Setting up a trust can be a wise financial decision for Illinois residents—especially for those with significant assets and complex estates. In most cases, revocable living trusts allow beneficiaries of the trust estate to bypass the time-consuming and often costly realities of probate court after a loved one passes away. Since establishing a trust in Illinois can be a complicated process, it’s a good idea to speak with financial advisors and attorneys who provide estate planning services.
The Steps Needed to Establish a Trust Include:
- Determining the type of trust you need. There are many types of trusts for a myriad of situations. Many unmarried persons will establish a single living revocable trust. A married couple with children has different needs and may want to create a joint marital trust, an A-B trust, a special needs trust or even a spendthrift trust. Meeting with a qualified estate planning attorney is invaluable and will help point you in the right direction.
- Take inventory of your investments, assets, and property. Once set up, you will want to transfer ownership of most, if not all, of your assets, including the contents of brokerage accounts, stocks, businesses, real estate, cars, boats and other titled assets, and property such as jewelry and artwork. As you take inventory of your assets, gather all necessary documents such as titles, bills of sale, account statements and other documents to prove ownership. There are some assets that should not be put in your trust, such as some deferred tax plans.
- Select a trustee (the person who manages the trust). The trustee can be yourself, but when you are no longer able to handle your affairs or upon you passing, you will need to have named a successor trustee to take over management of the trust estate. Successor trustees are typically children, siblings, parents or trusted friends.
- Have a lawyer draft your trust document. These are complicated and legally-binding documents and having the expertise of a lawyer can help ensure that your trust estate is protected and your assets are distributed per your wishes.
- Sign your trust with a notary present who will notarize it. This is not required in all states, but it is an added layer of protection and can help minimize future conflict should anyone wish to contest your estate.
- Fund your trust by transferring your property to it. A lawyer can provide direction and can assist with this process to ensure that everything is executed and titled properly in the name of the trust.
Benefits of Creating Trusts in Illinois
Trusts are a popular estate planning vehicle for a number of reasons. Establishing a trust could save your loved ones a significant sum of money by avoiding probate court after your passing, provided the trust is prepared and funded properly. Probate court can cost thousands of dollars in court and legal fees—especially if estates are complicated or contested by relatives. Living trusts will also give your loved ones access to funds immediately, whereas accessing assets without a trust could take a year and often longer. Another advantage to creating a living revocable trust is the fact that you have control over your estate during your lifetime and can access your funds and property while you’re alive. You can add assets to your trust and remove assets from your trust. You can also revoke or change your trust, in whole or in part. In fact, a review of your estate planning on a regular basis is important. Situations change and so can your trust.
If you so choose, you can make provisions for your loved ones in the event that you become incapacitated. This means that your successor trustee can manage your trust if you cannot make decisions for yourself. Trusts are also flexible and can accommodate your specific wishes, such as setting up a spendthrift trust for your child (whom you love dearly) but who just cannot handle money at all or other specific directions such as the disbursement of assets in phases over a set period of time. This means your named beneficiaries can inherit portions of your trust estate over time rather than all at once.
When to Speak with an Attorney for Estate Planning
If you have a net worth that is nearing $100,000 or exceeds that amount, consulting with an estate planning lawyer can help you protect your property and your loved ones’ inheritances. Attorneys are experts at drafting legal documents and contracts. They can also anticipate potential issues and correct them before they arise.