Funding a living trust
Free. Last updated 10 October 2026
A revocable living trust is usually bought as a document: a binder, a signing appointment, a fee. The document is the easy half. A trust is a set of instructions about property, and it governs only the property that has actually been put into it. Putting it in is called funding, it is dull, and it is the step that gets skipped. The details below are Michigan's, the state the episode's story is set in. The idea holds widely; the fees, taxes and the exact rules for changing a trust are set state by state.
Signing the trust is half the job
Michigan's trust code says it directly: a trust document is not invalid because nothing has been transferred to it yet, but until property is transferred to the trustee, the person named as trustee has no duties under it. An unfunded trust is a valid set of instructions about nothing.
Whatever is still in your own name when you die passes under your will — the route a trust is usually meant to avoid. FINRA's investor pages note that wills typically go through probate court, which can take time, and become a public record.
What funding means, asset by asset
The house. You sign a new deed from yourself to yourself as trustee of the trust, and record it with the county register of deeds. You give the house away and receive it in the same breath, in a different capacity: before, you owned a house; after, you are the trustee of a trust that owns it, and you live there exactly as before. In Michigan:
- Recording costs $30 per document, regardless of the number of pages (MCL 600.2567). A charter county may set its own fee schedule, so check yours.
- Transfer tax: a deed where the consideration is less than $100 is exempt from both the state and the county real estate transfer tax.
- Property tax: a conveyance to a trust is not a "transfer of ownership" — so the taxable value does not uncap — when the sole present beneficiary is you, your spouse, or both (MCL 211.27a(7)(g)).
- The mortgage: federal law bars a lender from calling a home loan due because you moved the house into a living trust in which you are and remain a beneficiary, for homes of fewer than five units (12 U.S.C. §1701j-3(d)(8)). The federal regulation adds that you remain the occupant, and that you not refuse the lender a reasonable way to learn of any later transfer.
Bank and brokerage accounts. The firm retitles the account in the trust's name; ask for its form for trust accounts. Keep the confirmation it sends back. It is dated, and it is on the firm's letterhead, not yours.
Retirement accounts and life insurance are different. They pass to the beneficiaries named on the account or policy, and those designations typically override what a will says. Whether the trust or a person should be named is a question for whoever drafts the trust. What matters is that you check the forms, because they decide where that money goes.
What you leave out. Write a short list of what you deliberately did not move — the car, tools, household contents — and why. It is not a legal requirement. It is evidence, later, that the rest was done on purpose.
The pour-over will is a net, not a substitute
A pour-over will is a short will that leaves anything outside the trust to the trustee. Michigan allows exactly that (MCL 700.2511): property left by will to the trustee of a trust you created during your lifetime becomes part of the trust and is handled under its terms, including later amendments.
But a pour-over will is still a will. Whatever it catches is passing under a will, through the process the trust was meant to avoid for everything else. It is the safety net for what you forgot, and the more it has to catch, the less the trust did.
Does a later will override a trust?
This is the question families fight over, usually after a parent signed a new will late in life. The honest answer has two halves.
Property already in the trust is not passing under anyone's will. A new will replaces an older will's instructions for property in your own name. A house deeded to the trustee years earlier is no longer in that pile, so a will that simply leaves "everything" differently does not, on its own terms, reach it.
But a revocable trust can be changed, and in Michigan the route is wider than the trust's own form. Under MCL 700.7602, a settlor may amend or revoke a revocable trust by substantially following the method the trust itself provides. If the trust provides no method, or its method is not expressly made exclusive, a written trust can also be changed by "another writing manifesting clear and convincing evidence" of the intent to revoke or amend it. A later will that clearly says it is changing the trust could be that writing; one that never mentions the trust is a much weaker candidate.
Two practical consequences. Read the amendment clause of your trust: whether its method is exclusive is a sentence someone may one day argue about. And the capacity needed to create, amend, revoke or add property to a revocable trust is the same as the capacity needed to make a will (MCL 700.7601). Funding is cheapest, and least open to argument, while nobody could question your capacity. Other states word these rules differently.
The records that hold up are the ones somebody else made
If a trust is ever challenged, the dates that matter are the ones you did not write: the recording date the county stamped on the deed, the brokerage's letter confirming the new registration, the attorney's file from the signing. Each was made by someone with no stake in a family dispute, before there was one. A binder of instructions shows what you intended. A recorded deed shows what you did, and when.
A short checklist
- Sign the trust.
- Deed the house to yourself as trustee, and record the deed. Keep the recorded copy.
- Retitle bank and brokerage accounts. Keep each firm's confirmation.
- Check the beneficiary forms on retirement accounts and life insurance.
- List what you left out on purpose.
- Read the trust's amendment clause, and put the binder where someone will find it.
Where to read the primary sources
- MCL 700.7401 — how a trust is created, and that a trustee has no duties until property is transferred.
- MCL 700.7602 — revoking or amending a revocable trust, including "another writing".
- MCL 700.7601 — capacity to create, amend or add property to a revocable trust.
- MCL 700.2511 — leaving property by will to a trust (the pour-over will).
- MCL 600.2567 — register of deeds fees.
- MCL 211.27a — what is and is not a transfer of ownership for property tax, subsection (7)(g).
- 12 U.S.C. §1701j-3 and 12 CFR 191.5 — due-on-sale clauses and the living-trust exception.
- FINRA: Investment accounts — the section on wills, trusts and assets that pass by beneficiary designation.
What this page is not
It is not legal or tax advice, and it does not replace the person who drafts your trust. Whether a particular will changed a particular trust is decided on the exact words of both documents and on the facts of the day it was signed. What this page can do is show you which step turns a trust from a binder into something that works, so that it gets done while it is still a dull afternoon's work.
