One of the most popular additions to the average estate plan is a living trust. One reason that living trusts are so commonly found in an estate plan is that they are extremely flexible, meaning they can help achieve a wide range of estate planning goals. If you are considering the addition of a living trust to your estate plan, the Waukegan living trust attorneys at Hedeker Law Ltd. suggest you ask yourself the following questions when creating your trust.
- What is your trust purpose? A living trust can be used to achieve numerous estate planning goals. Before you sit down to create your trust agreement, take some time to define the purpose of your trust with as much specificity as possible. Narrowing down the purpose and goals of your living trust makes creating the trust easier and increases the odds of your trust working as intended. If you are no longer here, and questions arise regarding the administration of your trust, the Trustee, or even a judge may need to rely on your stated trust purpose when answering those questions.
- What type of living trust do you need? Trusts can be broadly divided into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s 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 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 and for any reason. An irrevocable living trust, on the other hand, cannot be modified or revoked by the Settlor at any time nor for any reason once active. Your trust purpose will typically determine which type of trust you need to create.
- Who should be your Trustee? Your choice of Trustee will go a long way in determining whether your living trust succeeds or fails. Your Trustee is responsible for managing and investing trust assets as well as administering the trust. The duties and responsibilities of a Trustee are numerous and diverse. Given the important role your Trustee requiring you to spend a considerable amount of time deciding who to appoint as your Trustee. Ideally, your Trustee should have a legal and/or financial background to ensure that he/she is capable of administering the trust successfully. Avoid making the common mistake of appointing a spouse or family member as your Trustee unless he/she is truly qualified and capable of administering the trust. Depending on the size and complexity of your trust, choosing a professional Trustee may be your best option.
- Don’t DIY! The ease with which you can find DIY legal forms online makes it tempting to go that route; however, the DIY route is likely to cost you and your loved ones much more time and money in the long run than you save in the short run. Instead, allow your estate planning attorney to draft the trust for you.
- What trust terms are important to you? As the Settlor of the trust, you will decide on the terms used to administer the trust. You will use those terms to decide when assets can be distributed, how assets should be invested, and how much discretion you want your Trustee to have, among other things. As the Settlor, you can include any terms you wish as long as they are not illegal, impossible, or unconscionable.
- How will you fund your trust? You can use almost any type of assets to fund your trust; however, the trust purpose and type of trust created may dictate the type of assets you use. Then you must actually convert the assets into the name of the trust. This can be as simple as transferring cash into the trust or as complex as re-titling real property into the name of the trust.
Contact the Waukegan Living Trust Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns regarding living trusts, or you are ready to get started creating your living trust, contact the experienced Waukegan living trust attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.