If you're planning your estate in Illinois -- and you want you and your family to benefit from potential tax savings, privacy and the ability to avoid probate -- you may want to consider one of many different trust options.
Trusts allow you to remove yourself as the owner of certain assets, so that you can achieve various estate planning goals.
What trusts can I choose from?
When it comes to trust planning you will have a lot of different options. Here are some of the most common trusts types you may encounter:
Revocable trusts (also known as living trusts): Estate planners establish their revocable trusts while they're still alive. After creating the trust, you can change it or revoke it completely at any time while you're still alive. You can transfer specific property to the ownership of the trust, you can serve as the trustee, and you can remove and add property to the trust at any time.
Your creditors may still access the money you place in your revocable trust, but the revocable trust does make it more difficult for creditors to access the funds.
Usually, revocable trusts become irrevocable trusts upon death and the assets will be transferred to heirs without the need for probate.
Irrevocable trusts: Once you set up an irrevocable trust, you can't alter it. The trust will own the property you place inside it and nobody -- including yourself -- can change it. This is an excellent way to earmark assets for the benefit of a specific person, to be distributed according to the terms of the trust by a designated trustee -- while protecting those assets from potential creditors. It can also allow the beneficiary of the trust to continue receiving vital government benefits.
Charitable remainder trusts: Charitable remainder trusts allow people to place assets inside the trust and then liquidate those assets without incurring capital gains taxes. The individuals can then receive regular distributions from the charitable remainder trust. When the trust beneficiary dies, the remainder of the trust assets will be transferred to a designated charity.
What kind of trust is right for you?
The above trusts are just a few of the many trust options available. By learning about your situation and the benefits and potential setbacks of various trust options, you can choose the most appropriate trust solution for your and your family's needs.