In Illinois, effective estate planning often involves choosing between wills and trusts. Wills are cost-effective and crucial for appointing guardians for minors but involve a public and lengthy probate process. Trusts, though initially more costly, offer privacy and probate avoidance, providing long-term financial benefits. Combining both in a comprehensive plan with a pour-over will ensures thorough asset management. Consulting an experienced estate planning attorney is vital to navigate these options and implement a plan that aligns with your wishes.
Estate planning is crucial for managing and protecting your assets, avoiding probate, reducing taxes, and ensuring your healthcare wishes are honored. Our survey revealed that while only 41.7% of respondents have created an estate plan, over 50% cited "protecting my family" as the primary reason for doing so. The most common documents included are a will (40.3%) and power of attorney (37.3%). However, only 27.8% have discussed their plans with family. This highlights the importance of estate planning in safeguarding your loved ones' future. Learn more here.
Key Takeaways
- Creating a trust in Illinois can have higher upfront costs than a will but may save money long-term by avoiding probate and maintaining privacy.
- Wills are easier and cheaper to make and necessary for appointing guardians for minors, but they require probate, which can be expensive and lacks privacy.
- Combining a will and a trust in an estate plan, with a pour-over will to transfer all assets into the trust, provides thorough control. Consulting an experienced estate planning attorney is essential to handle the intricacies and ensure your intentions are clearly expressed.
Revocable and irrevocable trusts are the two main forms of trusts. Special needs trusts and spendthrift trusts are two examples, but trusts can be configured to do almost whatever you want, and they all fall into one of these two groups.
For most people, an irrevocable trust isn’t a viable choice because it entails permanently transferring control of your property to the trust and its trustee—no there’s going back.
If you change your mind, a revocable living trust may be “undone.” If you form a revocable living trust instead of writing a will, you can always change your mind later if you’d like to do so.
Compared to a last will and testament, this form of trust has several distinct advantages. This article discusses the benefits of a trust vs. a will, including:
- Getting Around Probate
- Keeping Your Personal Information; and
- Making Provisions for Mental Illness
Evaluating Wills and Trusts: Key Consideration
In Illinois, the intricacies of estate planning should not be underestimated. The process demands a thorough assessment of multiple crucial elements including:
- Financial implications
- Timeframe requirements
- Steps involved in probate
- Confidentiality concerns
- Management and distribution control regarding assets
It’s imperative for individuals to scrutinize these aspects when determining the most suitable approach between wills and trusts.
Now let’s delve into these factors to gain a deeper understanding.
Cost Comparison: Will vs. Trust
In Illinois, crafting a will is usually less expensive upfront compared to establishing a trust because of the relative simplicity of wills. They are less complex documents and thus cheaper to produce initially. These initial expenses should not be your only consideration.
The creation of a trust may come with higher beginning costs, but it’s important to evaluate the long-term advantages that could make up for these early outlays. Trusts can ultimately serve as a more cost-effective approach in terms of estate planning due to their ability in bypassing probate fees. Keep in mind that effective estate planning involves looking beyond immediate costs and considering future implications as well.
Time and Probate Process
In the realm of estate planning, timing is crucial. The probate process in Illinois has a reputation for its duration, which can extend from several months to beyond a year. Its length is dependent on numerous elements such as:
- the magnitude of the estate
- whether there’s a will present
- diversity within asset types
- properties spread across various states
Conversely, when assets are allocated into a trust, they circumvent probate altogether and enable faster distribution. This aspect presents an advantageous prospect for beneficiaries who might require swift access to these assets following your death.
Getting Around Probate
The court-supervised method of shifting properties from a decedent’s possession to his heirs is known as probate. Since the property has no other means of transferring to a living person, it is expected when someone dies leaving a will—or even if they don’t leave a will.
Since the trust retains the properties and the trust hasn’t died, a revocable living trust does not require probate. It’s a private arrangement between you and the trust party as the “trustmaker” or “grantor.” In most instances, the grantor acts as the trustee of his own revocable living trust during his lifetime, controlling the property placed within it.
When the grantor dies, a successor trustee will be designated to take over control of the trust, settling it and distributing its assets to the beneficiaries named in the trust documents. Learn more about how a revocable living trust can avoid estate taxes in our article.
Keeping Your Personal Information Private
When a will is sent to the court to open probate, it becomes public record. Anyone can read it if they come to the courthouse. They’ll be able to tell what you owned and who you left it to.
Only the beneficiaries—and, in some states, the heirs, whether or not they are beneficiaries of the trust—have access to the trust records. They won’t become public record until a beneficiary or successor files a lawsuit challenging the trust’s validity.
Making Provisions for Mental Illness
A revocable living trust has a huge benefit over a will in that you will prepare your estate if you become mentally incapacitated, not only when you die.
If you become mentally unstable to the extent that you can no longer manage your affairs, your successor trustee can step in.
Your trust documents may indicate how you will be determined to be mentally incompetent, such as by your own physician’s certification or by a team of physicians who must agree.
When this occurs, your property would not be transferred to your heirs as it would be if you died. If you are unable to handle your assets and property, your successor trustee will do so for you.
This is something that a will cannot provide for. If you don’t have a revocable living trust, your loved ones will have to petition the court to name a guardian or conservator to handle your affairs.
You may also need a will.
When a trust is formed, it is an empty vessel, a legal entity with no property ownership until you pass your property into it. If you’ve made no other plans for it to transfer to living beneficiaries, property that’s left out may still require probate.
To deal with excluded property, some people build “pour-over” wills. This form of will clearly directs that when you die, everything you own under your own name should be transferred to the trust. A pour-over also necessitates probate.
In most states, you may also use a will to appoint a guardian for your minor children if you die. This is something that a trust cannot do. Learn about how to revoke a trust in our article.
A Cautionary Note
Some revocable trusts don’t consider mental incapacity, while others have only basic preparation. If you decide to create a trust, make sure it has a detailed disability plan.
Request a consultation with an Illinois Attorney. Call our office at (630) 324-6666 or schedule a consultation with one of our experienced lawyers today. You can also fill out our confidential contact form and we will get back to you shortly.
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