Common Trust Funding Mistakes And How To Avoid Them

Creating a trust can be a smart move to help manage and protect your assets, both while you’re alive and after you’re gone. It allows you to pass down property, control how money is distributed, and reduce court involvement. But for a trust to actually do what it’s supposed to do, it needs to be funded properly. That means making sure the trust owns the assets, not you personally. Unfortunately, this is where many people slip up.

Even with the best intentions, trust funding mistakes happen more often than you’d think. These missteps can cause delays, increase legal fees, or even undo everything the trust was created to protect. The good news is that most of these errors are easy to avoid with a little attention to detail and the right guidance. Let’s take a look at a few common trust funding mistakes that can easily derail your estate plans if you’re not careful.

Not Transferring Assets To The Trust

One of the biggest and most frequent mistakes people make is forgetting to move their assets into the trust. Just creating the trust document doesn’t automatically do that. It’s like setting up a storage locker but never putting anything inside. If something still belongs in your name when you pass, it might have to go through probate, even if the trust was set up specifically to avoid that.

To properly transfer assets to a trust, you typically need to change the title of the asset so the trust becomes the new owner. This step depends on the type of asset. For example:

– Real estate usually requires a new deed showing the trust as the owner

– Bank accounts might need paperwork submitted to the branch

– Investment accounts may involve changing the ownership structure with your brokerage

– Business interests must be reassigned using specific legal documents

– Tangible personal property like art, jewelry, or vehicles might need a signed assignment document

A lot of times, people miss smaller or less obvious items. Maybe they transferred the house but left out the vacation home. Or they assumed that simply listing an asset in the trust document was enough. It’s not. The law in Chicago is clear that the trust must actually own the asset before it can control how it is handled during probate or administration.

Incorrectly Titled Assets

Even when you do transfer assets to a trust, it’s easy to get the naming wrong. This might seem minor, but it can cause problems down the line if the asset doesn’t clearly belong to the trust. For example, putting “John Smith, Trustee” instead of “John Smith, Trustee of the Smith Family Trust dated March 1, 2020” can create confusion or even lead to legal disputes.

Correct asset titling gives real legal power to the trust. If the title isn’t accurate, it might still be considered part of your personal estate. That means the asset could go through probate even if you meant for it to be handled by the trust.

To make sure titles are properly aligned:

– Always use the full legal name and the date of the trust

– Double-check with banks and financial institutions that their records match the trust

– Update vehicle titles, property deeds, and stock certificates accurately

– Review and update beneficiary designations to make sure they match the trust’s intent

Getting help from a trust attorney can make a big difference when retitling assets. Someone with experience in Chicago will understand what local institutions typically require and ensure everything is done by the book.

Forgetting To Update The Trust

Even if your trust was created and funded correctly years ago, things can change. Life events can outdate your trust and make parts of it no longer relevant. Big changes like getting married, divorced, having more children, or gaining or losing assets can impact what you want your trust to say.

In Chicago, estate planning laws don’t automatically adjust for your circumstances. It’s up to you to make updates. If you forget, your trust might not reflect your wishes anymore. That could result in someone you no longer want involved ending up with control or property, or someone you care about being left out.

Here’s a list of events that may call for a trust update:

– Marriage or divorce (either yours or a beneficiary’s)

– Birth or adoption of a child or grandchild

– Death of a named trustee or beneficiary

– Selling or purchasing a large asset

– Moving out of Illinois or acquiring property in another state

– Changes in your health that affect your long-term plans

Reviewing your trust every few years or after major life changes is a small task that can help avoid major headaches. It’s a reliable way to keep your estate plan aligned with your real intentions.

Not Consulting A Trust Attorney

Trying to set up and maintain a trust on your own can be tricky. While it might seem simple, managing different types of assets or family needs without legal guidance often leads to overlooked details. Trusts might be filled out incorrectly, supporting documents missed, or steps skipped.

A trust attorney helps make sure all moving parts are legally sound. In Illinois, where every county may have its own small variations in procedure, having a local professional can go a long way. They make sure the wording of your trust, its funding, and how it interacts with other documents are all consistent.

Some tasks a trust attorney can handle include:

– Verifying important assets are correctly transferred into the trust

– Keeping supporting paperwork organized and easy to manage

– Making sure trustees understand their duties

– Matching the trust structure with Illinois law

– Spotting red flags that could create problems for your heirs

In Chicago, handling these details properly is key. Smaller errors can turn into bigger problems if left alone. With professional support, you lower the risk of surprises your family doesn’t need to deal with.

Getting Your Trust to Work the Way You Want

Setting up a trust is a big step in planning your estate, but just having it drafted isn’t enough. You’ve got to keep it current and be sure it’s fully funded with the proper assets titled in the trust’s name. Overlooking just one account or mislabeling one asset can cause avoidable complications when it counts most.

The biggest mistakes happen when people forget to fund the trust after creation, title assets incorrectly, skip important updates due to life changes, or try to handle everything without legal help.

These are all problems we help clients avoid every day. The goal is to make your trust useful, clear, and easy for your loved ones to manage—not something that creates confusion or court cases. A solid plan grows with you and stays in tune with your life’s changes.

With a little planning, and the right support, your trust can be one of the most helpful tools in protecting your family’s future. Marshiano Law Group is here to help you get it right from the start and keep it right over time.

To safeguard the future of your loved ones and make sure your wishes are carried out without complications, working with an experienced trust attorney can make all the difference. At Marshiano Law Group, our Chicago-based team is here to help you build a trust that fits your life and follows Illinois law.