When you initially sit down to create an estate plan, a Last Will and Testament may be all you need to ensure that you don’t leave behind an intestate estate in the event of your death. A Will can distribute your entire estate; however, as your estate and your family both expand, you may find that a Will is no longer sufficient to meet all your estate planning needs. At that point, you may decide to incorporate a Family Wealth Trust into your estate plan. Despite the name, a Family Wealth Trust is not only for the wealthy, as explained by the Waukegan living trust attorneys at Hedeker Law, Ltd.
What Is a Trust?
A trust is a fiduciary legal arrangement that allows a third party, referred to as a Trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. All trusts can be broadly divided into two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s (trust creator) Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust activates during the Settlor’s lifetime. Living trusts can be further sub-divided into revocable and irrevocable living trusts. If the trust is a revocable living trust, as the name implies, the Settlor may modify or terminate the trust at any time. An irrevocable living trust, however, cannot be modified or revoked by the Settlor at any time nor for any reason unless a court grants the right to revoke or modify the trust.
There are a multitude of reasons why you might choose to incorporate a trust into your estate plan. Trusts allow you to shelter assets from creditors as well as from spendthrift beneficiaries. Trusts can also provide tax advantages as well as probate avoidance. Finally, a trust allows you to exert a certain amount of control over the assets placed in the trust long after you are gone by creating trust terms that control how the assets are invested and used.
What Is a Family Wealth Trust and Why Might I Need One?
Despite the name, you do not need to be wealthy to benefit from a Family Wealth Trust (FWT). While those with large estates can certainly benefit from the inclusion of an FWT in their estate plan, so can those with moderate estates. Basically, an FWT is simply a revocable or irrevocable living trust into which you transfer the majority of your assets.
One significant benefit to an FWT is that, if you choose to create an irrevocable FWT it can protect assets from creditors both now and after your death. Assets held in an FWT may also be safe from claims made by a beneficiary’s spouse in a divorce. Another important benefit to including an FWT in your estate plan is the ability to protect assets meant for your minor children because your minor children cannot legally inherit directly from your estate. An FWT can protect your children’s inheritance until they reach the age of majority and are able to inherit directly. In the event you divorce and remarry at some point, an FWT can also provide for your spouse while simultaneously protecting assets you wish to be preserved for children from a previous marriage. Your spouse can be named as the Trustee of the trust, or you can appoint a close friend or professional Trustee. Your spouse can use or benefit from the property held in your FWT, but he/she does not own those assets. Ownership in the property held in the Trust is reserved for your children. Finally, because the assets are held in a trust they are not required to go through probate, offering one of the most important advantages of using a Family Wealth Trust to distribute your estate.
Contact Waukegan Living Trust Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns regarding a family wealth trust, contact the experienced Waukegan living trust attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.