What is a trust?
A trust is a document that allows for assets to be managed by a trustee, according to the guidelines you set in the trust, for the benefit of the trust beneficiaries. There are many different types of trusts, your attorney will determine which type will address your needs. Trusts fall into one of two categories:
Revocable – Revocable trusts are trusts in which the grantor (the person who sets up the trust) holds on to the ability to change, modify or revoke the trust at any time. Assets transferred to revocable trusts before the passing of the grantor are not subject to probate, as the trust owns the assets and property. Revocable living trusts in Illinois become irrevocable upon the death of the grantor.
Irrevocable- Irrevocable trusts cannot be changed or modified once the grantor creates it. Any property a grantor transfers to an irrevocable trust cannot be taken out by anyone, including the grantor. There are many types of irrevocable trusts, such as charitable planning, bypass, special needs planning, asset protection, life insurance trusts and more. Irrevocable trusts in Illinois are typically used to protect property and reduce or avoid taxes.
Do I need a trust?
How to distribute assets after death is a difficult decision. A trust is helpful for several estate planning goals including: tax minimization, control of assets, distributing assets over time, protection for creditors and privacy (trusts do not go through probate and are not public documents).
Trusts can also be created and carried out during the life of the grantor. An attorney could advise you on the best type of trust based upon your goals.
Remember, for a trust to be effective, you actually have to transfer your assets into the trust.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
Source: Pluymert, MacDonald, Hargrove & Lee, LTD