A trust, referred to as a “revocable living trust” or “living trust”, allows your beneficiaries to avoid the probate process that is required for property distribution under a will but still allow you the ability to designate who should receive your property and personal possessions at the appropriate time. Probate in Illinois can be a costly, lengthy process, generally lasting more than a year and sometimes several years.

Certain trusts also allow you and/or your beneficiaries to receive income during your lifetime. People often automatically equate trusts with tax minimization, which is incorrect. Preventing adverse tax consequences can be accomplished through trusts that are specific wealth preservation mechanisms. However, the main purpose of a living trust is probate avoidance.

No, but more and more courts are reviewing trusts as if they are contracts. Still, a trust is an agreement of one or more parties where one party (the “Trustee”) becomes the legal owner of the trust assets and agrees to provide services for another party (the “Settlor”). Often services provided by a trustee include managing trust property and distributing income from that property during the Settlor’s lifetime and upon and after the Settlor’s death.

A living trust, often called a “revocable living trust,” is created to provide for beneficiaries during and after the Settlor”s lifetime. At the time of creation, one person may be the Settlor, Trustee, and Beneficiary, but at the time of death an additional beneficiary must be in existence or the trust assets will revert to probate estate property.

A living trust is one that is created and effectuated while you, the Settlor, is alive. A testamentary trust is a trust that is created inside of a will and takes effect only upon the death of the Settlor.

A trustee is the legal owner of the trust assets and the party who agrees to distribute the assets in your trust according to the terms of the trust, which should be in accordance with your wishes. As such, trustees are generally very trusted persons who are considered fiduciaries to the beneficiaries of a trust. Trustees are legally accountable to the beneficiaries with respect to managing trust assets.

Once a trustee accepts the position and assets are in the trust, the trustee then becomes legal owner of the assets; the Settlor no longer own the assets of the trust, unless the Settlor is also the trustee, which is generally the case for living trusts.

A living will is somewhat of a misleading term because it is actually a healthcare advanced directive giving instructions for end of life or terminal illness scenarios. A living trust, as described above, involves the distribution of property and has very little to do with one’s health.