This article will give a brief overview of any changes to Illinois Living Trust Laws for 2024 since there has been no substantial changes to the law. Furthermore, this article will review what living trusts are in Illinois.
What Are Living Trusts?
An "inter vivos" trust is a trust that is created during the lifetime of the settler of the trust. The settlor designates beneficiaries of the living trust and will receive the property in trust upon the settlor's death. One advantage of living trusts is that upon the settlor's death, the trust avoids probate, which could be a lengthy and expensive process because it involves court involvement. There are two commonly utilized inter vivos trusts:
1. Revocable Living Trusts: as the name suggests, these trusts can be changed or revoked at any time
- The settlor of the trust is usually named the trustee of a revocable trust.
- The trustee of a revocable trust retains control of the trust property during their lifetime.
- Revocable Living Trusts will also name a successor trustee that will handle the trust property distribution to the beneficiaries upon the trustee's death.
- Revocable Living Trust does not need to be witnessed to become effective.
- Revocable Living Trusts become Irrevocable Trusts upon the death of the settlor.
2. Irrevocable Living Trusts: this type of living trust cannot be changed or revoked once the trust instrument is signed.
- The settlor of the Irrevocable Trust does not maintain control over the property transferred to the Irrevocable Trust.
- Irrevocable Living Trusts can be useful to reduce taxes.
Do I Still Need A Will If I Have An Inter Vivos Trust?
Inter vivos trusts are excellent instruments for passing on property that is properly transferred to the inter vivos trust. However, there are some things that an inter vivos trust cannot be used for. An inter vivos trust cannot be used to designate a guardian for the settlor's minor children. A will can be the proper instrument to name a guardian for the settlor's minor children.
A will is also useful if the property wasn't properly transferred to the inter vivos trust. This is a common mistake that many settlors and trustees of an inter vivos trust make. They will often neglect to transfer property deeds to the inter vivos trust. Sometimes the settlors and or trustees will purchase or inherit property after creating an inter vivos trust and fail to transfer the property into the inter vivos trust. A will is a valuable estate planning tool to distribute property that was not transferred into the inter vivos trust.
What New Laws In 2024 Will Affect Living Trusts In Illinois?
There haven't been any drastic revisions to Living Trusts in Illinois for 2024. There have been sweeping changes in laws due to the global COVID-19 pandemic that affect how certain Living Trusts can now be executed.
Adjustments to Estate Tax Exemptions
As of January 1, 2023, the Illinois estate tax exemption was increased to $8,000,000, enhancing the value of living trusts as an estate planning tool for Illinois residents. This change necessitates taxpayers to reconsider their current estate planning strategies. Those who have not previously taken advantage of the exemption may want to consider making gifts or implementing other strategies to benefit from the higher exemption levels, such as transferring trust property to beneficiaries.
Given the current uncertainty surrounding the future of estate tax exemptions in Illinois, there are proposals that could potentially result in an increase in the exemption level of the Illinois Estate and Generation-Skipping Transfer Tax Act. This may affect the use of revocable living trusts in estate planning.
Probate Court Modifications
The probate court process in Illinois has undergone significant changes, including amendments to the Probate Act of 1975 and the introduction of the Uniform Probate Code, which took effect on January 1, 2024. These modifications have enhanced the efficiency of the probate process and expedited the distribution of assets to beneficiaries. They involve shorter timeframes for creditors and taxing authorities to file claims against the estate, thereby facilitating a swifter distribution of assets to beneficiaries, particularly beneficial for Illinois living trusts.
The changes to the probate court process in Illinois can impact the timeline of estate planning, affecting electronic estate planning documents and adult guardianship. The probate process typically takes 1-2 months to initiate in probate court and involves appointing an executor/administrator. Furthermore, the use of a revocable living trust reduces delays in the execution of a living trust by circumventing the probate process, enabling swifter distribution of assets to beneficiaries.
Legal Advice for Updated Trust Documents
Given the new laws and revisions, securing expert legal advice is crucial to ensure compliance. This is especially important considering the intricacy of trust transactions and the trustees’ responsibility to furnish beneficiaries with pertinent information. The recent amendments to Illinois laws, particularly the Illinois Trust Code (ITC), have specified that a settlor can only modify a trust if the trust explicitly states that it is revocable or amendable by the settlor, thereby impacting the validity of the document.
Specifically, Act 102-167 mandates the presence of a witness for an Irrevocable Trust to attain effectiveness, introducing an additional level of formality to the instruments.
The Electronic Wills And Remote Witness Act
Public Act 102-167 was passed in response to the COVID-19 pandemic, allowing for probate of electronic wills and wills that were witnessed over telecommunication means, such as Zoom, for such purposes. The act also allows for documents other than wills to be executed and witnessed through Zoom and other telecommunication services. This change impacts Irrevocable Living Trust instruments, as a witness is required to make the Irrevocable Trust effective. This act comports with drastic change in the legal landscape as the COVID-19 pandemic is entering its second year of impairing traditional face-to-face meetings and in-person court sessions.
Though 2023 did not substantially revise Illinois Living Trusts, the new law permitting remote witnesses is a significant change to reduce face-to-face meetings. Even though there haven't been extensive changes to Illinois Living Trusts, a review of the types of Living Trusts is helpful.
Summary
In conclusion, the recent amendments to the Illinois Living Trust laws have significantly reshaped the landscape of estate planning and trust administration in Illinois. With the introduction of the Illinois Trust Code, adjustments to estate tax exemptions, modifications to the probate court process, and the need for updated legal advice, it’s crucial to stay informed and updated. By integrating digital assets into trusts, adopting electronic signatures and notarization, clarifying trust terms, enhancing beneficiary protections, conducting a cost-benefit analysis of revocable vs. irrevocable trusts, understanding estate taxes and trust funding, and taking practical steps to update your living trust, you can navigate these changes effectively and ensure a secure future for your estate.
Frequently Asked Questions
What is the new trust law in Illinois?
The new trust law in Illinois allows the creation of "silent trusts," which prevent trustees from disclosing trust details to beneficiaries until they reach age 30.
Should you put your house in a trust in Illinois?
Yes, putting your house in a trust in Illinois can help your estate avoid the probate process, saving time and money while ensuring more assets for your chosen beneficiaries.
Does a living trust avoid probate in Illinois?
Yes, creating a living trust in Illinois can help you avoid the complicated probate process, making it beneficial for your assets.
Does a living trust need to be recorded in Illinois?
No, a living trust does not need to be recorded in Illinois in order to be valid and effective. This enhances the privacy of the trust.
What is the average cost of a living trust in Illinois?
Setting up a basic Revocable Living Trust in Illinois generally costs between $1,000 and $3,000, with more complex trusts potentially costing even more. Online platforms like Snug offer more affordable options for creating wills and trusts, with transparent pricing and quality estate planning services available.
If you have any further questions, don't hesitate to get in touch with our experienced estate planning attorneys at (630) 324-6666 or by filling out our confidential contact form.
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