists all the assets that are meant to be included. This document doesn't transfer ownership on its own, but it shows intent and supports legal claims if anything is left out or improperly titled.
Review and Update Regularly
Life changes. People move, acquire new property, sell businesses, or change banks. That means the trust fund also needs to be reviewed and updated. An annual review with your estate planning lawyer helps keep everything current.
Don’t Forget Beneficiary Designations
Some assets, like retirement accounts and life insurance, pass outside the trust via beneficiary designations. It's important to coordinate these with your trust fund. For example, you might name the trust as the backup (contingent) beneficiary.
California-Specific Considerations
California has its own rules and legal quirks when it comes to trusts and probate. Here are a few key points that differ from other states:
Community property rules: California is a community property state. That means assets acquired during a marriage are generally considered jointly owned. A trust fund should reflect how property is held and how it should pass upon death.
Heggstad petition: Unlike many other states, California allows for a post-death petition to transfer assets into a trust if there's a written schedule showing intent. But this process can still lead to court involvement, which a properly funded trust is supposed to avoid.
Prop 13 and property taxes: Transferring real estate in California requires careful handling to avoid triggering reassessment under Proposition 13. Legal guidance is critical when transferring Los Angeles property into a trust.
From community property concerns to property tax rules under Proposition 13, these state-specific details can significantly impact how your trust functions and how assets are managed after death. With proper planning, these complications can often be addressed ahead of time.
However, even with a good understanding of California-specific rules, people often make simple mistakes that undermine the effectiveness of their estate plan. That’s why it’s just as important to recognize the most common trust funding mistakes—and how to avoid them.
Trust Funding Mistakes to Avoid
Here are some of the most common and costly mistakes:
Leaving bank accounts out of the trust
Failing to transfer out-of-state property
Assuming a pour-over will covers everything
Not updating titles after refinancing a home
Failing to inform beneficiaries about the trust
A good rule of thumb: if it has value, ask whether it should go into your trust fund.
Frequently Asked Questions About Trust Funding in California
Do I need a lawyer to fund my trust fund?
Technically, no. But practically speaking, yes. Many assets require legal documents and filings that can be difficult to manage without professional help. A lawyer also helps you avoid expensive mistakes.
What happens if I forget to fund my trust fund?
Assets left out may have to go through probate. California offers a workaround via Heggstad Petition, but it's not guaranteed.
Can I add assets to my trust after it’s created?
Yes, you can and should add assets as your financial picture changes. Keep your trust fund updated.
Are retirement accounts included in the trust?
Usually not directly. Instead, you coordinate beneficiary designations to work with the trust. An attorney can explain how this works in your situation.
Do I have to record my trust with the state?
No, trusts are private documents in California. However, real estate transfers into a trust must be recorded with the local county.
How California Differs from Other States
In addition to community property laws, California has more structured rules for property tax reassessment. In other states, transferring property into a trust might not raise any issues. In Los Angeles County, though, the wrong move could increase your property taxes permanently.
California also offers more leniency with the Heggstad Petition than many other jurisdictions. But don't rely on that as a backup plan. Courts don’t always grant it. Finally, the cost of probate in California is higher than in many other states, making trust funding even more important if you want to keep your estate private and efficient.
Research-Based Knowledge
According to the California Courts website, the average probate case in California takes 9 to 18 months and can cost 4% to 7% of the estate's value in legal and administrative fees. That cost and delay can be avoided with a properly funded trust fund.
Call the Law Office of Rodney Gould Today
If you have a trust fund but aren’t sure if it’s properly funded, or if you’re thinking of creating one, don’t leave anything to chance. Get guidance, ask questions, and protect what you’ve built for the people who matter most. Located in Los Angeles, California, the Law Office of Rodney Gould serves clients throughout Sherman Oaks, Studio City, West Hollywood, and Beverly Hills. Call today and start the process.