Planning for the future is one of the most important steps you can take to protect your loved ones and ensure your assets are distributed according to your wishes. Many people wonder whether a revocable living trust should be included as one of their estate planning documents.

What is a Trust?

A trust is a legal arrangement that allows you to transfer assets to a trustee, who then manages and distributes those assets according to your instructions. Trusts can be used to avoid probate, maintain privacy, help minimize taxes, provide greater control over how your estate is handled after your passing, and provide asset protection for beneficiaries.

Do I Need a Trust?

You may benefit from a trust if you:

• Want to avoid probate. A properly funded trust allows your beneficiaries to privately receive assets (discussed more below) with minimal delays and legal fees, which will result in a smoother and faster transfer of assets to your beneficiaries.
• Have minor children or dependents with special needs. A trust gives you control over how and when your assets are distributed, allowing you to provide for loved ones in a structured way. For example, you can ensure that funds are used for health, education, and/or basic maintenance and support for a beneficiary’s entire life or until a certain age or milestone is reached.
• Own real estate in multiple states. Without a trust, your heirs may face separate probate proceedings in each state where you own property. A trust can help centralize and simplify the transfer of those properties, saving time and expense.
• Want to minimize potential estate taxes. Certain trusts can be designed to leverage federal and state estate tax exemptions, potentially reducing your taxable estate and preserving more wealth for future generations.
• Want to keep your information private. Unlike a will, which becomes part of the public record once filed with the court, a trust remains private. This can help not only shelter financial information, but also protect the specifics of your estate plan from public view.
• Want to protect assets from creditors or lawsuits. Trusts can help safeguard wealth from future claims, helping to preserve your estate for your beneficiaries. This can be especially important in situations involving business liability, professional risk, or divorce.
• Want to help create and preserve generational wealth. Trusts can be used to strategically pass wealth down multiple generations, while avoiding or minimizing generation-skipping transfer (GST) taxes. With careful planning, a trust can help ensure that your family’s financial legacy benefits your grandchildren and beyond—while preserving control over how those assets are used.

Types of Trusts to Consider

There are different types of trusts, each serving unique purposes:

• Revocable Living Trust. This is one of the most popular estate planning tools. A revocable living trust can be altered, amended, or revoked during your lifetime, giving you flexibility as circumstances change. It also allows your assets to bypass probate, resulting in a faster, more private, and potentially less expensive transfer to your beneficiaries.
• Irrevocable Trust. Unlike a revocable trust, this type generally cannot be changed once established. However, the trade-off has significant potential benefits. For example, an irrevocable trust can offer strong asset protection from creditors and lawsuits, and can reduce estate tax liability by removing assets from your taxable estate and leveraging Federal and State estate tax exemptions.
• Special/Supplemental Needs Trust. If you have a child or dependent with a disability or special needs, this type of trust allows you to provide financial support without jeopardizing their eligibility for essential government benefits, such as Medicaid or Supplemental Security Income (SSI). A Supplemental Needs Trust is a thoughtful way to ensure continued care and stability for a loved one. Choosing the right type of trust depends on your personal goals, family dynamics, and financial picture. One of our experienced estate planning attorneys can guide you through your options and help design a plan that protects your assets and supports your legacy.

Do I Still Need a Will If I Have a Trust?

Yes. Even if you have a trust, a pour-over will ensures that any assets not placed in the trust during your lifetime are transferred into it upon your passing. A will also allows you to name guardians for minor children.

Consult an Estate Planning Attorney Near You

If you're in Hinsdale, Western Springs, LaGrange, La Grange Park, Westmont, Burr Ridge, or any of Chicago's western suburbs and you're considering a trust, our estate planning attorneys can help guide you through the process. Contact us today for a consultation and help secure your family's future with a holistic, well-crafted estate plan.