Setting Up a Trust After Divorce: Protecting Your Childrens Future in Illinois

It can seem like there are a million little details that have to be handled during and after a divorce, but the ones that often get overlooked have to do with creating or updating your estate plan.

This isn’t because it’s not important, but because most family law attorneys don’t deal with estate planning. It’s simply not their primary focus. However, there are some very important changes that take place during a divorce that will also require changes to your estate plan – that’s why we make our estate planning services available to all of our clients!

Many people think of estate planning as something that’s for older or wealthy people to do, but the truth is, everyone over the age of 18 needs some sort of estate plan. For families, especially those with minor kids, it’s a necessity – and after a divorce, that need only grows.

There are four main parts to an estate plan, and each will be beneficial in different ways:

1. Will
2. Trust
3. Power of Attorney
4. Medical Directives

A will is what most people think of when they hear the term “estate plan” – and while this document is important, it’s not complete. It only tells the court what your wishes are, but it doesn’t necessarily bind the court to follow those wishes. Without a will, what happens to your estate and who is granted guardianship of your children will be determined by the court without clear documentation of your wishes.

Avoiding Probate with a Trust

Although around 70% of American adults feel that having an estate plan is important, only 34% actually have one. This means that approximately ⅔ of families will have to go through the probate process after one or both of the parents die.

Now, dying is something that any of us like to think about, and planning for death isn’t a pleasant topic. But if you have minor children, it’s something you need to prepare for.

A properly executed and funded trust can not only allow your family to avoid the probate process (which is incredibly lengthy and expensive), it can also ensure that your wishes are followed if something happens to you. In fact, the probate court doesn’t have to be involved in the process – your trustee can handle everything according to the instructions you leave.

This means that your property, your assets, and your financial accounts will be handled according to what you want and anything you leave for the care of your children will be handled by the people you choose. 

This is priceless. And it’s all achievable through an effective estate plan.

The Benefits of Reviewing Your Estate Plan After Your Divorce

Creating an estate plan with a trust is something we recommend for many families, but after a divorce, there are specifics that you’ll need to consider.

In Illinois, when a divorce is finalized, your spouse will automatically be disinherited from your will. However, they may not be removed or amended as a beneficiary, trustee, etc. unless you are intentional about taking care of these details.

This is where your estate planning attorney can help! 

If there are changes that need to take place in the legal documents of your estate plan itself, your attorney can take care of those and may make recommendations on updating your beneficiaries to make sure things are handled the way you choose.

By working with both your family law and estate planning attorneys, you can take care of everything in one process. At Diamond Legal, our family law and estate planning divisions are housed right down the hall from one another, so that we can offer all of these services under one roof!

While estate planning is almost always a good idea, there are some added layers of complexity to consider after divorce. When parents separate, issues like managing assets and ensuring your children’s welfare can become a bit more complicated. Bringing in an experienced estate planning attorney can prevent a lot of stress and misunderstandings for everyone.

How Can a Trust Benefit You?

Setting up a trust after divorce can offer several advantages, including asset protection, avoiding probate, and having the ability to manage asset distribution (so your kids don’t automatically inherit at 18, before they’re old enough to properly handle their part of your estate). 

A properly executed trust can also help to ensure that your assets are utilized and distributed the way you want them to be.

If you would like to provide for your children’s college education, help them buy a house, or give them the beginnings of an investment account once they’re old enough, you can create a trust with instructions for your wishes. If you wish for them to inherit in yearly increments so they’re taken care of but they don’t inherit a large amount all at once, you can do so.

A trust is a powerful and very flexible way to protect your family and manage your assets – all without having to get the probate court involved. Your lawyer can structure it in a way that meets your needs, but also help you amend it as changes happen throughout your life.

Considerations for Minor Children in Estate Planning After Divorce

When it comes to estate planning considerations after a divorce, special attention should be paid to your minor children. They will need financial support throughout their childhood (which can be taken care of with a trust), but a trust will also allow you to ensure their financial security after they reach 18.

In your trust, you can provide for everyday needs, but you can also anticipate things like potential medical expenses, educational expenses, and more.

In addition to a trust, you should also consider a power of attorney (POA) and guardianship documents. As a now-single parent, if something were to happen to you, who would make your medical decisions? Who would take care of your children? 

If you share custody with your ex, it is likely that custody would be granted to them – but if you don’t, or if they’re not immediately available, having guardianship documents in place will ensure that your children are taken care of by someone you know and trust rather than having the state (DCFS) step in.

Illinois Trust Laws and Regulations

It is important to remember, however, that specific trust laws and regulations must be followed, and in Illinois, some of them apply to estate planning after a divorce.

Transferring marital assets into a trust can remove them from the marital estate, safeguarding them from being divided during a divorce. However, it’s essential to remember that trusts should not be used as a means to hide assets from a spouse. Any transfers should be conducted openly and transparently to be considered valid.

For instance, if a divorced individual in Illinois transfers marital assets into a trust and the transfer is found to be fraudulent or made with the intent to defraud the ex-spouse, it could lead to significant legal consequences. The court may deem that the assets should still be considered part of the marital estate, leading to division of the assets.

The type of trust chosen can also have different implications and consequences in divorce proceedings. For example, a revocable trust allows the creator to retain control over the assets during their lifetime and change the terms of the trust at any time. On the other hand, an irrevocable trust, once established, cannot be altered or terminated without the beneficiaries’ consent. 

Understanding the distinctions between these types of trusts is paramount when planning your estate, and an attorney well-versed in Illinois trust laws can provide invaluable guidance.

At Diamond Legal, both our family law and estate planning attorneys are ready to help you.

DISCLAIMER: Any information contained herein is solely for informational purposes and is only applicable in the state of Illinois.  While it is important that you educate yourself, nothing herein should be construed as legal advice or create an attorney-client relationship. For specific questions, we urge you to contact a local attorney for advice pertaining to your specific legal needs.