Texas Trust Funding Guide
Overview
A Revocable Living Trust only works if trust funding was done properly. In Texas, “funding a trust” means legally transferring your assets into the name of your Trust or updating beneficiary designations so your assets flow into your Trust automatically at death.
This guide explains what trust funding is, which assets must be transferred, how to avoid common mistakes, and why proper funding is essential to avoiding probate in Texas.
What Is Trust Funding?
Trust funding is the process of retitling assets into the name of your Revocable Living Trust.
If you create a Trust but do not fund it, the Trust does **not** avoid probate. Funding is what activates your Trust and ensures your family can bypass the court process. Your Trust can only control what is in the name of the Trust – anything left in your personal name alone (without a beneficiary designation) is still controlled by your Will.
Learn more: Living Trusts in Texas
Why Trust Funding Matters in Texas
A Trust with no assets is like a safe with nothing inside it.
Proper funding ensures:
– Probate avoidance
– Smooth management during incapacity
– Quicker distribution after death
– Protection for children and blended families
– Privacy (no public filings)
Without funding, your estate may still require Texas probate (even if you have a Trust.)
How to Fund a Trust (Step-by-Step)
Funding a Trust typically involves three main steps:
Step 1 — Transfer Title to Real Estate
Your home and other Texas real estate should be deeded into your Trust. This can be done in different ways depending on your situation, but generally through a Special Warranty Deed or potentially a Ladybird Deed.
Learn more: Texas Real Estate & Deeds Guide
Step 2 — Retitle Bank and Investment Accounts
Most financial institutions allow either direct Trust ownership or “Pay on Death to Trust” designations. Which route you go will depend on the overall structure of your plan and the techniques incorporated, balanced against the preferences of your financial institution (and willingness to change institutions if needed). As part of any of our Estate Planning Services, our team will walk you through this step by step based on your unique situation.
Step 3 — Update Beneficiary Designations
Retirement accounts, life insurance, and annuities typically list your Trust as primary or contingent beneficiary, based on your family dynamics. Before you name a Trust as a beneficiary of your retirement accounts, make sure you get the approval of your estate planning attorney. If your Trust is built to accomodate a Retirement Plan, it is no trouble at all; however, if your Trust was not drafted in a way to accomodate a Retirement Plan, funneling one through an improper trust could be disastrous for your heirs.
At NTX Estate Law, we personally help our clients with account title updates and/or beneficiary designations as part of their initial plan creation and as assets change over the years – it is one of the most important steps to making sure your plan will work as intended when it’s needed the most.
Which Assets Should Go Into a Texas Trust?
Common assets to transfer include:
– Your primary residence
– Second homes or rental properties
– Bank accounts
– Non-retirement investment accounts
– Brokerage accounts
– LLC membership interests and other business interests
– Mineral rights
– Vehicles (case-by-case)
– Personal property
Assets that **should not** be retitled:
– 401(k)s
– IRAs
– TSPs
– 403(b)s
These should instead name the Trust as a beneficiary when appropriate (and when your Attorney has personally advised you to do so based on your plan design).
Common Trust Funding Mistakes in Texas
Avoid these common errors:
– Forgetting to deed the home into the Trust
– Retitling retirement accounts (major tax implications)
– Leaving old beneficiary designations untouched
– Adding children directly as co-owners
– Failing to update accounts after moving or refinancing
Learn more about how deeds relate to probate avoidance: Lady Bird Deed vs TODD
How Trust Funding Protects Your Children
A properly funded Trust ensures:
– Assets pass privately
– Inheritances can be staged to release at responsible ages or at milestones
– No Court involvement is needed
– Special needs planning is properly integrated
Explore advanced protections you can also include: Protecting Kids from Divorce & Creditors in Texas
How Funding Works During Incapacity
If you become incapacitated:
– Your successor trustee can manage Trust-owned assets immediately
– No guardianship court is required
– Bills, mortgages, and investments continue to be managed smoothly
Learn more: Texas Incapacity Planning Guide
Who Is Responsible for Funding the Trust?
At NTX Estate Law, we provide detailed trust funding instructions as part of each Trust-based plan.
We assist with:
– Deed Transfers to your Trust
– Transfer of Business Interests to your Trust
– Transfer of Personal Property to your Trust
– Beneficiary Update Assistance
– Coordination with financial advisors
– Reviewing compliance and confirming proper title/beneficiaries
Members of the Client Care Program also receive annual beneficiary checkups and priority assistance directly from their attorney as well!
Trust Funding in Our Estate Planning Packages
Our Trust plans include:
Foundational Trust Plan
Includes one deed to transfer your primary home to your Trust, County Recording fees for the deed, Transfer of one business interest to your Trust, Transfer of Personal Property to your Trust, and direct funding guidance for all financial accounts. Additional Deeds and Business Interests may be added as needed to the base plan as well.
Legacy Vault Plan
Includes two deeds to transfer your primary home and secondary property to your Trust, County Recording fees for both deeds, Transfer of two business interests to your Trust, Transfer of Personal Property to your Trust, and direct funding guidance for all financial accounts. Additional Deeds and Business Interests may be added as needed to the base plan as well.
Learn more about Our Estate Plans.
Ready to Plan?
If you want to ensure your Trust is fully and properly funded, we can help. Schedule your Discovery Call today.
