A trust is a legal arrangement that allows someone (the trustee) to hold and manage property for the benefit of another person (the beneficiary). While there are many types of trusts, one of the most used in estate planning is the revocable living trust.
This tool offers flexibility, privacy, and the potential to simplify the management and distribution of your assets — but it’s not the right fit for everyone.
What Is a Revocable Living Trust?
A revocable living trust is created during your lifetime and can be changed or revoked at any time while you’re still alive and mentally competent. You typically serve as your own trustee and beneficiary during your life, which means you maintain full control over the assets you place in the trust.
What Is a Living Trust Used For?
Living trusts are primarily used to:
- Avoid probate at death
- Plan for incapacity by naming a successor trustee
- Maintain privacy, since trusts are not public like wills
- Provide for minor or dependent beneficiaries
- Simplify management of assets, especially if they are held in multiple states
How Is a Living Trust Set Up?
To create a revocable living trust in Illinois:
- An attorney drafts the trust document, naming you as trustee and setting out your instructions.
- You name a successor trustee to manage or distribute your assets if you become incapacitated or die.
- You fund the trust by retitling your assets (e.g., real estate, bank accounts, investment accounts) in the name of the trust.
This last step — funding the trust — is crucial. A trust that isn’t properly funded won’t avoid probate.
What Happens to Trust Assets During Life and at Death?
During your lifetime, you can buy, sell, and use the assets in the trust just as you normally would. You continue to file taxes under your own Social Security number.
At your death, the successor trustee takes over and follows the instructions in the trust. Unlike a will, there’s no court involvement (probate) for trust assets. The trustee can distribute assets quickly and privately.
Pros and Cons of a Living Trust
✅ Pros
- Avoids probate, saving time and costs
- Maintains privacy, since it’s not a public court record
- Provides continuity if you become incapacitated
- Flexible — can be changed or revoked any time
- Can reduce the risk of family disputes or delays in asset distribution
⚠️ Cons
- Upfront cost is higher than a simple will
- Requires ongoing attention to ensure assets are properly titled
- Doesn’t protect assets from creditors or nursing home costs (unlike certain irrevocable trusts)
- Still requires a pour-over will to catch any unfunded assets
Is a Living Trust Right for You?
A revocable living trust can be a powerful tool in an estate plan, especially for those who want to avoid probate, keep their affairs private, or plan for incapacity. However, it’s not a one-size-fits-all solution.
📞 Schedule a Consultation
If you’re wondering whether a living trust makes sense for your situation, I’d be happy to help. Schedule a free call to review your estate planning goals and find the tools that fit your needs best.
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