A trust is an entity that holds the title of property on another person’s behalf. Trusts are commonly used in estate planning to transfer assets to a person’s intended beneficiaries after his or her passing.
The rules for creating a trust are complex and may be based in state law or on a federal model law known as the Uniform Trust Code. If you are considering creating a trust as part of your estate plan, an experienced attorney in Lombard could help you understand the Uniform Trust Code and how it might apply to your trust.
A trust serves many purposes, and there are several types of trusts that may fit a specific individual’s goals. Trusts could be used to transfer property after a grantor’s death while avoiding the probate process. Certain types of trusts, like Irrevocable Life Insurance Trusts, may help the grantor avoid estate taxes by reducing the taxable value of his or her estate.
Trusts could also provide for minor children or disabled individuals. A trustee could manage property or real estate on a child’s behalf until he or she reaches the age of majority, or a trust could distribute income in a way that does not interfere with a person’s ability to collect benefits like Medicaid or Supplemental Security Income. Likewise, certain types of trusts may also provide money for charity or a specific cause, or they could protect trust assets from creditors.
All states have the right to create their own laws which govern their citizens. However, as the country became more interconnected over time and people began to travel or relocate frequently, it started to make more sense to have similar laws across the country on the same topics.
The Uniform Trust Code (UTC) is a model law which acts as a guide for trust issues nationally. By referring to this guide, states that have adopted the UTC will have consistent decisions and outcomes in trust cases.
The UTC was created in 2000 by the National Conference of Commissioners on Uniform State Laws (NCUSL). The NCUSL has created several model acts that are in use around the country and cover topics ranging from adoption and family law to business structures and criminal records.
The NCUSL created the Uniform Trust Code in response to the rise of the use of trusts in estate planning. As it became more popular to create a trust as part of an estate plan, the NCUSL decided to provide guidance on what it believes are the national standards of trust administration and interpretation.
However, not every state has adopted the UTC, and states are not required to do so. Illinois is one of only 19 states that has not adopted the UTC. Instead, the state has its own Illinois Trust Code, which is a modified version of the model law tailored to Illinois.
In many respects, the UTC and the Illinois Trust Code have similar or identical provisions. Like the UTC, the Illinois Trust Code covers the rules for creating a trust, modifying or editing a trust, enforcing a trust, and resolving trust disputes.
Because Illinois has its own trust code, the UTC is not binding for a judge in Lombard and such a judge is not required to follow its provisions. While the UTC terms may not be mandatory, the model legislation is considered a persuasive authority and may influence how a judge rules on a case. This is especially true when the provisions of the UTC mirror existing Illinois law.
Trusts are essential for anyone who wants to transfer his or her property after death in a way that minimizes taxes, saves time and attorneys’ fees, and avoids lengthy delays in probate court. If you want to learn more about creating a trust for your estate plan, contact a qualified attorney today and find out more about how the Uniform Trust Code affects Lombard cases.