New York Trust Series · Part 7
Which Assets Can Go Into a Trust? A Funding Checklist
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Once a trust is signed, it is an empty box. Putting property into the box is called “funding.” Many people pay for a trust but never fund it, and their families end up in court anyway. This article covers the general rules. The next several articles go through each type of asset.
Why Is Funding Necessary?
New York law is explicit: a lifetime trust is valid only as to assets that have actually been transferred to it. A sentence in the trust saying “all my property belongs to this trust” does not count (EPTL §7-1.18).
If you are the sole trustee, the law is even more specific:
- Real estate: a new deed must be recorded;
- Stocks, bonds, bank and brokerage accounts and other registrable assets: they must be re-registered in the name of the trust or trustee;
- Other assets: you must sign a written assignment describing the asset specifically.
What Are the Ways to Put Property Into a Trust?
Method 1: Retitling
Change the owner from “Wei Zhang” to “Wei Zhang, as Trustee of the Wei Zhang Revocable Trust.” Used for real estate, bank accounts and brokerage accounts.
Method 2: Naming the trust as beneficiary
The asset stays in your name, but the trust receives it at your death. Used for retirement accounts, life insurance and annuities, and possible for some bank and brokerage accounts.
Method 3: Written assignment
A signed document transferring untitled property to the trust, such as jewelry, art, business interests or money owed to you.
How Is Each Type of Asset Handled?
| Asset | Usual Approach | Watch Out For | See |
|---|---|---|---|
| House, condo, multi-family | New deed recorded to the trust | Mortgage, property tax exemptions, title and homeowner’s insurance | Part 8 |
| Co-op | Transfer shares and lease to the trust | Board consent required | Part 9 |
| Bank accounts, CDs | Retitle or name the trust as beneficiary | FDIC coverage | Part 10 |
| Brokerage and fund accounts | Retitle or name a TOD beneficiary | Cost basis, paper certificates | Part 11 |
| IRA, 401(k), 403(b) | Do not retitle; handle by beneficiary form only | Retitling is treated as a full withdrawal and taxed | Part 12 |
| Life insurance, annuities | Beneficiary designation, or owned by an insurance trust | Estate tax, minor beneficiaries | Part 13 |
| Business and LLC interests | Written assignment plus updated company records | Transfer restrictions, S corporation rules, professional entities | Part 14 |
| Out-of-state real estate | New deed under local law | Avoiding a second probate there | Part 15 |
| Assets abroad | Usually requires local legal arrangements | Local recognition of U.S. trusts, reporting duties | Part 15 |
| Jewelry, art, collectibles | Written assignment with specific descriptions | Insurance, appraisals | Part 16 |
| Cars | Usually not transferred | Insurance and liability | Part 16 |
| Digital assets, cryptocurrency | Authorization plus an access plan | Secure handoff of passwords and private keys | Part 16 |
Which Assets Usually Do Not Go Into a Trust?
- Retirement accounts (IRA, 401(k) and similar): never retitle them; use the beneficiary form;
- Everyday cars: usually not worth it, and it may create insurance issues;
- Health savings accounts (HSAs) and 529 education accounts: usually handled by naming a beneficiary or successor owner;
- Shares of a professional practice (a PC or PLLC for doctors, lawyers, accountants and similar professionals): the law generally does not allow a trust to own them.
Should a Home Owned With My Spouse Go Into the Trust?
A home owned by a married couple as tenants by the entirety passes automatically to the surviving spouse, so no probate is needed at the first death. But when the second spouse dies, probate is still required. This form of ownership also carries certain protections against creditors. Whether to retitle it to a trust requires weighing the benefits and trade-offs.
Can I Still Use the Property After It’s in the Trust?
With a revocable living trust, yes. You are the trustee. You live in, use, buy and sell the property as usual. You simply sign “as Trustee.”
Is Funding a One-Time Task?
No. Future homes and new accounts must also be titled in the trust’s name, or name the trust as beneficiary. We recommend checking once a year. (See Part 18.)
What If Some Property Is Left Out?
A pour-over will sends forgotten property into the trust, but that property still has to go through probate. A pour-over will is a safety net, not a substitute.
The Bottom Line
Whether a trust works depends half on the document and half on funding. The next articles go through each type of asset, one at a time.
Attorney’s perspective
To avoid a signed but unfunded trust, I give every client an itemized funding checklist: which assets are retitled, which get a beneficiary designation, which need an assignment, and who does each step by when. We prepare and record the deeds ourselves.
For advice about your own family’s situation, call +1 718-218-5805 or schedule a consultation. We meet clients in Flushing and Manhattan, in English or Chinese.
Related: Part 8: Putting Real Estate Into a Trust: Houses, Condos and Multi-Family Homes | Part 17: The 15 Most Common Trust Mistakes
This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. For advice about your situation, please contact us.
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