One of the more useful tools used by Illinois Estate Planning attorneys is the inter vivos trust, also commonly known as a living trust. This is a trust created by someone during their lifetime and then “funded” by transferring assets from the name of the person who created the trust (the “grantor”) into the name of the trustee. The estate planner generally combines the living trust with what is called a “pour over” will, which is intended to take care of any assets which remain in the testator’s name at the time of his or her death. The pour over will provides that any assets in the testator’s name at the time of his or her death “pour over” into the trust, which contains the complete dispositive estate plan.
Living trusts typically can be amended or revoked by the grantor at any time or times. To the extent assets are transferred into the trust during lifetime, the trust creator can avoid probate at death or in addition, the often much costlier and longer lasting need for a probate court guardianship of the estate of a grantor who suffers a stroke or other debilitating condition rendering him unable to handle his affairs during his lifetime.
The grantor of the living trust can name himself the initial trustee during his lifetime, thus retaining complete flexibility and control over the assets in the trust. Under Internal Revenue Service rules, the trust can be simply ignored during the grantor’s lifetime, with all income and expense reported by the grantor under his or her social security number on his or her 1040 annual tax return. Further, the trust is ignored for such important issues as qualification of a residence transferred to the trust for purposes of the real estate tax homestead, senior and senior freeze exemptions.
Feel free to contact an Illinois estate planning attorney experienced in the use of living trusts at Logan Law, LLC, if you have questions about the use of trusts in your estate plan or any other area of the laws governing Illinois estate planning or Illinois probate or estate administration.