If you are looking to preserve some of your wealth for beneficiaries after you move on, then you may need to look at the many types of trusts in Naperville that are available. An attorney could help you do just that, but especially because there are so many and not every one could be of use.
A testamentary trust is a trust that is created by and through a will. Things definitely get more complicated when a testamentary trust plan is used. A testamentary trust still needs to go through probate because the executor of a will is in charge of collecting all the assets and paying all the debts. Once that is done, instead of distributing it to the beneficiaries outright, the trust is distributed to a trustee who is named in the will and then that money is administered pursuant to the terms in the will. Essentially, it is a mini trust that is built into a will.
A freestanding trust is a trust that is a separate document. In a way, it is opposite to that of a testamentary trust. A freestanding trust exists separate and apart from a will takes on many forms.
Among the many types of trusts in Naperville, a revocable living trust is basically what most people think of when they think of trust. It is a document that creates a trust that is fully revocable and fully amenable by the person who creates it. In the vast majority of situations, a revocable living trust names the person who creates the trust as the initial beneficiary and the initial trustee. What this means is that while the person is alive and not disabled, they may make any type of amendment they want to the trust. If unsatisfied by the trust or unforeseen circumstances, they are able to revoke it outright.
Because revocable living trusts are drafted while are alive, they have all the power that they want over the assets that are in the trust as if it was outside of the trust. It turns into a separate kind of a separate pocket that a person might have where one pocket does everything that is in their individual name, then the other pocket is assets that are in their revocable living trust.
There are no restrictions on how someone may use their own property.
An irrevocable trust is a trust that cannot be revoked and there are usually restrictions on amendments. The main difference is that once assets are putting in an irrevocable trust, then the ability of the grantor to get those assets is restricted in some way. In an irrevocable trust, they put that money in there, it is no longer just another one in your pockets because there are restrictions on how they are able to access it or use it or get it out.
An asset protection trust generally refers to the ability of the assets and the trust to be protected from creditors including an ex-spouse or judgment. As the estate tax exemption continues to rise, one of the more clearly beneficial aspects of estate planning and trust creation is the asset protection aspect. If families have large trust estates and they want to make sure that the money lasts through the generations, they give it to a trustee of an asset protection trust.
Then, the beneficiaries of the trust, if they get sued, have bad business debt, or divorce, then it is difficult for a creditor or from an ex-spouse to attach to the assets of that trust. However, there is no complete protection against getting sued. A motivated creditor may try to get at the assets, even in an asset protection trust, but the more protections that they put in place, and the more barriers there are to that creditor actually obtaining those assets.
A lot of times, some people may decide to have their trust property pass in successive trusts. That way, their children do not spend it all or become a victim to creditors or an ex-spouse. Asset protection is basically a way to protect assets for future generations from current day creditors.
A charitable trust is a trust whereby the beneficiaries are all organizations that meet the definitions of a charitable organization pursuant to the tax code, so 501(c)(3).
A special needs trust is a trust that allows a beneficiary who is receiving government benefits to continue receiving government benefits while money is available in the trust to supplement those benefits. There are various different kinds of special needs trusts, but the gist of it is to allow generally a person with a developmental disability or other sorts of disability to be able to access government benefits such as Medicaid, while at the same time, there is money that could supplement that. There are certain specific provisions that need to be in a special needs trust in order to make sure that the assets that are in it do not qualify as assets available to the beneficiary who is receiving the special needs assistance.
A bypass trust is a trust that essentially bypasses certain generations and restricts the income that is available to the current beneficiaries. A common situation is an irrevocable trust, which is designed to pay certain income and according to the trustee principle to the spouse for the duration of their life. While the spouse is alive, the funds in that trust are available for their benefit, but upon their death, it goes to other beneficiaries, such as the children. One of the goals of that trust is also to preserve certain amounts of principals, so it could be passed on to other beneficiaries like the children.
There are many types of trusts in Naperville. Discovering which one could best suit your needs and the future needs of your beneficiaries could be a laborsome task. Instead of doing research on your own, reach out to an attorney. A legal professional could draft a trust and have it suit your desires. Call today.
