What Happens to an Unfunded Trust?

Web Admin - Wednesday, June 11, 2014

illinois unfunded trust lawyerPreparing estate planning documents is a key step in ensuring that a person’s final wishes are respected throughout the probate process, and a recent survey shows that the majority of Americans understand this fact. However, when setting up a trust, preparing the documents does not finish the process. If the person who sets up the trust fails to properly transfer their assets into it, it can become an underfunded or unfunded trust. This lack of proper funding can lead to a failure of a person’s estate plan, and also increases the potential for disputes throughout the process of probating the estate.

What an Unfunded Trust Is

A trust is a legal construction that involves a settlor, a trustee, and a beneficiary. The settlor creates the trust and transfers assets into it. The trustee manages the assets in the trust and they do so with the best interests of the beneficiary in mind. The drafting of the trust instrument is a key part of this process. That document will outline many of the legal rights and responsibilities of the trustee and the beneficiary, and it can provide instructions for the trustee to follow.

Many people think that once they draft the trust document, the process is complete and the trustee will be able to carry out their desires. This is not the case. The person will also need to legally transfer the assets to the trust. Without doing so, the trustee may not actually be able to control the assets and distribute them in accordance with the settlor’s instructions.

The Consequences of Improper Trust Funding

Improper trust funding can lead to disputes between heirs throughout the probate process. This is because if the settlor does not properly fund the trust the trustee has no legal authority to carry out the wishes of the settlor. Instead, the assets would pass through any will that the settlor left behind, or they may pass through right of survivorship, the default way that courts distribute assets. This means that the beneficiaries of the trust may end up in a legal battle with the heirs listed in the will over their rights to the assets.

Additionally, even if the settlor did not leave a will and there are no disputes, the assets will still need to go through the state probate process to be distributed. This can lengthen the amount of time it takes to wind down a person’s affairs and tends to be a less convenient process than if the trust had been properly funded.

If you are thinking about how best to carry out your final wishes, seek out an Illinois estate planning attorney for help. Our skilled team of lawyers helps clients in northwest suburban towns like Mount Prospect, Arlington Heights, and Schaumburg understand their estate planning options and create the best plan for themselves.

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.

Using Virtual Representation Effectively in Illinois

Web Admin - Wednesday, November 06, 2013

When a trust is created, many different people may have an interest in how it is administered. For example, it is common for the trust documents to allow one person to benefit immediately (i.e. a spouse), with others to receive the assets upon that beneficiary’s death (i.e. the children). Those who are set to inherit later obviously have a stake in how the trust is managed. Mismanagement may affect their interests.

But what happens if those future beneficiaries are children, disabled, or otherwise unable to effectively advocate for their interests? One solution is to go to court and have a judge appoint a guardian to act in their interest. But that process often takes significant time, is costly, and may be ineffective if the future beneficiaries are unknown, like unborn children.

Reaching an Agreement

Is there a way to settle disagreements involving a trust without going to court? Fortunately, there is.

Illinois has a “virtual representation” statute which allows select individuals to represent the interests of others to craft agreements, often dealing with disputes regarding a trust. Essentially, this law allows different parties to create agreements which avoid litigation and are binding on some future beneficiaries.

When used properly, these settlement agreements can solve ambiguities in the trust document, delineate duties of the trustee, and account for many other administrative issues. As a result, these agreements can be incredibly efficient, eliminating the risk of prolonged legal battles down the road.

Many Illinois residents are well served by exploring use of virtual representation to reach a nonjudicial agreement. However, it is important to proceed cautiously, usually with the aid of an attorney. When not created properly, the agreement may not hold up. Under the law, to be valid the primary beneficiaries must all be adults and legally competent. The trustee must also be a party to the agreement. Notably, the agreement cannot change the terms of the trust. In addition, the primary beneficiary must not have a conflict of interest with those who are being bound. To qualify as a primary beneficiary the individual must currently receive income or principal from the trust. Alternatively, the individual must be eligible to receive a distribution of principal at a certain date.

Learn More

Do you want to learn more about using virtual representation effectively? These issues are quite complex, and so it is helpful to contact a Palatine estate planning attorney to make sure you are doing everything in your power to protect your long-term interests. The law office of Drost, Gilbert, Andrew & Apicella, LLC serves clients in Palatine, Arlington Heights, Crystal Lake and other suburban Chicago areas.

Recent Posts


denied insurance claims Illinois motorcycle accident lawyer Illinois construction accident attorney brain injury Illinois employment law attorney Crystal Lake accident attorney Illinois medical malpractice lawyers Palatine insurance lawyer traumatic brain injuries Barrington estate planning lawyer ObamaCare Inverness injury lawyer insurance claims federal crimes Rolling Meadows insurance attorney Long Grove real estate attorney field sobriety test Rolling Meadows real estate attorney Schaumburg criminal attorney Chicago will attorney Illinois wills and trusts digital assets, digital fiduciary, estate planning, digital content, Long Grove estate planning lawyers eluding a police officer Schaumburg corporate attorney workplace sexual harassment Barrington Illinois estate planning lawyer Illinois probate lawyer car accident Whistleblower Claims Arlington Heights criminal lawyer insurance agent negligence liability claims Arlington Heights wills and trusts lawyer Inverness insurance attorney wills and trusts first degree murder insurance claim denial Rolling Meadows drug defense attorney Barrington real estate lawyer suspended license Chicago employment lawyer estate plan dram shop law employee rights reckless homicide child safety Chicago insurance claim attorneys Palatine employment attorney workers comp Deer Park real estate law firm Illinois jet ski accident lawyer Illinois elder law attorney bike accident Barrington litigation attorney whistleblower protections Rolling Meadows personal injury lawyers Illinois mortgages car crashes fiduciary rule Long Grove estate planning Palatine punch death criminal law insurance adjusters murder charges Colin Gilbert Schaumburg construction accident lawyer irrevocable trust digital information Schaumburg estate planning lawyer distracted driving accidents gift taxes Illinois traffic attorney IRA benefits living trust vs will bicycle dooring accidents hiring employees hands free device Palatine corporate law attorneys drug crime Illinois real estate life insurance claims School Visitation Rights Act Forcible Entry Rolling Meadows employment attorney Schaumburg traffic lawyer Home Sale Contingencies liability Illinois car accident attorney internet auto accidents uninsured motorist motorcycle accident lawyer wrongful death insurance denial appeals employee discrimination Buffalo Grove personal injury attorney Illinois workplace discrimination attorney rumble strips distracted driving accident victims Transfer on Death Instrument Barrington injury attorney work unions Rolling Meadows tax attorney Crystal Lake insurance lawyer Barrington boating accident attorney privacy Palatine traffic lawyer Arlington Heights wills and trusts lawyers Colin H. Gilbert Des Plaines claims law firm surgical mistakes Barrington workers compensation attorney Landlord Tenant Ordinance Jay Andrew swimming pools drug crimes Illinois insurance disputes blood alcohol content pedestrian-automobile accident forming a corporation in Illinois elder abuse BAIID car crash Illinois red light cameras Policy Cancellation Self-Directed IRA Accounts Rolling Meadows traffic law firm pain and suffering owner responsibility Mount Prospect real estate lawyer trauma after an accident right to work independent contractor attorney fees texting while driving estate planning, death tax, succession plans, business estate plans, Barrington estate planning lawyers Rolling Meadows estate planning attorney food poisoning Buffalo Grove employment lawyer Palatine employment law lawyer South Barrington real estate lawyer estate attorney rollover accidents Illinois insurance claim dispute lawyers traffic accidents Palatine personal injury lawyer institutional trustee Arlington Heights insurance attorney Illinois medical malpractice case Illinois job attorney Rolling Meadows DUI lawyer construction accidents Mount Prospect elder law attorney Deer Park workers compensation lawyer Illinois Smoke Detector Act Arlington Heights car accident lawyer Des Plaines medical malpractice attorney Palatine civil litigation lawyer Schaumburg insurance lawyers Super Mario personal injury attorney capital gains tax Illinois personal injury lawyers low-ball insurance settlement probate minimum wage pay when paid contract traffic violations defense Inverness estate planning lawyer Illinois Workers’ Compensation Commission Illinois insurance dispute lawyers Palatine real estate lawyer Chicago biking tips Illinois small business Barrington employment law firm boating under the influence Arlington Heights wills and trusts attorneys truck collisions Illinois registered agent Retaliatory Discharge Deer Park traffic accident attorney Long Grove estate planning attorney employment contract Barrington estate planning attorney Long Grove real estate lawyer Arlington Heights accident attorney Rolling Meadows traffic attorney deed transfer wage theft real estate rent to own real estate contracts traffic tickets subcontractor overtime pay Crystal Lake personal injury attorney unauthorized overtime Barrington employment law attorney mortgage Arlington Heights injury attorney rest breaks car accidents personal injury claims Rolling Meadows probate lawyer Chicago corporate attorney Schaumburg personal injury attorney Illinois Crystal Lake injury attorney Inverness probate lawyer Palatine elder law attorney Illinois estate planning Illinois driving without license Palatine estate planning lawyer car accident lawyers Illinois insurance claim dispute lawyer Rolling Meadows boating crash lawyer taxes medical malpractice claims Illinois insurance claim attorney rollover car crashes bad faith insurance claims Palatine drug lawyer DUI defense Inverness traffic law firm Schaumburg personal injury lawyer special needs trust small business filing a medical malpractice claim Illinois employee rights attorney. Illinois traffic attorneys Des Plaines Schaumburg real estate lawyer commercial real estate insurance dispute, insurance dispute lawyers, insurance claim denial, insurance claim delays, Rolling Meadows insurance dispute attorneys Des Plaines Traffic Lawyer installment contracts Crystal Lake estate planning lawyer Illinois Wage Payment and Collection Act IRS Illinois attorney Schaumburg wrongful death attorney preventing accidents employment lawyer estate planning paid sick leave Fourth of July Buffalo Grove criminal defense lawyer estate planning for college students Inverness real estate lawyer Schaumburg meal breaks Des Plaines injury law firm license reinstatement Palatine criminal defense lawyer Illinois workplace lawyer comparative negligence health insurance dispute Palatine business attorney DUI pet bites cell phone Des Plaines criminal attorney Schaumburg civil litigation attorney clemency appealing an insurance claim Schaumburg employment attorney trucking accidents license revocation Rolling Meadows insurance dispute lawyers, insurance dispute Illinois personal injury murder Illinois Transfer on Death Instrument Des Plaines pet law attorney Illinois employment laws Mt Prospect Attorney Illinois employment law Schaumburg criminal law attorney Des Plaines DUI attorney Des Plaines motorcycle accident attorney Schaumburg injury lawyer medication errors in terrorem provision insurance dispute bicycle accidents Arlington Heights traffic attorney Illinois workers compensation lawyer speeding Liquor Control Act automated cars Illinois home inspection Illinois lawyer life insurance Barrington personal injury attorney Crystal Lake medical malpractice law firm power of attorney for healthcare job lawyers LLCs license suspension Chicago car accident lawyer Rolling Meadows personal injury attorney Des Plaines real estate lawyer digital media accounts, estate planning, Arlington Heights estate planning attorney, trusts Illinois real estate lawyer healthcare Crystal Lake will lawyer wrongful termination Illinois living will Illinois civil litigation lawyer Illinois estate planning attorney traffic crimes mass shooting revenge porn medical malpractice texting and driving Des Plaines drug lawyer pregnant women living wills Arlington Heights employment law attorneys Long Grove estate planning attorneys Illinois workers compensation attorney Illinois DUI attorney investment property probate lawyer probate fees Crystal Lake pedestrian accident lawyer sexual harassment fault based insurance income distribution deducation real estate closing college kids Inverness personal injury attorney Rolling Meadows employment law attorney Illinois criminal defense attorney employment attorney Deer Park criminal attorney head on collisions insurance claim dispute dynasty trusts Illinois employment attorneys driving homestead rights Illinois trusts attorney Rolling Meadows medical malpractice lawyers Arlington Heights trucking lawyer Arlington Heights real estate lawyer icy parking lots estate tax wrongful termination, employment law, whistleblower protections, Illinois employment laws, discrimination in the workplace Barrington personal injury lawyer Palatine Attorney no contest clauses preventable medical errors Illinois personal injury lawyer spinal cord injuries Inverness accident lawyer Inverness DUI lawyer Do Not Resuscitate criminal record Chicago attorney DNR loopholes foreclosed rental property disability benefits Chicago lawyer products liability Inverness civil lawyer Crystal Lake car accident attorney criminal Crystal lake insurance dispute attorney digital assets Crystal Lake pet attorney Illinois speeding lawyer insurance dispute attorney Deer Park traffic lawyer elder law Arlington Heights medical malpractice lawyer Crystal Lake medical malpractice attorneys Food and Drug Administration's Food Safety Modernization Act Schaumburg probate attorney Rolling Meadows accident lawyer jet ski IRA trust transfer murder defense Kenilworth estate planning lawyer drug crimes lawyer boating DUI living trust marijuana crimes attorney pet law caretaker rights Inverness real estate attorney Rolling Meadows llinois Real Estate Lawyers Association condo underage DUI real estate attorney Kenilworth estate planning attorneys comp time marijuana Palatine law firm real estate zoning real estate attorneys civil litigation compensatory time Palatine workers compensation lawyer dog bites POA Joliet general practice lawyers commercial leases Palatine construction attorney Rolling Meadows criminal attorney severance agreements sexual images traffic deaths social media after death personal injury lawyer personal injury accidents Rolling Meadows car accident lawyers Rolling Meadows corporate lawyer Rolling Meadows Attorney crossover accidents controlled substance drug possession Palatine traffic accidents Illinois tax attorney Crystal Lake employment law attorney Crystal Lake traffic attorney problem employees life insurance policy breach of contract cell phone tower data Schaumburg drug defense lawyer changes to mortgage law Buffalo Grove corporate attorney drunk driving statistics Buffalo Grove real estate attorney Rolling Meadows personal injury lawyer Illinois traffic ticket lawyer insurance claim denials Buffalo Grove traffic attorney Schaumburg estate attorney Des Plaines insurance attorney Illinois business lawyer modern family estate planning traffic violations medical research Palatine probate lawyer Illinois estate planning law firm breathalyzer test Buffalo Grove law firm Thanksgiving Illinois medical malpractice claim Arlington Heights pedestrian accidents employment law, meal breaks, rest breaks, hotel employees, Des Plaines employment law attorneys guardianship attorney new real estate form boating accidents defective products lawyer Illinois insurance lawyer digital evidence Rolling Meadows insurance lawyer fatal car accidents Arlington Heights TBI attorney probate process agent Des Plaines civil attorney Des Plaines personal injury lawyers Deer Park motorcycle accident lawyer Buffalo Grove probate lawyer insurance claim dispute attorney involuntary manslaughter Detainer Actions civil litigation attorney Illinois pedestrian accident attorney Buffalo Grove car accident lawyer Illinois law Chicago traffic lawyer BUI Illinois LLC creation traffic offenses workers compensation Illinois injury lawyer slip and fall Crystal Lake civil litigation lawyer Illinois wrongful termination lawyer anesthesia errors Illinois pet lawyer golf accidents South Barrington real estate attorney defective products estate planning, digital assets, Revised Uniform Fiduciary Access to Digital Assets Act, Illinois digital assets, Illinois estate planning, Rolling Meadows insurance dispute lawyers traffic laws medical marijuana Arlington Heights personal injury attorney Schaumburg employment law attorneys estate planning attorney Schaumburg Attorney creditors trust payments operating agreements personal injury, auto accident injuries, delayed injuries, serious injuries, Des Plaines personal injury attorneys license Mount Prospect wills and trusts lawyers unfunded trust Arlington Heights car crash attorneys traumatic brain injury privacy laws trucking accident lawyers ACA Palatine civil attorney construction accidents, personal injury, wrongful death, Arlington Heights personal injury attorneys, workers' compensation insurance denials condo association natural gas Des Plaines collections attorney power of attorney Schaumburg medical malpractice lawyer Chicago estate planning Kenilworth estate planning attorney Crystal Lake employment lawyer employee misclassification BAC Des Plaines drug crimes lawyer IRELA Illinois will lawyer advance healthcare directive Crystal Lake traffic lawyer insurance claim delay personal injury startup company Chicago estate planning lawyer DMV drunk driving Palatine trusts lawyer DUI penalities vacation home fines Arlington Heights Traffic Lawyer foreclosure back injuries underfunded trust Rolling Meadows business lawyer Des Plaines personal injury lawyer employment law Crystal Lake law firm estate planning lawyer Schaumburg estate planning attorney trench injuries tax attorney Deer Park DUI lawyer Palatine corporate attorney gift tax exemption, estate planning, estate planning strategies, Illinois estate planning, South Barrington estate planning attorneys Schaumburg personal injury lawyers Barrington criminal lawyer denied insurance claim insurance negligence financial advisors landlord tenant law Crystal Lake bike accident lawyer cell phone accidents vacation home accidental death benefits Des Plaines personal injury attorney consent to a search Fair Labor Standards Act Illinois rollover accident lawyers Crystal Lake criminal defense attorney Rolling Meadows Traffic Lawyer Employment Discrimination Law holiday statistics Barrington civil litigation attorney Illinois personal injury attorney denial of life insurance Chicago trucking accident attorney Illinois bicycle safety corporate law Illinois corporate lawyer living trust benefits Exclusions business litigation insurance attorney Illinois Sales Representative Act probate claims process pedestrian accident Arlington Heights Attorney car collision dealing with problem employees construction contracts medical malpractice compensation overtime violations Rolling Meadows employment law attorneys Arlington Heights estate planning attorney Illinois medical malpractice attorney Buffalo Grove medical malpractice lawyers personal injury claim Arlington Heights wills and trusts attorney caregiver Barrington employment attorney slip and fall accidents Arlington Heights tax lawyer Des Plaines tax law firm estate planning trusts GM ignition switches pizza emoji Deer Park employment law attorney expungement real estate lawyer underinsured motorist Class A misdemeanor insurance disputes, Illinois insurance disputes, Illinois insurance dispute attorneys, denied insurance claims, Arlington Heights insurance dispute attorneys probate claims Illinois employment law attorneys hit and run accident Chicago employment attorney Attorney Ken Apicella Schaumburg elder law lawyer unpaid overtime jet ski accidents home inspection lawyer employment law, Illinois employment laws fiduciary rule delay Des Plaines real estate attorney ken apicella Illinois defective products attorney Barrington business law firm natural gas explosion nursing home negligence Illinois insurance claims lawyers motorcycle accident Chicago insurance law firm Deer Park accident attorney Illinois employment lawyer premises liability car accident lawyer PTSD Buffalo Grove personal injury lawyer Illinois traffic laws DUI attorney criminal defense Long Grove wills and trusts attorneys Barrington criminal defense lawyer Arlington Heights employment attorney Crystal Lake medical malpractice lawyer Barrington medical malpractice lawyers Illinois boating accident lawyer Rolling Meadows marijuana attorney Deer Park personal injury lawyer contracts spinal cord injury loss of consortium Barrington attorney Rolling Meadows criminal lawyer Crystal Lake car accident lawyer Des Plaines accident attorney product liability Illinois traffic accident lawyer FSLA Crystal Lake personal injury lawyer Family Medical Leave Act Legal Info Buffalo Grove traffic lawyers insurance claim unpaid assessment pedestrian injuries, pedestrian fatality insurance agents Federal Food Drug and Cosmetic Act Crystal Lake business law attorneys pedestrian accidents Buffalo Grove injury lawyer TBI Illinois Human Rights Act car crash injuries Illinois Probate Act of 1975 Barrington Traffic Lawyer Illinois wills and trusts attorneys real estate leasing Arlington Heights personal injury lawyer Illinois insurance attorney liens Home Remodeling Repair Act Illinois business law atorneys blended families Illinois trucking safety drugs Palatine injury attorney Inverness elder law lawyer insurance disputes Crystal Lake employment attorney residential real estate Riverwoods estate planning lawyer federal regulations for LLCs wills Illinois employment law firm Inverness corporate attorney workers compensation benefits Affordable Care Act manufacturing deadly crashes personal injury law firm Barrington drug crime attorney landlord Rolling Meadows litigation lawyer real estate contract Deer Park medical malpractice attorney trustee employment contract, employment law, employment at-will, Deer Park employment law attorneys, contract, civil rights violation Buffalo Grove insurance claim dispute lawyers Chicago will attorney, social media platforms, Illinois estate planning lawyer, senior citizens DGAA commercial leasing medical malpractice, missed diagnosis, delayed diagnosis, medical mistake, Deer Creek medical malpractice lawyers life insurance lawyer Illinois collections attorney sole proprietorship Arlington Heights lawyer Schaumburg car accident attorney CAM FMLA employees Crystal Lake tax lawyer healthcare claims Palatine employment lawyer