What Happens if You Don't Fund a Trust?

 Posted on January 22, 2026 in Estate Planning / Probate

According to the American Association of Retired Persons, nearly 60 percent of Americans do not have a will or any estate planning documents. But creating a trust is only half the work. Many people spend time and money setting up a trust, but never complete the critical second step of funding it. An unfunded trust cannot do its job. 

Funding a trust means transferring ownership of your assets into the trust's name. Without this transfer, your trust remains an empty legal shell. If you have questions about properly funding your trust in 2026, our DuPage County estate planning lawyer can guide you through the process and make sure your estate plan works as intended. 

What Does It Mean to Fund a Trust?

Funding a trust means changing the ownership of your assets from your personal name to the name of the trust. For example, if you own a home in your name and you want it to be part of your trust, you must execute and record a new deed that transfers the property to your trust. The same process applies to bank accounts, brokerage accounts, and other assets. 

Illinois law recognizes trusts under the Illinois Trust Code, 760 ILCS 3/101. A trust only controls the assets that have been properly transferred into it; the trust document itself is simply a set of instructions. Those instructions only apply to assets that are actually owned by the trust. 

What Problems Does an Unfunded Trust Cause?

An unfunded trust creates several serious problems. 

Probate

The most significant issue is that your assets will go through probate court instead of passing directly to your beneficiaries through the trust. Probate is the court process for settling an estate after someone dies. It can take months or even years to complete. Probate also requires court fees, attorney fees, and other costs that could have been avoided. 

Incorrect Beneficiaries

Your assets might not go to the people you intended. If your trust is not funded, the trust instructions become meaningless. Instead, your assets will be distributed according to your will if you have one. If you do not have a will, Illinois intestacy laws will determine who inherits your property. These laws follow a strict formula based on family relationships and might not match your wishes. 

Loss of Privacy

Privacy is another concern. Probate is a public process. Anyone can access court records to see what assets you owned and who inherited them. A properly funded trust allows your estate to be settled privately. 

Can You Fix an Unfunded Trust?

Yes, you can fund a trust at any time while you are alive and mentally competent. Many people create a trust and then gradually transfer assets into it over time. The important thing is to make sure the funding process is complete before you become incapacitated or pass away. 

Review your trust regularly with your attorney. Life changes such as buying a new home, opening new bank accounts, or receiving an inheritance all require attention. Each new asset should be evaluated to determine if it should be transferred into your trust. Your estate planning lawyer can help you stay on top of these changes. 

Some assets should not be placed in a trust. Retirement accounts like 401(k)s and IRAs typically should not be retitled in the trust's name because of tax consequences. Instead, you can name the trust as the beneficiary of these accounts. Your attorney can advise you on the best approach for each type of asset.

Call a Geneva, IL Estate Planning Attorney Today

An unfunded trust defeats the purpose of estate planning. Don’t let your hard work go to waste. Contact DLAW, PC at 331-222-7978 today to speak with a DuPage County estate planning lawyer who can review your trust and make sure it is properly funded. 

Our firm offers free consultations and has over 25 years of experience helping families in Illinois protect their assets and plan for the future.