Using a Trust May Limit the Reach of Probate

 Posted on November 23,2016 in Estate Planning

For many people, the first time they hear the word “trust” in relationship to financial matters is when it is used—often disparagingly—to describe a child of extremely wealthy parents. In the eyes of some working-class people, these “trust-fund kids” have things pretty easy, which may, in turn, lead to a negative connotation for the idea of a trust. Trusts, however, are extremely valuable tools with a wide variety of economic applications. When a trust, like a revocable living trust, is used in estate planning, it can dramatically ease the process of distributing the decedent’s property to his or her chosen beneficiaries.

What is a Trust?

A trust, put simply, as an arrangement that places assets and property under the care of a particular person, entity, or other third-party to be distributed to beneficiaries at some point in the future. The party responsible for managing the trust is known as the trustee and should be chosen with great care. There are many potential advantages to using a trust in place of or in addition to a traditional last will and testament.

Probate

When a person dies in the state of Illinois, his or her estate may be subject to the probate process. Generally, if the decedent solely owned more than $100,000 worth of assets, the estate must go through a probate court to ensure that fraud does not occur in the transfer of property to beneficiaries. If the decedent does not have an estate plan, the probate court may even make determinations as to who will receive which assets.

Revocable Living Trust

A trust—a revocable living trust, in particular—may allow your estate to skip the process of probate altogether, even if you currently own more than $100,000 in assets. Once the trust has been created and you properly transfer assets to the trust, you, technically, no longer own the assets; they are owned by the trust. You may create your trust in such a way that you still have control over your assets, including naming yourself as a trustee for the remainder of your life. As far the probate court is concerned, however, the assets in a trust are not considered yours and, therefore, are not usually subject to probate.

Guidance for Trust Creation

There are many considerations that go into establishing a trust, and the experienced Lombard estate planning attorneys at A. Traub & Associates are equipped to assist you. Call 630-426-0196 to schedule a confidential consultation at any one of our three convenient office locations.

Sources:

https://www.fidelity.com/estate-planning-inheritance/estate-planning/trusts

https://www.thebalance.com/pros-and-cons-of-revocable-living-trusts-3505384

http://www.investopedia.com/articles/pf/06/revocablelivingtrust.asp