Naperville Estate Planning Lawyer Discusses How a Living Trust Can Protect Your Assets

living trust, Naperville estate planning attorneyIf you are in debt, you may be wondering what happens to all of your assets when you pass away. In my practice as an estate planning lawyer, clients frequently ask me questions of this nature. Do the nagging creditors get everything that you have acquired over the years, or do your children and heirs have the right to keep any of it? The answer depends on how you establish your wishes. If you simply leave everything in a will, creditors may very well get to split up your estate to clear up some of the debt you leave behind. However, there are other avenues to ensure asset protection for your loved ones, including the creation of a revocable living trust.

Ethical Issues

You may be wondering how ethical all of this is. Essentially, you are attempting to secure property so that there is no way that a creditor can touch them after they have been passed on to your heirs, no matter the amount of debt that you owe. It is absolutely not illegal, unethical, or wrongful to take measures to keep your assets in your family, rather than being sold at a creditor’s auction. It is something that people do every single day. You earned the property you own, why not be able to pass them on?

How to Do It

While federally there are several options to protecting your assets, in Illinois, you have to be sure to use the correct one for you, because not all are recognized by the state. One of the best ways in Illinois is to create a revocable living trust. While this does not protect the assets from your own creditors, it protects them from any of your successor’s potential creditors. This is true even if they are involved in an accident in which they are found negligent and are court-ordered to pay restitution. The reason for this is that your children do not actually own the propety, the trust does.  During the process of creating a living trust, assets can be protected from the probate process because titles are transferred to a trust and are no longer in anyone else’s name. In most cases, you can name yourself as one of the trustees and reap the benefits when you are alive, which will then pass on to your beneficiaries after you pass away.

The opposite is true for a will. Although a will is often necessary for certain property and explaining your wishes with regard to caring for your minor children, anything left in a will is subject to a probate process. First, the state verifies the validity of the will. Then they name an executor or administrator of the will—if you did not already do so—who will, in turn, distribute the assets as necessary. This may include selling assets to settle outstanding debts prior to distributing the remainder of the estate to the beneficiaries.

Other Benefits of a Living Trust

In addition to protecting assets from being divided up and sold to pay off a debt, living trusts have several other benefits. Some of these include:

  • Avoidance of probate court, making it a shorter and less costly process after your death;
  • When you name a trustee, they are able to control your assets rather than the state;
  • Gives guidance to the trustee as to what your wishes are, preventing them from using all of the assets themselves unless you explicitly express that as your wish; and
  • If you become incapacitated and are named as the trustee, the secondary trustee would be able to take over to carry out your wishes.

Creating documents to protect your investments and your family can be stressful. Although it can be done alone, it is helpful to have a professional guide you through the process to be sure that your wishes will be fulfilled exactly as you would like them to be. Contact an experienced Naperville estate planning attorney at The Gierach Law Firm today to get started. Call 630-756-1160 and schedule a confidential consultation.

 

Sources:

Illinois Compiled Statutes: Trust and Trustees Act

Bankrate