Living Trust Funding: Complete Guide for California Homeowners

I have difficult conversations with families almost every week that start like this: "My father created a living trust 10 years ago. He died last month, and now the attorney says the house wasn't in the trust. We have to go through probate anyway."

These families did everything right—they hired an attorney, created a comprehensive trust, paid for quality planning. But they missed the most critical step: funding the trust. Now they're facing the exact probate nightmare they paid to avoid.

As a Glendale estate planning attorney who also handles probate and trust litigation, I've seen this scenario devastate families too many times. Creating a trust is only half the job. Funding it—actually transferring your assets into the trust—is what provides protection.

In this comprehensive guide, I'll walk you through everything California homeowners need to know about funding a living trust, including step-by-step instructions, common mistakes, document requirements, and exactly what happens if you don't complete this critical step.

What Is Trust Funding and Why Does It Matter?

Trust Funding Explained

Trust funding is the process of transferring ownership of your assets from your personal name into your trust's name. Your trust is a legal entity, and it can only control assets it actually owns.

Think of it this way: Creating a trust is like buying a safe to protect your valuables. Funding the trust is actually putting your valuables in the safe. If you buy the safe but leave everything sitting on your dresser, the safe doesn't help.

The Critical Truth: Unfunded Trusts Don't Work

Here's what most people don't realize:

If your house is still in your personal name when you die—even if you have a beautifully drafted living trust—that house must go through probate. The trust doesn't protect it because the trust doesn't own it.

Real example: A Pasadena client created a trust in 2015 to avoid probate. The attorney prepared the deed transferring her $825,000 home into the trust. But she never signed the deed or recorded it. When she died in 2023, her family discovered the house was still in her personal name. Result: Full probate, $41,000 in fees, 16 months of court proceedings—exactly what the trust was supposed to prevent.

What Funding Actually Accomplishes

When you properly fund your trust:

Probate Avoidance Assets owned by the trust bypass probate completely. Your successor trustee can distribute them in weeks, not months.

Incapacity Protection If you become incapacitated, your successor trustee can immediately manage trust assets—no court conservatorship needed.

Privacy Protection Trust assets remain private. Nothing about trust-owned assets becomes public record.

Control Your trust instructions control exactly how trust assets are managed and distributed.

Seamless Transfer At your death, assets transfer according to your trust instructions without court involvement.

California Real Estate: The Most Important Asset to Fund

For California homeowners, transferring your house into your trust is the single most important funding step.

Why Your House Matters Most

It's usually your largest asset For most California families, the home represents 50-80% of total estate value.

Real estate MUST go through probate without a trust Unlike bank accounts (which can use beneficiary designations), real estate has no shortcut. It's either in the trust or it goes through probate.

California probate is especially expensive for real estate A $750,000 home triggers $36,000 in minimum probate fees—far more than the cost of proper planning.

It takes months to access real estate in probate Your family can't sell, refinance, or access equity for 12-18 months during probate.

Step-by-Step: How to Transfer Your California Home Into Your Trust

Step 1: Obtain a Copy of Your Current Deed

Before creating a new deed, you need to know exactly how you currently hold title.

Where to find it:

• Check your closing documents from when you purchased the home
• Request a copy from the county recorder's office
• Order a title report from a title company
• Your attorney should have ordered this when preparing your trust

What to look for:

• Exact legal description of the property
• Current owners and how title is held (joint tenancy, community property, etc.)
• Any easements, restrictions, or other limitations
• Outstanding liens or encumbrances

Important: The new deed must use the EXACT legal description from your current deed. Even small errors can create title problems.

Step 2: Choose the Right Type of Deed

California recognizes several types of deeds. For trust transfers, you'll typically use one of these:

Grant Deed (Most Common)

• Transfers property with basic warranties
• Grantor promises they own the property
• Grantor promises no undisclosed encumbrances
• Most common for trust transfers in California
• Recommendation: This is what we use for most trust funding

Quitclaim Deed (Sometimes Used)

• Transfers whatever interest the grantor has, if any
• No warranties or guarantees
• Faster and simpler
• Sometimes used for trust transfers between spouses
• Caution: Some title companies don't like quitclaim deeds

Warranty Deed (Rare in California)

• Provides strongest warranties
• Uncommon in California
• Usually unnecessary for trust transfers

For most California homeowners: A grant deed is the right choice for transferring property into your trust.

Step 3: Prepare the New Deed

The deed must be prepared carefully with specific information:

Required Information:

Grantor (Current Owner): Your name exactly as it appears on current title Example: "John Robert Smith and Mary Ellen Smith"

Grantee (New Owner—Your Trust): Your name as trustee of your trust Example: "John Robert Smith and Mary Ellen Smith, trustees of the Smith Family Trust dated January 15, 2024"

Legal Description: Exact legal description from your current deed (usually starts with "Lot X of Tract Y..." or uses metes and bounds description)

Assessor's Parcel Number (APN): Found on your property tax bill

Documentary Transfer Tax Statement: Usually states "no documentary transfer tax due—transfer to trust for estate planning purposes"

Preliminary Change of Ownership Report (PCOR): Required form submitted with the deed (more on this below)

Signature Requirements:

• Must be signed by the grantor (current owner—you)
• Must be notarized
• Both spouses must sign if both are on current title

Step 4: Complete the Preliminary Change of Ownership Report (PCOR)

The PCOR is a required form that provides information about the property transfer to the county assessor.

Key sections for trust transfers:

Question: Is this transfer solely to substitute a trustee of a trust? Answer: Yes (this prevents property tax reassessment)

Question: Is this transfer solely to change the method of holding title? Answer: Yes (for transfers to your own revocable trust)

Important: Properly completing the PCOR prevents your property taxes from being reassessed when you transfer property into your own revocable living trust. Under California Revenue and Taxation Code Section 62(d), transfers to your own trust are excluded from reassessment.

Step 5: Sign and Notarize the Deed

Requirements:

• All current owners must sign
• Must sign in front of a California notary public
• Notary witnesses and stamps the document
• Notary verifies signers' identities

Important: Some notaries don't understand trust transfers and may question whether you can transfer property to yourself as trustee. You absolutely can. This is a routine estate planning transaction.

Step 6: Record the Deed with the County Recorder

Once signed and notarized, the deed must be recorded with the county recorder's office where the property is located.

How to record:

In Person:

• Bring original signed, notarized deed
• Bring completed PCOR
• Pay recording fees (cash, check, or card)
• Receive stamped copy as proof

By Mail:

• Mail original deed, PCOR, and check for fees
• Include self-addressed stamped envelope for return of stamped copy
• Allow 4-6 weeks for processing

Online (Some Counties):

• Some California counties now allow electronic recording
• Check your county recorder's website

Recording Fees:

• Los Angeles County: $15 per deed
• Orange County: $38 per deed
• San Diego County: $40 per deed
• Varies by county

Processing Time:

• Walk-in: Immediate stamping, recording processed within days
• Mail: 2-6 weeks
• Online: Usually 1-3 days

Step 7: Update Your Homeowner's Insurance

Once your property is transferred to your trust, update your homeowner's insurance policy.

What to do:

• Contact your insurance agent
• Provide copy of recorded deed
• Request that policy be issued to you as trustee
• Confirm coverage continues without interruption

Policy should read: "John Robert Smith and Mary Ellen Smith, trustees of the Smith Family Trust dated January 15, 2024"

Good news: This doesn't change your coverage or rates. It's purely an administrative update.

Step 8: Notify Your Mortgage Lender (If Applicable)

If you have a mortgage, notify your lender about the transfer.

Important: Under the Garn-St. Germain Act (federal law), lenders CANNOT call your loan due or accelerate payment simply because you transferred your property into your own revocable living trust.

What to do:

• Send letter to lender with copy of recorded deed
• Explain this is a transfer to your revocable living trust for estate planning
• Confirm the transfer doesn't trigger the due-on-sale clause
• Keep copy for your records

Most lenders' response: They'll update their records showing the property is now held in trust. Nothing changes with your loan terms, payment, or interest rate.

Other Assets to Fund Into Your Trust

While your house is the most important asset to fund, you should also transfer other assets into your trust:

Bank Accounts

How to transfer:

• Contact your bank
• Bring copy of your trust (or certification of trust)
• Request to retitle accounts in trust name
• Bank provides new signature cards

New account name: "John Smith and Mary Smith, trustees of the Smith Family Trust dated January 15, 2024"

Alternative: Some people prefer to keep checking accounts in personal name for convenience and only transfer savings/investment accounts. This is acceptable if amounts are modest, though everything in your personal name must be distributed through your pour-over will (requiring probate if over $184,500 total).

Investment and Brokerage Accounts

How to transfer:

• Contact your broker or financial advisor
• Provide copy of trust or certification of trust
• Complete broker's trust transfer forms
• Accounts retitled without selling investments

Tax consequence: None. Transferring investments into your revocable living trust is not a taxable event.

Important: Your Social Security number continues as the tax ID for the trust during your lifetime. No separate tax return is required.

Vehicles

California vehicle transfers to trusts: This is complicated in California. The DMV makes it difficult and expensive to transfer vehicles into trusts.

My recommendation:

• For most California families, don't transfer vehicles into the trust
• Instead, use DMV's Transfer-on-Death (TOD) registration
• Vehicles usually aren't worth enough to justify the hassle and expense
• If vehicle is very valuable (classic car, luxury vehicle), consult your attorney

Business Interests

If you own a business:

• LLC interests: Transfer membership interest to trust
• Corporation stock: Transfer shares to trust
• Partnership interests: May require partner consent
• Sole proprietorship: Transfer business assets to trust

Important: Business transfers can be complex. Consult with your attorney to ensure you comply with operating agreements, shareholder agreements, and don't inadvertently trigger tax issues.

Life Insurance

Life insurance is NOT transferred into your trust

Instead, you name the trust as beneficiary of the policy.

How to do this:

• Contact insurance company
• Request beneficiary change form
• Name your trust as beneficiary
• Beneficiary designation: "The Smith Family Trust dated January 15, 2024"

Why this matters: Life insurance proceeds paid to your trust can be distributed according to your trust instructions, providing control and protection for your heirs.

Retirement Accounts (Special Rules)

DO NOT transfer retirement accounts into your trust

IRAs, 401(k)s, 403(b)s, and other retirement accounts should NOT be owned by your trust.

Why: Transferring retirement accounts to a trust is treated as a taxable distribution. You'll owe income tax on the entire account value.

What to do instead: Name beneficiaries on beneficiary designation forms:

• Primary beneficiary: Usually your spouse
• Secondary beneficiary: Often your children or your trust

When to name the trust as beneficiary:

• Special needs beneficiary requiring controlled distributions
• Complex distribution plans
• Creditor protection needs
• Consult with your attorney and CPA before doing this

Common Trust Funding Mistakes (And How to Avoid Them)

Mistake 1: Creating the Trust But Never Funding It

The problem: This is the most common and most devastating mistake. Families spend thousands on trust creation but never transfer assets. Result: Probate happens anyway.

Real case: A Burbank family came to me after their father died. He had a beautiful, professionally drafted trust created in 2018. When we investigated, NOTHING had been funded—not the house, not the bank accounts, not the investments. Everything was still in his personal name. The family faced full probate on an $1.1 million estate. Cost: $54,000 in fees and 18 months of court proceedings.

How to avoid:

• Don't leave the attorney's office without a clear funding plan
• Use the funding checklist your attorney provides
• Schedule a follow-up appointment to review funding
• Don't procrastinate—fund immediately while motivated

Mistake 2: Signing the Deed But Not Recording It

The problem: Signing the deed isn't enough. The deed must be recorded with the county to legally transfer the property.

Real case: A Glendale client's attorney prepared her deed in 2019. She signed and notarized it. But she put it in her filing cabinet and never recorded it. When she died in 2023, the house was still legally in her personal name. Her family had to probate the $735,000 home.

How to avoid:

• Record the deed immediately after signing
• Ask your attorney to handle recording for you
• If you'll record it yourself, do it within one week
• Keep the recorded copy in a safe place

Mistake 3: Buying New Assets in Your Personal Name

The problem: You properly fund your trust initially, but then buy new assets in your personal name instead of your trust name.

Common scenarios:

• Refinance your house, new deed in personal name instead of trust
• Buy a vacation home, title in personal name
• Inherit property, transfer into personal name
• Open new bank accounts in personal name

How to avoid:

• Always purchase new real estate in trust name
• After refinancing, immediately transfer back to trust
• When inheriting assets, transfer into your trust
• Open new accounts in trust name from the start

Mistake 4: Transferring Property That Shouldn't Be in the Trust

Assets that should NOT be in your trust:

• Retirement accounts (IRAs, 401(k)s, etc.)
• Health Savings Accounts (HSAs)
• Most vehicles (use TOD registration instead)
• Stock options (transfer restrictions may apply)

The problem: Transferring retirement accounts into your trust triggers immediate taxation on the entire account value—potentially hundreds of thousands in taxes.

How to avoid:

• Consult your attorney about which assets to transfer
• Use beneficiary designations for retirement accounts
• Keep HSAs in personal name
• Don't assume everything goes into the trust

Mistake 5: Not Updating After Major Life Changes

Life changes that require funding updates:

• Marriage or divorce
• Birth or adoption of children
• Death of spouse
• Acquisition of new property
• Sale of property
• Moving to a new state
• Significant change in asset values

How to avoid:

• Review your trust funding every 3-5 years
• Update after any major life change
• Keep an asset inventory showing what's in the trust
• Schedule periodic reviews with your attorney

Mistake 6: Losing Track of What's Been Funded

The problem: Years pass, you can't remember which assets were transferred to the trust and which weren't.

How to avoid:

• Maintain a trust asset inventory
• Keep copies of all transfer documents in one place
• Update the inventory when assets are added or removed
• Review annually

What Happens If Your Trust Isn't Funded?

The consequences of an unfunded trust range from inconvenient to catastrophic:

Assets Must Go Through Probate

Any assets in your personal name when you die must go through probate (unless they pass by beneficiary designation or joint tenancy).

For a $850,000 house:

• Probate fees: $40,000+
• Timeline: 12-18 months
• Court supervision: Complete
• Privacy: None (all public)

This is exactly what you created the trust to avoid.

Your Pour-Over Will Provides Some Protection

A properly drafted estate plan includes a "pour-over will" that acts as a safety net. This will says: "Any assets I own in my personal name should be transferred into my trust and distributed according to trust terms."

How it works:

1. Assets in your personal name go through probate
2. After probate, assets "pour over" into your trust
3. Trust instructions then govern distribution

The problem: This still requires probate. You avoid probate entirely only if assets are already in the trust.

Small Estate Exception May Help

If your total personal assets (not in trust) are under $184,500, your heirs may be able to use simplified small estate procedures instead of full probate.

The problem: Most California homeowners exceed this threshold with their house alone.

Family May Face Delays Getting Assets

During probate (which takes 12-18 months), your family can't access probate assets except through court-supervised procedures.

Real impact:

• Can't sell the house without court permission
• Can't access bank accounts
• Can't manage investments
• Everything is frozen pending court approval

Increased Costs to Your Family

Between probate fees, attorney fees, court costs, and delays, an unfunded trust can cost your family $30,000-$50,000+ more than a properly funded trust.

Trust Funding Checklist for California Homeowners

Use this checklist to ensure your trust is properly funded:

Real Estate

• Obtain copy of current deed
• Prepare new deed (grant deed) transferring to trust
• Sign and notarize new deed
• Complete Preliminary Change of Ownership Report (PCOR)
• Record deed with county recorder
• Receive and file stamped recorded copy
• Update homeowner's insurance
• Notify mortgage lender (if applicable)
• Transfer any other properties (rentals, vacation homes, etc.)

Financial Accounts

• Transfer checking accounts (or leave small amounts in personal name)
• Transfer savings accounts
• Transfer investment/brokerage accounts
• Transfer money market accounts
• Transfer certificates of deposit (CDs)
• Update bank signature cards

Beneficiary Designations

• Life insurance: Name trust as beneficiary (or spouse, then trust)
• Retirement accounts: Name beneficiaries (usually NOT the trust)
• Transfer-on-Death (TOD) accounts: Name beneficiaries
• Payable-on-Death (POD) accounts: Name beneficiaries

Business Interests

• Transfer LLC membership interests
• Transfer corporate stock
• Transfer partnership interests (if allowed)
• Update business records

Personal Property

• Transfer valuable art, jewelry, collectibles (by assignment)
• Consider vehicles (or use DMV TOD registration)
• Transfer other significant personal property

Documentation

• Maintain asset inventory
• File all transfer documents together
• Keep certification of trust for future use
• Schedule periodic reviews

How We Help California Homeowners Fund Their Trusts

At our Glendale office, we don't just create trusts—we ensure they're properly funded so they actually work.

Our funding assistance includes:

Deed Preparation We prepare your deed transferring your primary residence into the trust (included in our $575/$675 pricing).

Recording Service We can handle recording with the county for you (recording fees additional).

Complete Funding Instructions Step-by-step guidance for transferring all asset types.

Follow-Up Consultation We schedule a follow-up meeting to review funding progress and answer questions.

Asset Inventory Worksheets Tools to track what's been transferred and what still needs attention.

Ongoing Support We answer funding questions as they arise—we want your trust properly funded, not sitting unfunded in a drawer.

Frequently Asked Questions

How long does trust funding take?

For most families, funding can be completed in 2-4 weeks:

• Real estate deed: 1-3 weeks to record
• Bank accounts: 1-2 weeks
• Investment accounts: 2-3 weeks
• Total time: 2-4 weeks with focus and organization

Can I do the funding myself or does my attorney have to do it?

You can do much of it yourself with proper guidance. We provide detailed instructions. Many clients prefer we handle the real estate deed (most critical) and they handle bank/investment accounts.

Will funding my trust affect my property taxes?

No. Transferring your primary residence into your own revocable living trust does NOT trigger property tax reassessment in California.

Can I refinance my house if it's in a trust?

Yes. This is routine in California. When you refinance, the lender may temporarily transfer the property to your personal name, complete the refinance, then transfer it back to the trust.

What if I move to a different house?

You would transfer your new house into the trust and remove the old house (either because you sold it or transfer it to the new owner).

Do I need a new tax ID number for my trust?

No. During your lifetime, your revocable living trust uses your Social Security number as its tax ID. No separate tax return is required.

How much does it cost to fund a trust?

The main cost is the county recording fee for your deed ($15-$50 in most California counties). Retitling bank and investment accounts is usually free.

Take the Next Step: Fund Your Trust Today

If you have a trust but haven't funded it, every day you delay leaves your family vulnerable. If you don't have a trust yet, now is the time to create one AND fund it properly.

Don't let your trust become another unfunded document that fails to protect your family when it matters most.

Schedule your free consultation today. We'll:

• Review whether your current trust is properly funded
• Identify which assets need to be transferred
• Prepare your deed and provide funding guidance
• Follow up to ensure everything is completed correctly
• Answer all your questions about the funding process

Call (818) 291-6217 or visit our estate planning questionnaire to get started.

Already have a trust from another attorney but never funded it? We can help with that too. We regularly assist families with funding trusts created by other attorneys. Bring us your trust and we'll help you complete the funding process.

Don't wait another day. Proper funding is what makes your trust actually work.

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About the Author

Rozsa Gyene (State Bar No. 208356) is a California estate planning and trust litigation attorney serving Glendale, Burbank, Pasadena, and throughout Los Angeles County. With extensive experience both creating estate plans and handling litigation involving unfunded trusts, Rozsa has seen firsthand the critical importance of proper trust funding and helps clients avoid the costly mistakes that leave families vulnerable.

Office Location: Glendale, California Phone: (818) 291-6217

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Disclaimer: This article provides general information about living trust funding in California and should not be construed as legal advice. Every situation is unique. California laws change regularly, and this article reflects laws in effect as of November 2024. Consult with a qualified California estate planning attorney about your specific circumstances.