A trust is a legal arrangement where one person, the trustee, holds and manages property for the benefit of another person or group of people, the beneficiaries. Trusts are commonly used in estate planning to help manage and distribute assets and to minimize taxes and probate costs. But what does it mean to fund a trust, and how do you go about funding a trust in Illinois? Consulting with an estate planning attorney can provide valuable guidance in this process.

How to Create a Trust in Illinois

There are a couple of ways to create a trust in Illinois to avoid the probate process and probate court. The first is by hiring an attorney. However, attorneys can be expensive and aren't always available to help. The second, easier, and more affordable way is by using GoGo Estate. At GoGo Estate, you can create a trust in Illinois in minutes with our unique online approach (purchase one of our Standard Trust Plans or Blended Family Plans). Once your plan is complete, all you'll have to do is get it signed and funded.

On that note, every Illinois trust must be funded in order to be effective. Below, you'll find how to appropriately fund your trust in Illinois to avoid have to go to probate court.

What Does it Mean to Fund a Revocable Living Trust?

Funding a trust means transferring assets into the trust to be managed and distributed according to the terms of the trust agreement. The assets transferred to the trust are known as trust property and are owned by the trust, not by the individual who created the trust. The trustee manages the trust property for the benefit of the beneficiaries according to the terms of the trust.

Funding a trust is an important step in the estate planning process because it ensures that your assets will be managed and distributed according to your wishes, and it can help avoid the probate process and minimize estate taxes.

Steps for Funding a Trust in Illinois

Funding a trust in Illinois involves several steps. It’s important to note that the process may differ if you are dealing with an irrevocable trust, which cannot be modified or revoked once it is created. Here’s what you need to know:

Step 1: Identify the Assets You Want to Transfer to the Trust

The first step in funding a trust is to identify the assets you want to transfer to the trust. These may include real estate, bank accounts, investments, business interests, and personal property, all of which should be clearly outlined in the trust document.

Step 2: Review the Trust Document

Review the living trust agreement to ensure that the assets you want to transfer are eligible to be held in the trust and that the transfer is consistent with the terms of the trust.

Step 3: Transfer the Assets into the Trust Property

Once you have identified the assets you want to transfer, you can transfer them to the trust. It’s also important to designate a successor trustee who will manage the trust in the event of your incapacity or death. Depending on the type of asset, this may involve signing over the title or ownership documents, changing the beneficiary designation, or re-registering the asset in the name of the trust.

For example, if you want to transfer real estate to the trust, you will need to sign a new deed that transfers ownership of the property to the trust. You may also need to record the new deed with the county recorder’s office.

If you want to transfer bank accounts to the trust, you will need to re-register the accounts in the name of the trust. You may need to provide a copy of the trust agreement and other documentation to the bank.

Step 4: Update Related Accounts and Documents

After you have transferred the assets to the trust, you need to update any related accounts or documents to reflect the transfer and ensure that your financial affairs are in order. For example, you may need to update your beneficiary designations on retirement accounts or life insurance policies to name the trust as the beneficiary.

You may also need to update your will or other estate planning documents to reflect the trust.

Step 5: Keep Records of Transfer

It’s important to keep records of the transfer and any related transactions. Proper documentation can also help in achieving estate tax savings by providing clear evidence of asset transfers and valuations. This includes documentation of the transfer, such as the new deed for real estate, as well as any appraisals or valuations of assets.

Step 6: Use GoGo Estate's Funding Documentation

Funding a trust can be complex, especially if you have a larger or diverse portfolio of assets. Luckily, GoGo Estate provides you with appropriate funding documentation so that you can know how to properly transfer assets into your trust or designate beneficiaries. If done properly and in compliance with any legal or tax requirements, the assets in your trust will avoid the probate process.

There may be things that GoGo Estate cannot do at this time, however. For example, if you are a business owner and wish to transfer your business interest into the trust, you may need to consult with a business valuation expert to determine the value of your interests. You may also consult with a tax professional to ensure that the transfer does not trigger any tax implications. You should also probably consider talking with an attorney who can draft up the transfer documentation.

Conclusion

Funding a revocable living trust is an important step in the estate planning process that can help ensure that your assets are managed and distributed according to your wishes. The specific steps for funding a revocable trust in Illinois will depend on the type of trust you have and the assets you want to transfer. It’s important to review the trust agreement and seek professional guidance if necessary to ensure that the transfer is done properly and in compliance with any legal or tax requirements.

It’s also important to remember that funding a trust is an ongoing process. As you acquire new assets or dispose of existing assets, you will need to update the trust accordingly. It’s important to review your trust regularly to ensure that it reflects your current wishes and asset holdings.

If you have multiple trusts or have created trusts in other states, it’s important to coordinate the funding of the trusts to ensure that your estate plan is integrated and effective.

Overall, funding a trust is a critical step in the estate planning process that can help ensure that your assets are managed and distributed according to your wishes. If you are considering setting up a trust or have questions about funding an existing trust in Illinois, don’t hesitate to refer to your GoGo Estate documentation or ask an attorney about how to fund your trust. With the right help, you can protect your assets and provide for your loved ones with confidence.