What is a Living Trust and What Does it Do?

A "living" trust (sometimes called an "inter vivos" trust) is a trust you create while you are alive. A trust is a fiduciary (legal) arrangement that allows a third party (called the trustee) to hold title to assets (property) on behalf of certain beneficiaries. As holder of the title, the trustee is subject to the condition of keeping or using the trust property for the benefit of the beneficiary. The creator of the trust selects the beneficiaries of the trust property. Those who were selected as beneficiaries will receive the trust property when the creator of the trust dies.  

Probate Court

A trust has a similar function to a will but is often a much better choice for a person looking to control what happens to their property after they pass because a trust avoids probate, where a will is always subject to probate. Probate is the legal process that a person’s estate must go through when they die either with a last will and testament or when they have no legal estate planning documents stating how they wish their estate to be distributed (this is called intestate). Probate court oversees the transfer of the estate’s property to the deceased person’s heirs, according to state law. Probate court is often time-consuming and costly because of court costs and attorney’s fees. Attorney’s fees for a probate case vary drastically depending on several factors, however, the average amount for attorney’s fees in probate cases in Illinois is anywhere from $2,500-$5,000. This amount does not include court costs, filing fees, or other fees associated with the court itself. 

Types of Trusts (Revocable vs. Irrevocable)

As part of their estate planning, many people create a “revocable living trust.” These trusts can be modified or revoked at any time. Typically, the creator of a revocable living trust would name themselves as the trustee of the trust and, as a result, the creator of the trust would retain control of the trust and its property for life. The trust creator would also select a second person who will take over and manage the trust after their death. This person is called the “successor trustee.” On the other hand, some people create an “irrevocable trust.” This type of trust cannot be revoked or modified once it is signed. Irrevocable trusts can be useful tools for specific goals (like reducing taxes), but they require giving up ownership and control of trust property.

What is Spendthrift Protection?

Spendthrift protection is the benefit provided to a trust that protects a beneficiary’s inheritance from a beneficiary’s creditors such as a divorcing spouse or a creditor such as a credit card provider or a business lawsuit or a mortgage foreclosure among other creditor issues.

One of the primary benefits of a spendthrift provision is to protect a beneficiary from their themselves. Spendthrift also is putting restrictions on a person’s inheritance with the primary intent to protect their child or children from their immaturity or lack of fiscal management skills. 

Spendthrift language in a trust is required to protect a beneficiary’s inheritance from their creditors. This type of language is called a “Spendthrift Trust” or “Spendthrift Provision.”  Parents often desire to protect young adults (21 to 25 years of age) or with serious disability issues from themselves. A beneficiary may not be technically disabled, but parents desire to protect their loved ones from themselves. Spendthrift language provides asset protection for a trust beneficiary because their inheritance may not be assigned, encumbered and/or alienated in any way (or similar language). 

A special needs provision should be included in every person’s Will or Trust. Not only does it protect loved one that has special needs at the time your Will or Trust is executed, but it also is effective in the event a loved one who was not disabled at the time but becomes disabled after the execution of the Will or Trust. 

What Is a Special Needs Trust? 

A special needs trust provides financial support for your loved one with special needs, while at the same time, does not disqualify them from receiving or continuing to receive any government benefits. This includes benefits like Medicaid and Social Security, which are often on an income contingency, meaning if you make over a certain amount of money, you can be disqualified from receiving those benefits.

How Do You Set Up a Special Needs Trust? 

A special needs trust is included in your overall Trust document or in your Will. It is helpful to have an experienced and specialized attorney assist you with setting one up. This way, you can be sure that any personalization is tailored to your specific circumstances. The purpose of a Trust, in simple terms, is to assign someone (called the trustee or executor) to manage what you have decided to put in it, upon your passing. The person you decide to assign is legally bound to the terms you specify in your Trust and must carry it out exactly as it has been written by you. 

Trusts are not simply for the ultra-wealthy. Trusts are a great tool for those with modest assets that wish to protect those assets and save unnecessary expenses and arguments between loved ones after their death. 

What is a Living Trust and What Does it Do?

A Trust is a fiduciary arrangement that allows a third party (the trustee) to hold title to assets (property) on behalf of certain beneficiaries. The creator of the Trust selects the beneficiaries of the Trust property. As holder of the title, the trustee is subject to the condition of keeping or using the property for the benefit of the beneficiary. A "Living" Trust (sometimes called an "inter vivos" Trust) is a Trust you create while you are alive.

Yorkville and Oswego IL Estate Planning Attorneys

What is a Last Will and Testament?

A Last Will and Testament is a written, legal document that expresses a person’s wishes as to how their property (known as their estate) should be distributed after they pass. A Last Will and Testament also designates a person (known as the Executor) to manage the estate until it is fully distributed. When the creator of the Will dies, the Will must then go through a time-consuming and often costly process called probate court.

What is Probate Court?

What is a Trust?

A Trust is a legal instrument, which holds title to property, subject to certain obligations, rights, and restrictions placed on the property. A Trust is fiduciary relationship in which a party (Trust Maker) establishes a Trust that gives another party (Trustee) the right to manage property that the Trust owns.

What is a Trustee?

A Trustee is a person or entity that is appointed by the Trust Maker (the person or couple that created the Trust) to manage their assets and property. Generally, the Trustee is the same person(s) that creates the Trust for their benefit for estate planning purposes. The Trust instrument or otherwise known as the “Trust Agreement” creates the Trust until they (the creators of the Trust and Trustees of the Trust) are unable to fulfill the role of Trustee. The Trust Agreement will typically pass trust administration to a person(s) or entity upon the Trust Maker’s incapacity or death.

At the time of incapacity or death, the role of administration changes to a Successor Trustee. A Successor Trustee is by and large a trusted family member or friend. The Successor Trustee administers the instructions outlined by the Trust Agreement. The Trust Agreement is a legal document created by the persons wishing estate planning for their family. The goal of the Trust is to avoid probate court and create a smooth transition upon a death or incapacity. People create trust because they want their loved ones to have an easy process if something happens to them.

When we think about what goes in a Will or Trust we usually think about physical assets, such as property and family heirlooms. However, as time goes on and technology advances, more and more of our assets become digital. Before learning why digital assets are so important to put in your Will or Trust, you need to know what qualifies as a digital asset. 

What Is a Digital Asset?

Digital assets are all assets that exist online. These digital assets may have tangible financial value, but they also may not.  Some examples of digital assets may include: 

• any of your social media accounts, 

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