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 experienced trusts attorney could help you do just that, but especially because there are so many and not everyone could be of use.
A testamentary trust is a trust that is created by and through a Naperville 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 responsible for collecting all assets and paying all debts. Once that is done, instead of distributing it to the beneficiaries outright, the trust is distributed to a trustee named in the will, and that money is then administered pursuant to the terms of 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 the opposite of that of a testamentary trust. A freestanding trust exists separate and apart from a will and 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 a trust. It is a document that creates a fully revocable, fully amenable trust 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 amendments they want to the trust. If dissatisfied with the trust or unforeseen circumstances arise, they can revoke it outright.
Because revocable living trusts are drafted while we are alive, they have all the power they want over the assets in the trust, as if those assets were outside the trust. It turns into a separate kind of pocket that a person might have, where one pocket holds everything in their individual name, and the other pocket holds assets 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 placed in an irrevocable trust in Naperville, the grantor’s ability to access those assets is restricted. 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 can access, use, 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 a judgment creditor. 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 want to ensure the money lasts through generations, they place it in a trustee of an asset protection trust.
Then, if the beneficiaries of the trust are sued, have bad business debt, or divorce, it is difficult for a creditor or 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, the more barriers there are to that creditor actually obtaining those assets.
Often, some people in Naperville decide to have their trust property pass through successive trusts. That way, their children do not spend it all or become a victim of 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 in which the beneficiaries are all organizations that meet the definition of a charitable organization under the tax code, i.e., 501(c)(3).
A special needs trust is a trust that allows a beneficiary who is receiving government benefits to continue receiving those benefits while funds in the trust supplement them. There are various kinds of special needs trusts, but the gist of it is to allow a person with a developmental disability or other disability to access government benefits such as Medicaid, while also allowing money to supplement those benefits. There are specific provisions that must be in a special needs trust to ensure that the assets in it do not qualify as assets available to the beneficiary receiving 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 a certain amount of principal, so it could be passed on to other beneficiaries, like the children.
There are many types of trusts in Naperville. Discovering which one best suits your needs and the future needs of your beneficiaries can be a laborious task. Instead of doing research on your own, reach out to an attorney. A legal professional could draft a trust that suits your desires. Call today.
