How Does a Trust Work Once I Have One?
Many people know that trusts are valuable legal tools useful in a wide variety of situations. However, fewer people understand exactly how trusts work. They may wonder how trust funds are accessed, whether trust assets may be sold, and how trusts influence their tax responsibility.
If you are exploring your estate planning options, you may want to consider using a trust to ensure your assets are managed according to your wishes both during your lifetime and upon your death. Trusts have many benefits, including asset protection, tax advantages, and reduced probate expenses.
Trust Basics in Illinois
A trust is a fiduciary relationship in which an individual, called the grantor, gives a trustee the authority to hold property for the benefit of a third party. Sometimes, the grantor can also act as the trustee. Trusts provide protection for assets and ensure that trust assets are distributed to beneficiaries according to the grantor’s wishes. Trusts may contain assets such as bank accounts, vehicles, stocks, personal items, real estate, and more.
Trusts may be used for a diverse range of purposes. Living trusts are used to manage assets during the grantor’s lifetime and transfer the remaining assets to beneficiaries upon his or her death. Testamentary trusts provide instructions for asset distribution after death and ensure that assets are managed appropriately. Charitable trusts are used to transfer assets to charities. These are just some of the many types of trusts that may be useful in your estate plans.
I Have a Trust, Now What?
Trusts fall into two main categories: revocable trusts and irrevocable trusts. Irrevocable trusts are usually used for asset protection and tax purposes. The grantor cannot modify the trust or sell assets once they are transferred to an irrevocable trust unless the beneficiaries agree to the modifications.
In a revocable trust, the grantor maintains control of the property in the trust. He or she can sell trust assets or remove assets from the trust as he or she sees fit. The grantor can also revoke the trust at any time.
Many people choose to put their house in a trust for tax reasons or to avoid probate. If you decide to place your house in a revocable trust and later want to sell it, you can simply modify or dissolve the trust to do so. If your house is held in an irrevocable trust, selling the house is more complicated, but it may still be possible.
High-end assets and even businesses may also be placed in trusts for estate planning purposes. Essentially, trusts can accomplish many of the same things as other estate planning tools like wills, but trusts provide greater protection for assets.
Contact a Naperville Estate Planning Lawyer
If you are interested in further exploring how a trust can be used to benefit you and your loved ones, contact the knowledgeable Naperville estate planning attorneys at the Gierach Law Firm. Call 630-756-1160 for a confidential consultation.
Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.