Estate planning is something many people just put off, and try not to think about until they have to. However, there’s a lot at stake. When you’re gone, you won’t be able to say anything about how your estate and your assets are divided up, and it’s not unheard of for a will to be contested by a disgruntled relative.
You know about writing a will, and you may also know the things that can go wrong with it once you die and the probate process starts. But there is a way around it that can make sure your property is distributed the way you want, and the lengthy probate process can be avoided: the Living Trust.
Will Vs. Living Trust
Actually, you can have both a will and a living trust as part of a comprehensive estate plan. But you have to know the difference, because they’re not exactly the same and have different functions.
A will is a document that distributes property only after you die, and is administered by the court through the probate process. Probate can take months or even years to complete, and is also made public.
A living trust is a legal entity you set up while you’re alive, and is also called a “revocable trust.” This means that once you create the trust, you can transfer property into it, and begin transferring it to your beneficiaries. You can also name yourself as the trustee who holds the property on your behalf until you die, or until you direct the property to be given.
While a will has to go through probate, a trust doesn’t, and property can distributed immediately. You can also specify dates or events for disbursements, such as monthly payments to your spouse, or to a child or grandchild when they turn 30. By spreading out the disbursement, you can help ensure your family’s financial protection for many years.
A trust is also private, and no one outside of the trust will find out how many assets you had, who the beneficiaries are, or the terms of the trust. Using a living trust is also helpful if you are unexpectedly incapacitated or otherwise unable to take care of your own affairs.
Creating A Living Trust
To begin the process, you’ll create a trust document with the help of a Chicago estate planning attorney, and sign it in the presence of a notary public. You’ll then begin properly transferring your assets into the trust’s ownership. Most grantors (the person who creates the trust) names him or herself as trustee, with a successor trustee after he or she dies.
The idea is to transfer as many assets as possible into the trust with the intent of the owner using them throughout their lifetime. Although a living trust is revocable during the owner’s lifetime, once the owner dies, it becomes irrevocable and the property is transferred according to the terms of the trust to the beneficiaries.
Since the trust is a legal entity that can own property, you can transfer your property into it and use it as you have before. Should you become incapacitated, your assets are already in the trust for ownership, control and management, so there is no need for a conservatorship.
Note that transferring to a trust does not shield assets from state or federal estate tax, nor can you use it as part of a Medicaid “spend-down.” Get help from your estate planning attorney before you begin.
Hiring A Chicago Estate Planning Attorney
If you’re considering a living trust to begin distributing a lifetime of assets, it’s important to work with an estate planning attorney who understands them. James C. Provenza is an Illinois estate planning attorney with years of experience helping clients with their estate planning to make sure their wishes are carried out. Call our firm today at (847) 729-3939, or use our online contact form.