Trust Funding Checklist: How to Properly Fund Your Illinois Trust

Creating a trust is a significant step in safeguarding your assets and ensuring your wishes are carried out, but establishing the trust is only half the battle. Unfortunately, many people overlook funding their trusts, which can jeopardize the very goals they hoped to achieve. Working with an experienced estate planning attorney in Illinois can help ensure your trust is fully funded and your estate plan works as intended.

At Illinois Estate Law, Chicago revocable trust lawyer Mary Liberty understands the common pitfalls Illinois residents face when funding their trusts and provides step-by-step guidance to ensure every asset is properly accounted for.

Whether you're adding real estate, bank accounts, or personal property, Mary Liberty and the team at Illinois Estate Law are here to help. Call 312-373-0731 today to ensure your trust is set up for success.

What Is Trust Funding and Why Does It Matter?

Trust funding means transferring legal ownership of assets into your trust's name. You retitle property deeds, change account registrations, and update beneficiary designations. The trust becomes the legal owner while you maintain control as trustee.

Under Illinois law, only properly titled assets avoid probate. Assets in your personal name require probate at the Cook County Probate Division at 50 West Washington Street in downtown Chicago. According to the Illinois State Bar Association, funding failures are the most common reason families end up in probate despite having trusts.

An unfunded trust often fails to achieve your estate planning goals. You paid an attorney to draft documents and signed everything properly. But without transferring asset ownership, the trust holds nothing and protects nothing. Your family discovers this problem only after your death.

Illinois Probate Requirements

Illinois probate includes a mandatory claims period of at least six months from the date of publication, during which creditor claims must be resolved before closing the estate. The estate representative must wait six months after publishing notice to creditors before distributing assets. During this period, they handle creditor claims, court filings, and distributions under court supervision.

Chicago families with estates exceeding $150,000 must go through full probate proceedings at the Richard J. Daley Center. Illinois provides a small estate affidavit under 755 ILCS 5/25-1, but this only applies to estates valued at $150,000 or less with no real property. Homes in Lakeview, River North, and Gold Coast, where values routinely exceed $500,000, require probate unless properly funded into trusts.

The probate process involves filing petitions, publishing notices, attending hearings, and obtaining court orders. Attorney fees and court costs typically run several thousand dollars, and the process remains public record at the courthouse. Illinois also imposes an estate tax on estates exceeding $4 million, with rates up to sixteen percent.

Key Takeaway: Illinois probate takes at least six months and applies to estates over $150,000 or those with real estate. Chicago-area properties typically exceed this threshold, making trust funding essential to avoid probate.

Real Estate Transfers

Real property requires a recorded deed to change legal ownership. You create a new deed conveying property from your personal name to "[Your Name], Trustee of [Trust Name] dated [Date]." This exact wording matters because courts distinguish between different forms of trust names.

Record the deed at the Cook County Clerk's Recording Division at 118 N. Clark Street, Room 120, Chicago, IL 60602. The office is open Monday through Friday from 9 AM to 5 PM. You must include the property's PIN and the complete legal description from your current deed.

Illinois and Cook County impose transfer taxes on conveyances, but transfers into revocable trusts where you remain a beneficiary are typically exempt. You must complete a Transfer Tax Declaration through the Illinois Department of Revenue's MyDec portal, even for exempt transfers.

Most mortgage lenders allow transfers into revocable trusts without triggering due-on-sale clauses under federal law. Contact your lender before transferring mortgaged property to ensure compliance. Title insurance typically remains valid, but verify with your title company.

For Chicago properties in Bucktown, Logan Square, and Wicker Park, proper deed transfers protect equity representing decades of investment. Real estate values in these areas have appreciated significantly, making proper trust funding crucial.

Bank Accounts and Brokerage Accounts

Financial accounts require in-person retitling at your bank or brokerage. Schedule appointments with each institution. Bring your trust certification, a shortened document proving the trust exists without revealing all terms, along with photo identification.

Banks in Chicago's Loop and throughout Cook County have staff trained to handle trust transfers. You retitle accounts to "[Your Name], Trustee of [Trust Name]." The bank may create new account numbers or update registrations. The process takes 30 to 45 minutes per institution.

Brokerage accounts follow similar procedures. Investment positions transfer without triggering taxable events because you remain the beneficial owner. The transfer is a change in form of ownership, not a sale. Major banks in downtown Chicago process hundreds of trust transfers annually.

Key Takeaway: Banks and brokerages retitle accounts in person using your trust certification. Bring this document to financial institutions in Chicago to change ownership without disrupting access or triggering tax consequences.

Revocable Trust Lawyer in Chicago – Mary Liberty

Mary Liberty

Mary Liberty is a Chicago revocable trust attorney dedicated to making high-quality legal planning simple, accessible, and stress-free for families. Through her fully virtual, flat-fee law practice, she helps clients create wills, trusts, and comprehensive estate plans without the confusion or unpredictability of traditional hourly billing. Known for her clarity, responsiveness, and approachable style, Mary ensures every client feels supported and informed from the first consultation to final signing.

Mary serves a wide range of individuals, from young parents naming guardians to blended families navigating complex dynamics, always with precision, empathy, and transparent communication. Mary is admitted to practice in Illinois and is a graduate of Loyola University Chicago School of Law (Cum Laude) and the University of Illinois Urbana-Champaign.

Retirement Accounts and Beneficiary Designations

Never retitle 401(k) plans, IRAs, or pension accounts into your trust. These accounts receive tax-favored treatment under federal law. Transferring ownership would trigger immediate income taxation on the entire balance, plus ten percent penalties if you're under age 59½.

Instead, update beneficiary designations to coordinate with your trust plan. For married couples, name your spouse as the primary beneficiary to preserve favorable rollover rules. Your trust serves as a contingent beneficiary. Single individuals may benefit from naming the trust as the primary beneficiary to ensure funds pass according to trust terms.

Contact your plan administrator or IRA custodian to update designations. Many Chicago employers, including hospitals, universities, and corporate headquarters in the Loop, provide online systems for updating beneficiaries. Complete these updates promptly.

Cars, boats, and RVs require title transfers through the Illinois Secretary of State. Visit facilities in Chicago, including 17 N. State Street downtown or 5401 N. Elston Avenue. Bring your current title, trust certification, and identification. The Secretary of State issues a new title in the trust's name.

Business ownership requires special handling. Single-member LLCs need operating agreement amendments and assignment documents. File amendments with the Illinois Secretary of State's Department of Business Services at 69 W. Washington Street, Suite 1240, Chicago, IL 60602.

Multi-member businesses require review of operating agreements for transfer restrictions and partner consent requirements. Corporate stock transfers are made by endorsing certificates and issuing new ones to the trust. For Chicago businesses, a proper transfer ensures continuity if you become incapacitated.

Key Takeaway: Business transfers require amendments to operating agreements and compliance with partner consent requirements. Work with attorneys to transfer interests without triggering unintended consequences.

Digital Assets and Tangible Property

Illinois enacted the Fiduciary Access to Digital Assets Act under 755 ILCS 70/, giving fiduciaries legal authority to access digital assets. Designate legacy contacts on Google, Facebook, and Apple accounts. Create a secure list of usernames, passwords, and cryptocurrency wallet access codes.

For tangible personal property, Illinois law allows a separate written memorandum under 755 ILCS 5/4-10. This memorandum lists jewelry, artwork, and collections. It can be changed without amending your trust. Include detailed descriptions to prevent beneficiary disputes. Chicago has numerous appraisal services that can value estates for planning purposes.

Common Trust Funding Mistakes to Avoid

The most serious mistake is creating a trust but never funding it. Unfunded trusts typically fail to avoid probate because only assets properly titled in the trust's name are controlled by the trust under Illinois law. The trust document sits in a drawer while assets remain in personal name, guaranteeing probate at the Richard J. Daley Center. Your family pays for proceedings that could have been completely avoided.

Incorrect titling creates similar problems. Transferring property to "The John Smith Trust" instead of "John Smith, Trustee of The John Smith Living Trust dated January 1, 2020" may fail. Illinois courts treat these as different legal entities.

Partial funding leaves some assets in trust while others remain in the personal name. This forces families through probate for unfunded portions. Transferring your home but not bank accounts means probate is required to access cash for immediate expenses.

Forgetting to update funding after acquiring a new property creates unexpected probate. If you buy a vacation home in Illinois and forget to transfer the deed, that property must go through probate despite your existing trust.

Naming your trust incorrectly on beneficiary designations causes confusion. Life insurance payable to "John Smith Trust" may not be recognized as "The John Smith Living Trust dated January 1, 2020." Insurance companies require exact name matches.

When to Review and Update Your Trust Funding

Trust funding is not a one-time event. Review and update as your life changes and you acquire new assets. Marriage, divorce, births, home purchases, and business formation all require trust updates.

Review trust funding at least annually. Create a spreadsheet listing all assets and verify each is properly titled. This takes less than an hour but prevents costly mistakes.

Major life events demand immediate updates. When you buy property in Chicago, transfer the deed within 30 days. When you open accounts, retitle them within 30 days. Estate planning attorneys in Chicago recommend comprehensive review appointments every three to five years.

Key Takeaway: Review trust funding annually and update immediately after major life events. Regular reviews ensure new assets receive trust protection and prevent gaps that force families into probate.

Get Help from a Chicago Estate Planning Attorney

Proper trust funding protects your family from probate court and preserves your estate. Technical requirements for transferring real estate, retitling accounts, and updating beneficiaries demand careful attention. One mistake leaves assets exposed to probate.

At Illinois Estate Law, we handle deed preparation and recording at the Cook County Clerk's office, coordinate with financial institutions throughout Cook County, and ensure business interests are properly structured. We provide ongoing support to update funding as your life changes.

Contact Illinois Estate Law today for a free consultation. We serve clients throughout Lincoln Park, Lakeview, the Loop, and across Chicago and Cook County. Call 312-373-0731 to schedule your appointment.