Funding a Trust: Deed Transfers, Account Retitling & Common Mistakes

The most common estate planning failure isn’t a badly drafted document; it’s a perfectly drafted trust that was never funded. An unfunded trust is a legal fiction. It doesn’t avoid probate, doesn’t protect assets, and doesn’t accomplish any of the goals it was designed to achieve. The assets remain in the settlor ’s individual name and pass through the estate just as if the trust didn’t exist.

What “Funding” Means

Funding a trust means transferring ownership of your assets from your individual name (or joint names) into the name of the trust. Each type of asset requires a different transfer mechanism:

• Real estate: A new deed from you individually to you as trustee
• Bank accounts: Retitling at the institution, or opening new accounts in the trust’s name
• Brokerage accounts: Re-registration with your broker
• Business interests: Assignment of LLC membership interests or stock certificates
• Personal property: A general assignment document (often included with the trust)

Transferring Real Estate to a Trust

This is where most Pennsylvania-specific issues arise. To transfer real property to your trust, you execute a new deed conveying the property from yourself individually to yourself as trustee of the trust.

Realty transfer tax: Transfers to a revocable living trust are exempt from Pennsylvania’s realty transfer tax under 72 P.S. § 8102-C.3; but only if the transfer is to a trust where the settlor is the beneficiary during the settlor’s lifetime. The exemption also applies to transfers from the trust back to the settlor and to transfers upon the settlor’s death to designated beneficiaries of the trust. The transfer tax statement of value form must still be filed, claiming the exemption.

Recording : The deed must be recorded at the Bucks County Recorder of Deeds with a Statement of Value form, Certification of Residence, and applicable recording fees.

Title insurance : Transferring property to your own trust generally does not void your existing title insurance policy, but you should notify your title insurer. Some policies require formal endorsement.

Mortgage considerations: Most residential mortgages contain a “due on sale” clause. Federal law (the Garn-St. Germain Act, 12 U.S.C. § 1701j-3) prevents lenders from accelerating a mortgage when the borrower transfers the property to a trust in which the borrower remains a beneficiary. However, you should still notify your lender, and the borrower should remain personally liable on the note.

Retitling Financial Accounts

Each financial institution has its own process, but generally you’ll need to provide a certification of trust (20 Pa.C.S. § 7790.3) rather than the full trust document. The certification confirms the trust exists, identifies the trustees, and states their powers. Pennsylvania law protects institutions that rely on a certification in good faith.

Assets You Should NOT Fund Into a Trust

• Retirement accounts (IRAs, 401(k)s): Retitling a retirement account into a trust triggers immediate full taxation of the account. Instead, you name the trust as beneficiary ; see our conduit vs. accumulation trust guide
• Health Savings Accounts (HSAs): Must be held by the individual; transferring ownership triggers tax
• Vehicles: Generally not worth the hassle of retitling for insurance and liability reasons

Common Mistakes

• Never funding at all: The attorney prepares the trust, the client takes it home, and no assets are ever transferred. The trust sits in a drawer while the estate goes through probate
• Funding and then acquiring new assets individually: Every time you buy a new property, open a new account, or acquire a significant asset, it needs to go into the trust (or be designated to pass to the trust)
• Transferring property with an existing lien without notifying the lender
• Failing to update homestead exemptions or property tax records after the deed transfer
• Using a quitclaim deed: In Pennsylvania, a quitclaim deed doesn’t convey after-acquired title and provides no warranties. Use a special warranty deed for trust transfers

Statutory content on this page was last verified against Pennsylvania statutes (20 Pa.C.S.; 72 P.S. Art. XXI): February 2026 . If you are reading this significantly after that date, confirm key provisions with current statute text or contact our office.