What Are the Benefits of Creating a Living Trust?

 Posted on June 17,2024 in Estate Planning

During the estate planning process, there are a number of documents that can be obtained to protect one’s assets and reflect one’s decisions about how matters will be handled at the end of a person’s life, as well as after their death. Living trusts are some of the most powerful estate planning documents, as they offer numerous benefits to both the trustee and the beneficiaries.

Understanding how a revocable living trust works and the advantages it provides can help families make informed decisions about estate planning topics. An experienced estate planning attorney can provide guidance on the available options, the best solutions, and the steps that will need to be followed when creating trusts or other estate planning documents.

What Is a Revocable Living Trust?

A trust is a legal document that places assets under the control of a trustee, who usually is the person that obtains the trust, and provides instructions for how assets should be distributed to specific beneficiaries. With a living trust, a person may serve as the trustee and maintain control of his or her own assets. Since the trust will be revocable, its terms can be modified at any time.

The assets in the trust can eventually be distributed to different beneficiaries, but a person can use the assets to provide for his or her own needs first. Upon the death of the person who created the trust, a successor trustee will take over management of the trust, and will follow specific instructions to ensure that the remaining assets are transferred to designated beneficiaries correctly.

How to Create a Revocable Living Trust

Creating a living trust involves several steps:

1. Choose a trustee: A person will need to decide if they themselves will serve as the trustee and manage the trust during his or her lifetime, or whether someone else will be appointed as the trustee;

2. Draft the trust document: An attorney can ensure that the trust agreement properly details how assets will be managed and distributed;

3. Transfer assets: The trust will be funded by transferring ownership of assets into the trust;

4. Name beneficiaries: The trust agreement will specify how assets will be distributed; and,

5. Execute the document: The trust agreement must be signed and notarized to be legally binding.

Benefits of a Living Trust

A revocable living trust offers numerous advantages, making it a valuable component of an estate plan. Some key benefits include:

Avoiding Probate

Probate is a court-supervised process that, sometimes, can be lengthy and costly, as the executor or administrator of the estate takes an inventory of assets and distributes them to heirs. However, assets in trusts can be distributed to beneficiaries without the need to go through the probate process. This can ensure that beneficiaries will receive inheritances more quickly and with less expense.

Privacy

Unlike a will, which becomes a public record during probate, a living trust remains private. This means that the details of an estate and the distribution of assets will not be disclosed to the public.

Control and Flexibility

The trustee retains control over the assets in a living trust, and can make any changes they wish to. This flexibility allows a trust to be adjusted to reflect changes in a family’s financial situation, or in personal preferences.

Incapacity Planning

A living trust can include provisions for managing assets if a person becomes incapacitated. This can ensure that the person’s affairs will be handled according to his or her wishes without the need for a court-appointed guardian or conservator.

Continuous Management

A living trust provides for the ongoing management of assets. After a person’s death, the successor trustee can manage and distribute the trust assets without the need for any interruption, ensuring a seamless transition for beneficiaries.

Asset Protection for Beneficiaries

A living trust can include provisions that protect beneficiaries' inheritances from creditors, divorce, or irresponsible spending. This can ensure that assets will be preserved and used for their intended purposes.

Potential Tax Benefits

While a revocable living trust may not provide immediate tax benefits, it can be structured to incorporate tax-saving strategies. An estate planning attorney can help design a trust to minimize estate taxes and maximize the benefits for a person’s heirs.

Contact Our Hillside, IL Living Trust Attorney

As you begin thinking about a comprehensive estate plan for yourself, you may want to consider creating a revocable living trust to ensure that your assets will be managed and distributed according to your wishes. To learn more about the benefits of a living trust, and/or to get started with the process of creating and funding a trust, contact the Oak Park, IL estate planning lawyer at Law Office of Vincent C. Machroli, P.C.. Call us at 708-449-7404 to set up a free consultation.