Should You Create an Illinois Revocable Living Trust?
Also known as an ‘inter Vivos’ trust, a living trust is a tool that helps you manage your assets during your lifetime and can also be used as part of your estate planning. While there are different living trusts, a revocable living trust is the most common type.
As the name suggests, a revocable living trust can be revoked or modified by the grantor at any time during their lifetime. This flexibility makes it an attractive option for many people. Read on to understand more about Illinois revocable living trust.
Revocable Living Trust vs. Last Will and Testament
Some people use a revocable living trust and a last will interchangeably. So, what's the difference?
The last will and testament only come into effect after you die. That means that it cannot be used to manage your assets during your lifetime. On the other hand, a revocable living trust in Illinois can be used for asset management during your lifetime and can also be used to distribute your assets after you die.
Another key difference is that a last will and testament must go through probate, a legal process that can be time-consuming and expensive. However, a revocable living trust does not have to go through probate.
How Do You Create a Revocable Living Trust?
First, you should identify your trustee to manage the trust. It is also advisable to have a successor trustee to take over if the original trustee is unable or unwilling to continue.
You should also name the trust beneficiaries receiving the assets after you die. Finally, you can name yourself as the beneficiary of the trust, which allows you to continue to manage the assets during your lifetime.
The next step is to transfer the ownership of your assets into the trust. This can be done by retitling bank accounts and investment accounts in the trust or by deed for real estate property.
Finally, you must sign the legal document before a notary public or other witnesses to have the document properly executed.
What If You Don't Have a Revocable Living Trust?
Although it is recommendable, Illinois law does not require a living trust. If you don't have a living trust, your assets will be distributed according to your last will and testament if you have one.
Illinois adopted the Uniform Probate Code, which streamlines the probate process and makes it less expensive and time-consuming than in other states. However, the probate process can still be costly and time-consuming.
Your beneficiaries can bypass the probate process with an affidavit, but this is only applicable if your assets are below $100,000. Also, if all your estates are below $100,000, they can be eligible for summary administration, which is more like a shortcut of the probate process.
What If You Move to a Different State?
If you move to a different state, your revocable living trust in Illinois will still be valid. However, consider changing the trust's jurisdiction to your new state of residence. This can be done by executing a trust protector or drafting a new agreement.
Confirm that your spouse is still named as the trust's primary beneficiary if you are married. This is important because Illinois is a community property state, meaning all assets acquired during the marriage are considered jointly owned by both spouses.
How Does a Revocable Living Trust Affect Estate Tax?
A revocable living trust does not affect estate tax. Illinois has an estate tax, but it only applies to estates valued at over $4 million and a federal tax exemption is $12.06 million in 2022. But if your estates exceed this value and you want to protect them from the estate tax, you can use a QTIP or AB trust. That way, you can transfer assets to your spouse while still maintaining control over the assets during your lifetime.
Suppose you wish to create trust but do not know where to start; Forms.legal offers Illinois revocable living trust template to guide you through the process. You only need to fill out the form, then download and print and you are good to go.