Trusts are an important addition to an estate plan if one wishes to have more control over how one’s assets are used by the beneficiary. Illinois residents may wish to add a trust to their estate plan to help their children or grandchildren make more responsible decisions when it comes to using those assets. When adding a trust to one’s estate plan, it’s important to understand the difference between a revocable trust and an irrevocable trust.
Revocable vs irrevocable
Revocable trusts, sometimes called living trusts, allow one to make changes to the trust at any time for any reason. This means one can add or remove beneficiaries or change the assets that those beneficiaries will receive. One may also update the stipulations on how the assets are to be managed. Some people prefer this type of trust because it allows them to easily make changes in the case of a birth, marriage, divorce, or death in the family.
With an irrevocable trust, the terms cannot be changed once the trust is made official. Only in very rare circumstances can one make changes to an irrevocable trust. The main benefit of an irrevocable trust is that the assets are not subject to estate tax upon death, whereas the assets in a revocable trust will be taxed.
Advice during estate planning
Many considerations go into creating an estate plan that meets one’s specific needs. Most importantly, one must create a legally binding plan that outlines one’s wishes after death. Illinois residents who wish to start estate planning, or make changes to their current plan, can benefit from seeking legal advice from someone familiar with the state’s estate planning laws.
