The Absolute Truth About Trusts in Chicago, Illinois
The North Shore of Chicago estate planning lawyer of Sylvester Law Firm has prepared numerous Revocable Living Trust estate plans.
What is a Trust? A Trust, generally, is an arrangement where one or more persons (the Trustees) hold and manage property for others (the Beneficiaries). Typically you will serve as trustee of your Trust while you are able and willing. When you no longer serve as trustee, a successor trustee takes over for you. If you create a Trust within your Will, it’s called a Testamentary Trust. If you create a Trust outside of a Will and while you’re alive, it’s called an inter vivos or Living Trust. A Testamentary Trust comes into being after the death of the will-maker. A Living Trust comes into being during the trust-maker's lifetime.
What is a Revocable Living Trust? A Revocable Living Trust is a Trust that you set up during your lifetime, and you state in the trust that you reserve the right to revoke your Trust. Revocable Living Trusts are very useful in organizing and managing assets during life, and efficiently transferring assets at death.
Can I Avoid Probate Court By Using a Trust? Yes. The “funded” Living Trust is a way to manage your property during your lifetime and pass it on to your beneficiaries at death without the burden of probate court proceedings. Probate court proceedings can only be avoided through the use of a "funded" Living Trust. The probate courts cannot be avoided through the use of a Testamentary Trust. The Wilmette, Glenview and Northbrook estate lawyer of Sylvester Law Firm believes that taking the necessary steps to keep your family out of the court system is a worthwhile cause.
I'm Not "Rich," So Will I or My Family Benefit From a Trust? Yes. Contrary to what many people think, a Trust is not just for "wealthy" people. Individuals with very modest estates can benefit from the use of a Revocable Living Trust.
How Does a Living Trust Work? Your estate planning lawyer prepares a Trust agreement that names the Trustee and the Beneficiaries and defines everyone’s rights and duties. The Trust may, if you desire, stipulate that you retain power to amend or revoke the Trust whenever you want.
Typically, you serve as Trustee of your Trust until you can no longer handle the responsibility, at which time your successor Trustee will take over for you. Your Successor Trustee(s) may be one or more responsible individuals, a bank trust department or an independent trust company. You put property (real estate, securities, cash, etc., but NOT tax deferred accounts) in the Trust by transferring such assets into the Trust’s name; for example: John Doe, trustee of the John Doe Revocable Trust.
While you are serving as trustee of your Trust, you have the same amount of control over your assets as you did prior to transferring them to your Trust. If you become disabled and are no longer able to handle your financial affairs, the Successor Trustee is directed to use the income and principal of the Trust to pay your necessary expenses. Upon your death, the Trust assets are distributed to your Beneficiaries in accordance with your directions contained in the Trust Agreement, or the Trust can continue for specified purposes for a period of time.
Advantages of the Living Trust. If you want or need to have someone else manage your property and pay your bills in case of illness, the Living Trust is a good arrangement. One alternative is a court-supervised guardianship that is more costly and inconvenient and has the disadvantage of disclosing your assets to the public.
If probate avoidance is important to you and a Living Trust is appropriate for your circumstances, keep in mind that all of your probate assets must be in your Trust at the time of your death to accomplish your goal of probate avoidance. You should work closely with your north suburban Chicago living trust attorney to see that the Trust gets "funded" properly. A properly funded Living Trust makes the estate administration process easier for your beneficiaries. Also, trust administration is usually less expensive than probate administration.
Because a Living Trust is not filed in Court, its provisions are private. This differs from a Will, which must be filed with the Probate Court and becomes a public document.
Disadvantages of the Living Trust. There are more initial costs in setting up a Living Trust as compared to a Will. Living Trusts generally necessitate more extensive, technical and complex drafting, which should only be performed by an experienced Chicago estate planning lawyer. Also, time needs to be spent to assure the proper “funding” or re-titling of assets in the name of the Living Trust. The advantages of a Living Trust usually far outweigh the disadvantages.
A Word on Taxes. Forming a Living Trust will not alter your income tax situation. While you are living and serving as Trustee, you report your income on your federal and state income tax returns just as you always have. You do not use a separate tax identification number for your Trust while you are living. At death, the assets in your Trust are included in your estate for State and Federal Estate Tax purposes as if you owned the assets outside of your Trust.
Married couples may save significant estate taxes by using either a Living Trust or Testamentary Trust estate plan, either of which may provide for the use of an Estate Tax Exemption Trust. If your estate exceeds the estate tax exemption limit, currently $3.5 million, your estate plan should include measures to defeat estate tax. If you are married, you can double the exemption through proper planning – allowing a married couple to pass $7 million to their beneficiaries estate tax free! Click here to see a flowchart of a sample husband and wife joint-trust estate plan with estate tax planning.
During your initial consultation, the North Shore of Chicago living trust lawyer will advise you of your estate planning alternatives – in light of your particular circumstances. If you decide that a custom Trust-based plan is best for your planning goals, make sure your attorney provides you all of the following documents and services for a guaranteed flat-rate fee ...............
1. Revocable Living Trust
2. Pour-over Will
3. Durable Power of Attorney for Property
4. Power of Attorney for Health Care
5. Living Will
6. Bill of Sale
7. Memorandum for Distribution of Tangible Personal Property
8. Sample Trust Funding Letters
9. Deed in Trust
10. Necessary Consultations and Attorney Letters
11. Meeting to Review First Drafts
12. One Revision of First Drafts
13. Signing Ceremony
14. Estate Organizer
15. Trust Funding Instructions
16. Clear Instructions for Wrapping-up the Planning Process
Establishing a Revocable Living Trust estate plan is not a simple matter, and you should only work with an attorney who has a dedicated focus on Trust law. The Chicago will and trust attorney of Sylvester Law Firm has such a dedicated focus. Call us today at (847) 251 - 2999 to discuss how we can help you achieve your estate planning goals.