You’ve worked hard to acquire, built, and earn wealth during your life. But what is to become of it when you pass? To make sure your valuable property is protected even after you are gone, estate planning is name of the game is estate planning. Having a good estate plan is critical to ensuring that your valued keepsakes, family heirlooms, and beloved properties go to the people who will care for them properly. Due to the complex and varying nature of setting up a solid estate plan in Illinois, it is crucial to have a good estate planning attorney on your team.
In Illinois, as in most states, there are several tools that are especially helpful to have at your disposal. Of special interest here are the estate planning instruments involving the establishment of a trust: inter vivos trusts, revocable living trusts, and pour over wills. But what are these estate planning mechanisms, and how they can serve you in achieving your proprietary goals? Read on and learn!
Living Trusts and Revocable Trusts
The most common form of trust is the inter vivos trust, also known as a living trust. An inter vivos trust provides many possible benefits: it allows you to maintain control of your property during your lifetime, avoid probate after your death, and plan your estate. To create an inter vivos trust, you as the grantor place as many assets as possible into a trust to fund it. You must choose a trustee to manage your property for your benefit during your lifetime. If you name yourself as the trustee, you also choose a successor trustee to manage your estate for the benefit of your beneficiaries after your death. An additional benefit of inter vivos trusts is privacy. Unlike a will, which becomes part of the public record during probate proceedings, a trust is entirely private and allows you to keep under cover your assets, the terms of your trust, and the identities of your beneficiaries.
Whether funded by a pour over will or assets you allocate during your lifetime, the benefit of an inter vivos trust is avoiding probate. Importantly, Illinois does not follow the Uniform Probate Code, and so all of the traditional challenges of probate are amplified in this state. Probate can take a great deal of time – a minimum of six months, based on the length of time an estate must be open – and can be expensive, requiring an executor and an attorney. In some circumstances, such as when your estate is valued at less than $100,000, probate may be less costly than a trust. However, the exact legal tools that work best for your estate should be determined by a licensed attorney.
A type of living trust, a revocable living trust can be changed or terminated during your lifetime. Like other living trusts, you can avoid probate with a revocable living trust and keep long-term control over your assets. You will also have a fair degree of control over how your assets they will benefit your beneficiaries. However, a revocable living trust also protects you from anyone with eyes on your assets in the rare event that you become mentally incapacitated. Under this mechanism, if you become mentally incapacitated or incompetent, your spouse or children are able to immediately access your assets for your benefit, without going through an arduous guardianship proceeding.
Pour Over Wills
There are many different types of wills and trusts recognized by Illinois law. Consider, for example, the pour over will. The pour over will is not the most common estate planning tool. While it can be a very helpful device, it is best thought of as a safety net or a last resort. In short, a pour over will is a will that “pours over” all of your assets into a living trust when you pass away. Unlike a traditional will, which specifies how you would like your property to be divvied up to different beneficiaries, a pour over will has only one beneficiary: a revocable living trust you had set up when you were still alive. In other words, a pour over will fund your existing trust with whatever is left over your will after you die.
The big benefit of a pour over will is that it can be integrated into a larger estate plan designed to avoid costly probate issues. Probate is a notoriously lengthy, expensive, and stressful process. It typically requires your loved ones to go through an arduous court process to prove the validity of what you set forth in your will. After proving their case regarding your final intentions, your beneficiaries will then have to wait out the administrative process required by the court system before your assets are disbursed.
Unlike with a traditional trust, a pour over will allows you to maintain your property in your name during your lifetime.. This is useful because a trust must be funded with existing assets. Thus, if for whatever reason you do not wish to put all your assets into a living trust while you are alive, a pour over will funds the trust after your death. That way, you’ll never have to worry about unintentionally leaving a particular property out of your living trust And, so long as it does not exceed an aggregate value of $100,000 (which is the cap for any will to avoid probate in Illinois), you’re safe from probate court.
If you don’t use a pour over will, the alternative is to put your property into a traditional will, which will go through the probate process or to pass on intestate (which is what happens when you die without a will). In Illinois, dying without a will case your property to pass to your heirs according to the state rules of intestate succession. The problem with this is that your assets will be inherited by your nearest blood relatives, regardless of your relationship with them. So, if you want to make sure your property passes to the people who were most important to you during your life, it is critical to put together an effective estate plan. Contact the excellent estate planning attorneys at M&A Law Firm to find out more about what you need to include in your estate plan.