How to Transfer Property into a Trust

If you plan to use a trust as part of your estate plan, you need to know how to transfer assets, a.k.a “fund,” the trust. Most of the time, this is a fairly simple process that requires nothing more than listing the assets in the trust. However, transferring real estate into a trust is more complicated. You must get a new deed and notify insurers, and sometimes you may need to get permission from the lender, too. Failure to properly transfer real property, such as a person’s home, into a trust means the estate will go through probate after death, likely adding considerable time and expense to the settlement process.

A financial advisor can answer all your questions about trusts, probate, and estate planning.

What Are Trusts and How Do They Work?

Trusts help estates avoid probate and maintain privacy. The terms of the trust ensure it follows the wishes of the property owner and distributes their property to the appropriate beneficiaries.

There are many different types of trusts, including living trusts, revocable and irrevocable trusts. However, they all become effective once the asset transfers occur.

Some trusts have restrictions on the types of assets they can hold. For example, you can’t place IRAs directly into a trust like other assets. However, you can achieve the same effect by naming the trust as the beneficiary of the IRA.

Otherwise, assets in a trust include:

Vehicles
Cash and bank accounts
Brokerage accounts
Securities such as stocks and bonds
Business interests
Life insurance
Collectibles, art and other personal property

It’s easy to place personal property, such as jewelry, furniture, and sometimes vehicles, by simply including the property on a list of assets when you create the trust.

Other asset transfers can be more complicated. Stock and bond transfers involve coordinating with a brokerage or the financial institution that holds them for the owner. Life insurance is often not included in a trust. Instead, people often change the beneficiary designations of the policy to name the trust as the recipient of the payout.

Transferring Real Property into a Trust

Real estate must be retitled to the trust through a new deed that is properly recorded.

Real property, including a person’s personal home and any real estate investments, calls for a different set of steps. Essentially, you need to create a new deed that names the trust as the owner of the property. You must also make a record of the new deed at the courthouse.

The transfer typically involves two types of deeds. A quitclaim deed is the easiest and most commonly used. It is often possible for a trust owner to create a quitclaim deed without the help of an attorney. The other type, a warranty deed, involves a guarantee that the person transferring ownership has the right to do so and that no outstanding liens will interfere with the transfer. Warranty deeds cost more because they involve checking for liens.

Once a person prepares either type of deed the owner must sign it, notarize it, and file it at the county courthouse. Only then will the property transfer to the trust.

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Property Transfer Considerations

A number of problems can arise when transferring property to a trust. First, the transfer may not occur or may not be effective. This could happen if the owner sold a house that had been transferred to the trust, but then bought a new house and failed to transfer it into the trust. Any new real estate purchases must record the trust as the owner. Neglecting this step could send the estate to probate court when the owner passes away.

Another common issue involves inaccurate property descriptions. The legal description of the property must be exactly correct for the transfer to take place.

Some mortgages contain due-on-sale clauses that require full repayment of the loan before any sale or transfer can occur. To avoid this, check with the mortgage holder and get permission before transferring property into a trust. Lenders will usually agree without calling the loan, but ignoring this formality could lead to potential issues.

Similarly, the issuer of any homeowner’s or other insurance policies on the property should be notified of the ownership change. A phone call to the insurance agent or broker usually resolves this.

How to Transfer Property into a Trust

Most homeowners assume moving a property into a trust will trigger a jump in their property tax bill, similar to what happens with a traditional sale. In many states, that’s not the case. Transferring your home into your own revocable living trust generally isn’t treated as a change in ownership for property tax purposes. As long as you control the trust your existing assessed value typically carries over.

This protection isn’t automatic nor paperwork-free. Some jurisdictions require another form alongside the recorded deed. Often called a Preliminary Change of Ownership Report, it helps the local assessor’s office confirm the transfer qualifies for this treatment. Skipping this filing can result in your property being reassessed even when it shouldn’t have been.

A related but separate cost to check is documentary transfer tax. Transfers into your own revocable trust are commonly exempt from this tax, but like the property tax reassessment exclusion, the exemption typically needs to be explicitly stated on the deed itself at the time of recording.

It’s also worth considering title insurance when property moves into a trust. Many title insurance policies specifically name the individual as the insured party, and moving the property into a trust can raise questions about coverage. Some title companies will issue an endorsement extending coverage to the trust at little or no cost, but this is worth confirming directly with your title insurer rather than assuming your existing policy automatically carries over.

Because reassessment exclusions, transfer tax exemptions, and title insurance rules vary significantly from state to state, and sometimes county to county, working with a real estate attorney or title company familiar with local requirements can help make sure the transfer goes through cleanly, without an unexpected tax bill or coverage gap surfacing months or years later.

Ongoing Trust Maintenance

Funding a trust is not a one-time task. After the initial transfer of assets, a trust requires periodic review to confirm that new property acquisitions, account changes or refinanced loans have been titled correctly. A common issue arises when someone creates a trust, transfers their existing home, but later purchases new real estate or opens new financial accounts under their personal name instead of the trust. These omissions can leave assets outside the trust and subject to probate.

Maintenance also includes checking that deeds, titles and beneficiary forms remain aligned with the estate plan. If you refinance a mortgage, for example, the lender may temporarily retitle the property in your name. This means ownership must revert to the trust once the refinancing ends. Similar issues can arise when adding joint owners, updating insurance coverage or consolidating investment accounts.

Trustees or grantors may also need to update property schedules. This really matters for items that do not require formal titling, such as personal property and collectibles. Keeping these lists current helps avoid disputes and simplifies administration after death. A review every few years, or after major life events, helps ensure the trust reflects your current assets and objectives.

Finally, if state laws change or if the trust language no longer matches your needs, you may need to amend or restate a revocable trust. While the asset transfers remain valid, updating the trust document itself avoids inconsistencies during administration. Working with an attorney or financial advisor makes this process easier. Their expertise reduces the chance of overlooked assets or outdated instructions.

Bottom Line

Problems arise when property is not properly retitled to the trust, which can leave real estate subject to probate.

Transferring real estate property into a trust is often an important part of estate planning. If neglected, this can force the estate to go through probate, which can increase costs and compromise the estate owner’s privacy. Transferring real estate involves issuing a new deed that names the trust as the owner. The new deed then must be registered at the county courthouse.

Estate Planning Tips

Estate planning is one job where a financial advisor can provide particularly valuable insight and assistance. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
You can pay an attorney thousands of dollars to create a trust as part of your estate plan. For many people, especially those with large or complex estates, this is likely the best approach. However, for those with smaller and more simple estates, online trust-making tools can reduce those costs to as little as zero while producing a legally enforceable document that gets the job done.