A Trust is Much More Than Estate Protection
For over three decades, I have assisted clients and their families with a Living Trust. I have witnessed trusts transition from being met with curiosity and resistance by financial institutions to being the most widely accepted and requested estate plan today.
With that acceptance comes the reality that most people are unaware that a Living Trust is more than just an estate plan. It is the protection you owe yourself and your family.
Disability Protection
You may not be aware that if you become incapacitated by illness or an accident, even if you are married, your assets are subject to probate. The court’s probate system is designed to protect your assets if you have passed away or are unable to manage your financial affairs.
However, for as long as anyone can remember, the probate court system has been overwhelmed. It can’t handle the cases of every person who has died or is disabled and whose assets exceed the Illinois probate limit of $150,000. No court system can effectively handle tens of thousands of pending cases.
Consequently, having your assets under the court’s control is costly and lengthy. If you have a comprehensive, fully funded Living Trust plan, which includes power of attorney documents, your assets will not be subject to the probate court’s control. Your previously appointed trustee and agent will handle your financial affairs.
Trusts Asset Protection
Suppose one of your beneficiaries is at financial risk from creditors, lawsuits, or a divorce. In that case, a Spendthrift provision in your Trust protects their inheritance.
Further, if a beneficiary has a disability now or acquires one before your death and is receiving SSI or Medicaid benefits, their inheritance would be at risk. They may be subject to government reimbursement of benefits received, or they may lose their benefits. Your Living Trust should include a Supplemental Needs provision, which protects their benefits and inheritance.
Minors Trust Protection
If your children or other beneficiaries are under the age of 18 at your death, they cannot receive their inheritance. All assets not titled in a trust will be under the control of the probate court until they reach the age of majority. More problematic, an 18-year-old then receives the entirety of your estate.
You avoid both issues by titling all assets in your Living Trust. You choose the age of final distribution for each child after they are provided for during their lives to ensure their health, education, and support.
Avoiding Probate at Death
The most understood reason to secure a Living Trust is to avoid the probate system at your death. True, a fully funded trust will accomplish this.
You avoid probate because your assets transfer during your lifetime from your name to the name of your trust. All new taxable financial accounts and assets are titled in the name of your trust. You or you and your spouse are trustees of your trust. All the powers you had when the assets were in your name are still the same. You name a trusted person as your successor trustee to succeed you.
Today’s Trust Affordability
Wealthy families have historically utilized trusts to evade the court system, maintain financial privacy, and minimize taxable estate. Wealthy families did not have exclusive rights to Trusts. However, 30-40 years ago, the average cost of a trust plan made it unaffordable for most people.
With the arrival of technology and additional discount opportunities from groups like MAP, every person can afford a Living Trust.
Your Living Trust
At the end of your life, or incapacitation, along with your firearms, if you have property or bank accounts in your name, they risk Probate.
- A Will must be probated. The rule is that no one can legally sign on your behalf. Therefore, all assets in your name are subject to the probate process, which averages 18 months and is costly.
- A Living Trust completely avoids Probate.
- Your financial accounts, life insurance policies, and deferred compensation accounts can name your Living Trust as beneficiary, subject to essential tax considerations.
- A Living Trust estate plan includes Health Care and Financial Power of Attorney documents. It also consists of a Last Will and Testament. A Will is necessary for the guardianship of minor children. It also transfers assets in your name out of Probate.
Contact us today for further information or visit Tuohy Law Offices now.
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TomTuohy.com
312-559-8400
17W220 22nd Street
Oakbrook Terrace, Illinois, 60181
This blog entry is for information and planning purposes. Therefore, it is not legal advice. Please do not use this blog as a substitute for legal advice, which depends on specific facts and laws in a particular jurisdiction. No reader of this blog should act or refrain from acting based on any information included in, or accessible through, this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the reader’s state, country or other appropriate licensing jurisdiction.
Successor Trustee and Agent Changes
