A trust could be an essential component of a comprehensive estate plan. Trusts allow creators to transfer property, provide for a child or disabled person, or protect assets from creditors.
While drafting trusts on your own may seem like a reasonable idea, contacting an experienced trusts attorney could help ensure your beneficiaries receive as much of what is put aside in a trust for them as possible. If you are considering creating an estate plan, learn more about the types of trusts in Lombard from an accomplished attorney.
A trust is a document that creates a separate legal entity which could own property. In principle, there are three components to every trust: a grantor, trustees, and beneficiaries.
The person who creates a trust, known as the grantor, decides the terms of the trust and what property to transfer to that entity. The grantor may retain ownership of the trust and manage the property in it, or he or she could give this responsibility to another person.
The grantor of a trust may also be the trustee or the beneficiary, depending on the terms of the trust. The grantor may create a trust and manage it during his or her lifetime or may set up a trust that he or she cannot change.
A trustee is a person in charge of managing a trust. This person acts as the owner of the trust’s assets and manages the property held in the trust by paying taxes and distributing assets upon the grantor’s death. The trustee has a fiduciary duty to manage the assets of the trust for its beneficiaries.
The beneficiaries to a trust are the people for whom the trust is created. The grantor decides which people should receive the assets of the trust and how the trust property should be distributed. The beneficiaries usually have the right to monitor the actions of the trustee and make sure that their assets are not being squandered.
Trusts have many different purposes, and a trust may be tailored to each individual grantor’s needs and desires. Among other reasons, a grantor may create a trust to transfer assets outside of probate, to care for a minor child, or to support a charitable purpose.
No matter the purpose, there are two basic categories of trusts in Illinois: revocable trusts and irrevocable living trusts. Both have certain advantages and disadvantages that may be noteworthy to a grantor.
A revocable trust, also known as a living trust, is similar to a will in that it distributes assets to beneficiaries after a grantor dies. During the grantor’s lifetime, the grantor could retain control over the assets in the trust, add or remove property, or change the trustee or the beneficiaries.
After the grantor’s death, the property in the trust transfers automatically to the designated beneficiaries. These assets avoid the probate process and allow the beneficiaries to access the money or property in the trust without spending money to administer the grantor’s estate.
Unlike a revocable trust, a grantor cannot alter an irrevocable trust once it is executed. Additionally, the grantor generally cannot change the terms of the trust or its beneficiaries and may lose his or her ownership rights over the property that makes up the trust corpus. However, because the grantor loses the right to control his or her property in an irrevocable trust, these estate planning documents help minimize the amount of estate tax that the grantor pays and could protect certain assets from the beneficiaries’ creditors.
Creating a trust may allow you to retain control over your property while making a plan for passing down your assets after moving on. Trusts could help in all kinds of situations, and the terms of your trust are up to you to decide.
Deciding how to manage your estate is an essential step in protecting your family’s future. Learn more about the types of trusts in Lombard with the help of an experienced trusts and estates attorney.