Everyone wants to make sure that the next generation can carry on their legacy. With a lifetime spent building wealth and acquiring assets, it’s only natural to want to leave it all to someone that you care for. There is a mechanism in place that lets you pass things on to the next generation in a secure way: trust.
Once placed in a trust, accessing assets becomes more difficult by design, so those assets are cared for until they need to be passed on. If you are looking for ways to pass on your life holdings, like real estate or cash, work with an estate planning attorney to set up the right kind of trust.
What is a Trust?
A trust is a legal structure that you use to separate the control of your assets from the ownership of your assets, much like how a corporation is run. The corporation is run by a team that is designated by the owner. While the owner owns the corporation, the board of directors manages it.
Trusts are often used to protect assets, in many cases, in terms of succession and inheritance. If constructed correctly, a trust can be used to pass assets on after you die.
In a trust, the grantor (person establishing the trust) chooses a trustee (person who oversees the trust). The trustee manages the assets and is responsible for releasing those assets to beneficiaries.
Irrevocable Trust vs. Living Trust
There are two kinds of trusts: an irrevocable trust and a living trust. In a living trust, the terms of the trust can be changed. You can even cancel the trust itself. Living trusts are often used when guardianship of assets is needed while the grantor is still alive.
In an irrevocable trust, you cannot change the terms of the trust. You also cannot choose yourself as the trustee. Essentially, an irrevocable trust is used when passing on assets after the grantor dies and the assets need protection.
Why Use a Trust To Pass On Assets?
Trusts are generally used to protect assets when transferring them from one person to another, especially in estate planning. Imagine wanting to pass your estate to your children, but those assets are at risk. The government wants to tax your assets when you die, and other groups want your assets for themselves. Unless your heir is ready and able to handle these issues on their own, your assets need some protection during the transfer.
A trust makes it easier to transfer assets by giving someone else control of them. As you age and are unable to maintain the assets on your own, you can get help by naming your heir or someone you trust as the trustee (person in charge of the trust). That way, when you do pass on, there is someone who is already familiar with the management of your assets and can protect them until they are ready to be transferred and managed by your heirs.
Who Can Access Assets Put in a Trust?
The trustee, the person appointed to manage the trust, is the only person(s) who can access the assets put in a trust. The trustee manages the assets to protect their value and can distribute assets according to the rules of the trust.
In many cases, the trustee manages the trust until the last heir is a specific age (usually 18 or 25 years old). When they reach that age, the trustee distributes the assets to them and closes the trust. Depending on how the trust is set up, the trustee usually distributes disbursements of funds from the assets periodically until the trust is set to be closed.
Contact a Chicago Estate Planning Attorney Today
If you plan to pass assets to others when you pass away, start your estate planning now to know for sure that your assets are safe. Estate planning is an important part of preparing for the future. Make plans for your estate with the help of a qualified Chicago estate planning attorney. Contact James C. Provenza & Associates, P.C. at (847) 729-3939 or fill out our online form to schedule an appointment.