Do you have to give up control of your assets once you put them in a living trust? The answer is no – not necessarily. There are a lot of different kinds of trusts, to address many different goals and objectives. Also, some trusts are revocable and others are irrevocable.

For the purposes of this question, we’re going to focus on the revocable living trust. The word revocable means it can be changed – the trust can be revoked or it can be amended. (Irrevocable trusts are the opposite. They often do involve giving up a certain degree of control, in exchange for tax savings or other benefits.)

With revocable grantor trusts, the person (or couple) who owns the property and creates the trust often serves as the initial trustee. In the capacity of trustee, the grantor will have control of the property that is held by the trust. The trustee can sell it or exchange it. Financial assets can be invested. Real estate can be held for use, or it can be sold or rented, or another property purchased. Administering the assets as trustees rather than as individuals does not necessarily prevent the use of those assets.

A popular formulation of such trusts is for the trust assets to be distributed only after the grantors pass away. When that is the structure that is elected and implemented, the grantors should have access to the assets they have titled into the trust.

For more questions about wills, trusts and the types of considerations associated with estate planning, talk to Windy City Legal. No matter which stage of your life you are in, we’re here to help develop your estate plan to reflect it, and can help you keep it current as things change. Call Windy City Legal today at 312-278-1187.

What is a living trust? Do you need one?

A living trust or revocable trust is an arrangement in which the owner of property, or grantor, transfers said property to a trustee, who in turn administers the property according to the terms of the trust for the benefit of one or more beneficiaries. The trust begins when it’s created and continues after the death of the person who creates it. The trustee is responsible for managing the assets according to the provisions of the trust agreement. The grantor and trustee can be the same person, and the grantor can benefit from the assets held by the trust during his lifetime. The grantor can also change or revoke the provisions of the trust agreement if he chooses.

Does it make sense to have a revocable trust?

One of the advantages of trusts is that they avoid probate for the assets they hold. As a result, they may help to avoid costs and delays that can be associated with probate. Another advantage is that they are administered privately, as opposed to probate, which is a public court proceeding.

A trust can be advantageous for real estate, which otherwise would be subject to probate. If it is in trust, the trustee would be able to take any actions required to act quickly without need for court approval, including when maintaining, leasing, selling, or otherwise maintaining the property.

Having a trust can also be beneficial if there are children in the picture. First, minor children cannot hold or receive assets, but the trust can hold assets on their behalf. Second, the trust can address issues related to guardianship, and provide for the welfare of the children.

The trust also can preserve assets by establishing limitations on distributions based on age or other factors, increasing the chance that the proceeds will be put to good use. This is particularly useful when the beneficiaries are young adults in their late teen years or early 20s. Spreading out the distribution over time avoids burdening these young adults with a large influx of assets all at once.

In addition, a trust can be a useful mechanism to take care of and provide for a person with a disability. If that person requires significant medical care or is not able to handle financial responsibilities right away, a trust can provide that the necessary support while ensuring proper oversight.

To summarize, a revocable trust may be an appropriate way to handle a variety of assets and family situations. If some of the factors outlined above apply to your family, contact us to determine whether a trust could provide a material benefit.