A revocable or living trust is a useful document in estate planning, which enables you to place assets into a legal entity so they do not become the state’s property after your death. A revocable trust is a useful type of trust for those early in their life, as you still have complete control over the assets within. If you are unsure whether a revocable trust could benefit you, discuss your assets and potential beneficiaries with a qualified Chicago estate planning attorney.
When you place assets in a trust, you can name the individuals who you want to benefit from them, and you can keep those assets from probate court. With a revocable trust, as long as you have the legal and mental capacity, you can alter the contents at any point, including the assets held within and the named beneficiaries. When you die, the assets fall under the control of the successor trustee of your choosing, who will then administer the assets to their beneficiaries outside of the court.
Who Benefits From a Trust
A revocable trust is very similar to a will because it distributes assets in your estate to your beneficiaries when you die. A will, however, does not keep an estate out of probate court. When an estate goes through probate, beneficiaries do not have access to the assets and must wait until probate is complete, which may take months to years. A trust can prevent your loved ones from dealing with this costly and lengthy process.
Many people believe you only need a trust if you are very wealthy, but this is not true. A trust can be useful for many people, particularly those who:
- Own assets in multiple states
- Are married and/or have children
- Have high-value assets or complex assets
- Prefer privacy
- Are planning to retire
- Want to plan for incapacity or incapability
- Wish to keep their loved ones out of probate
- Have assets or an estate valued at a minimum of $100,000
It can be helpful to discuss with a qualified attorney the right time to establish a revocable trust, or if a trust is right for you.
Benefits of a Revocable Trust
After creating a trust, you are typically named the trustee, and you then list the successor trustee, who may be a friend, family member, or professional who you trust to manage your affairs. You can create more than one trust for different unique requirements. There are many benefits to a revocable trust, including:
- Bypasses Probate Court: This can prevent your loved ones from incurring unnecessary court and attorney costs and prevent the estate from being taxed by the state. By avoiding probate, you may provide your beneficiaries with the greatest amount of benefits possible from your estate.
- Protects Privacy: By keeping your estate listed under a trust, the assets and debts are not part of public record. The transference of those assets to your beneficiaries is also not public record. This can help you and your family maintain privacy.
- Provides Flexibility: When you use a revocable trust rather than an irrevocable trust, you maintain control over your assets and can choose to alter the contents of the trust whenever you want. With an irrevocable trust, you may need the permission of every beneficiary named in the trust, as well as the court’s permission. A revocable trust also allows you to name specific times or provisions at which a beneficiary can receive their inheritance.
Q: Should You Put Your House in a Trust in Illinois?
A: Placing a house in a trust can help it avoid probate court upon your death. In Illinois, it may also help prevent the house from being subject to state estate taxes. However, it can create complications if you plan to refinance the home or if the home still has a mortgage. If you are unsure how to navigate your estate plan, trust, and real estate properties, a qualified attorney can help you review your unique circumstances and determine the ideal course of action.
Q: Who Needs a Trust Instead of a Will in Illinois?
A: A trust offers you and your loved ones greater protection from probate. A trust is often harder to contest when paired with a will and therefore makes will contests and successful will contests less likely. A trust also gives you greater peace of mind and enables you to plan for if you are incapacitated at the end of your life or from an accident.
In Illinois, a trust can help you avoid the state’s estate tax. If you are married, have children, have significant or complicated assets, or wish to keep your estate and beneficiaries private, a trust carries significant benefits for you.
Q: What Is the Downside of a Revocable Trust?
A: A revocable trust offers several benefits but also carries some downsides. Unlike irrevocable trusts, they will not give the creator of the trust any tax benefits while they are alive and only give tax benefits to beneficiaries. Revocable trusts also take more effort than simply creating a will.
There is a higher cost to trusts, and they need continual management throughout your life to be effective. You must review any items in the trust, retitle them, and ensure matching beneficiaries. Additionally, placing assets into a revocable trust does not keep the assets safe from creditor claims.
Q: At What Net Worth Should You Consider a Trust?
A: There are many reasons other than net worth that a revocable trust or irrevocable trust could provide you with benefits. Typically, if you have more than $100,000 in assets or net worth, a trust is a wise idea. Other reasons to get a trust include:
- You are married and/or have children and want to ensure your family benefits from your estate at the right time
- You have assets in several different states, complicating probate processes
- You would like to keep the assets in your estate private, as well as who receives them
- You have a small number of high-value assets that you want to protect
Create a Comprehensive Estate Plan
A comprehensive estate plan can protect you, your estate, and your loved ones and can be made of many different documents. By working with the experienced attorneys at Stange Law Firm for your estate plan, you can determine what documents in an estate plan are helpful for your needs. Contact our team today to learn how we can help.