Information on Illinois Living Trusts

Illinois living trust is one simple way to avoid probate on your property. It is a legal arrangement by which an individual can direct how the property will pass over to the survivors.

How living trusts function?

Living trusts allow one individual to hold the legal title to the property for another individual, who has been named as the beneficiary to the trust. The one who holds the title according to the statutory trust agreement is termed as the ‘trustee’. An individual can name himself as the trustee for his own trust and can thereby have full authority over the property preserved in the trust.

Why is the trust termed as ‘living'?

Unlike the trusts created after an individual’s demise (according to the terms of the will), this form of trusts is formed while he or she is still alive. For this reason, this form of trusts is termed as ‘living trusts’.

Who are the parties involved in a trust deed?

Usually, there are three parties involved in a trust deed, as explained below –

1. The trustor – The one who is the original property owner and intends to give it away. He or she is also termed as the trust maker, settler or grantor.
2. The trustee – A person or a business that holds the title to the property and has the authority or the responsibility for the benefit of another.
3. The beneficiary – The individual or organization for whom the trust is created, and who is entitled to receive the property.

The state laws in Illinois allow a trustor to act as both trustee and beneficiary. However, if the same person acts as the trustee and the beneficiary, the trust deed will be considered void.

Why would you need a living trust in Illinois?

Illinois doesn’t follow the Uniform Probate Code. So, undergoing the probate process can be a bit complex and time-consuming for the survivors of the deceased. If you want your survivors or the beneficiary to receive your property easily, and spare them from the undue costs and delay of the probate process, opting for a living trust would seem a good choice.

Can living trust act as replacement for a will?

In spite of having a living trust, an individual would still need a will. Any property that is not included in a trust can be included in the will. A will thus acts like a back-up plan in addition to the trust and is necessary, especially if any new property is acquired after the trust is made. You can name a person in the will to ensure that he or she receives the property, which hasn’t been left to him in the trust.

In the absence of a will, the Illinois state laws will decide the fate of any property that doesn’t make into the trust.

Can an Illinois living trust help to ease your estate tax?

Every form of living trust cannot bring a reduction in your federal estate tax. A simple probate-avoidance one won’t serve the purpose. However, individuals having a lot of valuable assets can opt for an AB trust, which can be a bit complicated though. However, since the federal estate taxes are applicable only on estates worth more than $5 million, most people don't need to worry about that.

How to make a living trust in Illinois?

Creating a living trust in the state of Illinois is not much difficult. You’ll just need to follow the simple steps as elucidated below:

1. Prepare the trust document, whereby you can name yourself as the trustee and appoint a beneficiary who’ll receive the trust property.
2. Sign the papers in front of a notary public.
3. Transfer your personal properties, which you want to include in the living trust, in your name as the trustee.