Illinois Revocable Living Trust FAQ
1. Do I need a revocable living trust?
While a majority of our clients choose to utilize a living trust, the decision is very individualized. A living trust is not for everyone. The best decision comes from carefully weighing the pros and cons based on your personal situation in consultation with an estate planning attorney.
2. Can I change my revocable living trust after it is signed?
If it is a revocable living trust, then yes. As long as you are alive and competent, you may change the terms of the trust in any way you wish or may revoke it altogether. You remain in control.
3. Can my spouse and I create one trust for both of us?
Yes. This is commonly referred to as a “joint trust”. Joint trusts work well in some situations, but not so well in others. There are significant income and estate tax consequences. Additionally, the surviving spouse will generally be able to change the terms of the trust.
4. Will a revocable living trust save income taxes?
No. A revocable living trust is income tax-neutral during your life. The trust (known as a “grantor” trust) is essentially ignored for income tax purposes during your life while you are beneficiary. After your death, the trust becomes it’s own taxpayer and will have income tax consequences based on how it is structured and administered, which can create opportunities for trusts that are thoughtfully drafted and administered.
5. Will putting property into a living trust shield it from my creditors?
An irrevocable (gift) trust may provide some asset protection. A revocable living trust will not. Property held in a revocable living trust is reachable by creditors just as the property would have been in your sole name or in joint tenancy.
6. Will putting my assets into a revocable trust qualify me for medicaid?
No. All assets in a typical revocable living trust are treated as owned by the grantor. If medicaid qualification is your goal, you should contact an attorney that concentrates in elder and medicaid law.
7. Do I need to file or record my trust anywhere?
Not in Illinois. Some other states may have different requirements, but one of the principal advantages of a living trust is privacy. Unlike a Will, which must be made public record after you die, a trust remains private and is not filed or recorded.
8. Will my trust be valid in all 50 states?
Yes. Trusts are well recognized and respected all over the country. Nonetheless, if you move to a new state it is wise to have your Trust, your Will and your Powers of Attorney reviewed by a local attorney, and amended as needed based on your current situation.
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