Probate avoidance is one of the most common estate planning goals. Given the time and expense involved in probating an estate, it is not surprising that many people try to set up their estate plan in a way that avoids probate altogether. A common tool used when trying to avoid probate is a revocable living trust. If you recently lost a loved one who left behind a living trust, you may be wondering if you need a trust attorney to help you settle the trust. In most cases, the answer is “yes.” There are, however, several factors that you should consider when determining if you need the assistance of a trust attorney.
Using a Living Trust to Avoid Probate
It helps to understand what your loved one was trying to accomplish by using a living trust. When an individual dies, he or she leaves behind an estate that consists of all assets owned by the decedent at the time of death. Those assets are broadly divided into two categories – probate and non-probate assets. Probate assets are required to go through the legal process known as probate while non-probate assets bypass the probate process altogether. Probate is typically a lengthy and costly process. Beneficiaries do not receive their intended gifts until the probate process has reached its conclusion. Non-probate assets, on the other hand, can be distributed to the intended beneficiaries immediately after the decedent’s death. Not surprisingly, avoiding probate is a common estate planning goal. Because trust assets are non-probate assets, the use of a living trust to accomplish this goal is also common. The idea is to use a trust to distribute estate assets instead of a Will by transferring all assets into the revocable living trust and continuing to manage those assets as the Trustee of the trust while alive. The successor Trustee then takes over upon the death of the Trustee and distributes the trust assets.
Factors to Consider When Deciding If You Need a Trust Attorney
Following the death of a loved one, one of the first practical tasks is to locate estate planning documents, such as a Last Will and Testament or a trust agreement. If you recently lost a loved one and have located a trust agreement that names you as the successor Trustee of the trust, you may be wondering if you need the assistance of a trust attorney in order to administer and settle the trust. To make that determination, consider the following factors:
- Were any assets left out of the trust? Although the idea is to avoid probate by transferring all estate assets into the trust, it is not uncommon for assets to be left out unintentionally. In that case, probate may be required, thereby complicating matters and likely calling for the assistance of a trust attorney.
- Are the assets to be distributed outright? If all you are required to do is oversee the distribution of the trust assets right away, you may not need an attorney. If, however, the beneficiaries are to receive staggered disbursements, or they are to receive their inheritance in a trust, you will need the help of a trust attorney.
- Was the Settlor married? If so, and all the trust assets are to go to the spouse, you should at least meet with a trust attorney to make sure you understand the tax implications of that transfer of assets as well as to ensure that any tax returns required of the trust are prepared an filed in a timely manner.
- Will any gift and estate and/or inheritance taxes be due? As the Trustee of the trust you are responsible for ensuring that all taxes owed are paid before assets are distributed. If you make distributions before taxes are paid, you could be held personally responsible for the tax debt. Consulting a trust attorney will prevent that from happening.
- Is the trust a beneficiary? Sometimes, a trust itself is also a beneficiary of a life insurance policy or retirement account. When that is the case it complicates the task of settling the trust and calls for the assistance of an attorney.
Contact an Illinois Trust Attorney
Please feel free to download our FREE estate planning worksheet. If you have questions or concerns regarding settling a living trust, contact an experienced trust attorney at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.