How does a living trust work?
How does a living trust avoid probate?
Is it hard to transfer property to a trust?
Who should have a living trust?
Who can serve as trustee of my living trust?
Is a living trust expensive?
Who should write my living trust?
If I have a living trust, do I still need a will?
Are living trusts new?
How can I learn more about living trusts?
If I have a will is that enough?
What is probate?
Why should I want to avoid probate?
If I don't have much money, will probate really affect me that much?
All of my property is owned jointly with my spouse. Doesn't that avoid probate?
Why must the probate court become involved if I am incapacitated?
How can I avoid these problems?
Q: How does a living trust work?
A living trust becomes the owner of your property. The trustee administers the trust – and you may be your own trustee. If you become unable to act as trustee, the trust can contain language that automatically names a successor trustee.
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Q: How does a living trust avoid probate?
Since you have transferred ownership of all of your property to the trust, there is nothing for the probate court to control either during your life or at your death. The trust owns all of your property for your benefit. But you are in control (even if you are not the trustee) since you may revoke the trust at any time.
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Q: Is it hard to transfer property to a trust?
The process of transferring your property into a living trust is not difficult at all. Your attorney, banker, trust officer, financial advisor, or other professional, can help you.
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Q: Who should have a living trust?
Nearly anyone can benefit from having a living trust. But if you have a modest estate you need to consider whether the cost of a living trust is necessary. Unless you have other non-tax or non-probate cost issues it may be more cost effective to use a will in smaller estates.
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Q: Who can serve as trustee of my living trust?
Anyone who is of legal age can be your trustee. Many people choose to name a bank trust department as trustee or co-trustee, in order to ensure professional asset management of their investments. Corporate trustees charge a fee for their investments. Corporate trustees charge a fee for their services, but the fee is usually very reasonable. Your choice of trustee should be carefully considered and discussed with the chosen individual or bank.
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Q: Is a living trust expensive?
The cost of a living trust will vary, depending on the complexity of the estate plan. However, when compared to the costs of probate the expense of a living trust can be extremely reasonable.
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Q: Who should write my living trust?
Only an attorney can write a living trust. An experienced estate planning attorney can provide valuable guidance for your individual situation. A trust is a legal document, and only an attorney can ensure that the document is appropriate for your situation, and conforms to state law. Avoid “do-it-yourself” kits and form books. Only an attorney is authorized to give you legal advice, and you must receive legal advice in planning and preparing your trust.
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Q: If I have a living trust, do I still need a will?
A living trust is only part of a complete estate plan. You should have a pour-over will, which “catches” any property you might have overlooked in funding your trust, and places the property in your trust at your death. This ensures that your plan of distribution is followed, even if you accidentally overlooked something. Your attorney may suggest other legal documents as a part of your estate plan.
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Q: Are living trusts new?
Living trusts have been used for hundreds of years. Bank trust departments, lawyers, financial advisors, and other professionals regularly utilize living trusts for their clients.
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Q: How can I learn more about living trusts?
By talking to an attorney who focuses their practice on estate planning and in the preparation of living trusts you can have all of your questions answered.
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Q: If I have a will is that enough?
Although a will is a necessary part of any estate plan, it may not be enough. A will does not avoid probate, and in fact a will ensures that the probate court becomes involved in the process of administering your will. Many people do not want their financial affairs to become a matter of public record, which is a part of the probate process.
Also, a will is effective only following your death. If you becomes mentally or physically incapacitated, your will provides no protection. But you may be forced to submit to the control of the probate court while you are living. This is because if may be necessary for a guardian of your estate (sometimes called a conservator) to be named.
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Q: What is probate?
Probate is the process of providing and administering a will. The probate process makes sure that your debts are paid and your property is distributed according to your wishes as determined from your will. If you do not have a will, our state law provides one for you. The probate court also may take control if you are unable to manage your affairs.
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Q: Why should I want to avoid probate?
PRIVACY – Probate files are open to the public. Your heirs and beneficiaries may be exposed to unscrupulous individuals who hope to profit from their “good fortune.”
TIME – Probate may take one or two years or longer. During this time, your heirs may be forced to ask for an allowance from the executor of your estate. If your assets are not liquid, the court may not approve an allowance.
EXPENSE – Fees and court costs must be paid from your estate. This expense may amount to
4 – 6% of the value of your estate before debts are paid, reducing the amount for distribution to your heirs.
CONTROL – The probate court, through your executor, has control of your estate. Immediate needs of your family may not be met, and your heirs may become frustrated at the delay.
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Q: If I don't have much money, will probate really affect me that much?
If your total probatable estate is valued less than $100,000 probate will be avoided. But you might be surprised to discover what probate could cost your estate if you do have to go through probate. Probate costs, in Illinois, typically from 4 – 6% but by using 2.5% you can get an idea of a low cost estimate. Keep in mind you still have to contend with the delays and loss of privacy.
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Q: All of my property is owned jointly with my spouse. Doesn't that avoid probate?
When one owner of jointly owned property dies, the ownership is automatically transferred to the survivor. But at the death of the second owner, the property must, naturally be probated. So probate is not avoided, just postponed.
Joint ownership has some risks, too. As a joint owner, you are not in complete control, since both owners must agree to sell or mortgage the property. Also, the property is exposed to the other owner’s creditors.
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Q: Why must the probate court become involved if I am incapacitated?
In order to make any change with respect to your property – a sale or refinancing for example – and you are incapacitated, someone must sign for you. And unless other arrangements have been made in advance, only the probate court, through its agent, may sign for you. Your family may be forced into probate court simply in order to do what is right for you.
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Q: How can I avoid these problems?
The law provides an answer to all of the concerns discussed above. It is called a living trust, and it is similar to a will. But a trust avoids probate, and is effective during your lifetime as well as after your death. A properly drafted living trust may simplify all of your estate planning goals.
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