When creating your estate plan in Illinois, you may have questions about trusts. Contrary to popular belief, trusts are not only for rich people. In the interest of avoiding probate, some people use a trust instead of a will, while others find that an estate plan is not complete unless it includes both a will and a trust. You may decide for yourself whether it is appropriate to your situation to create a trust, but it will probably be helpful to first have a basic understanding of how a trust works.
According to FindLaw, there are many different types of trusts, although there can be some overlap between them. Trusts can be either revocable or irrevocable. It is possible to make changes to a revocable trust after its creation, but an irrevocable trust is not subject to change. A testamentary trust transfers its benefits to others after your death, while a living trust helps you to manage your property while you are still alive.
There are three basic roles that parties to a trust have to play. There are several different names for the person who creates a trust, which include grantor, settlor or trustor. If you create a trust, that makes you the trustor, and you then have the ability to appoint someone to manage the trust. The name for this person is the trustee. You can be both the trustor and the trustee at the same time, but if you want the trust to continue after you have died, you must appoint another trustee to take over for you in the event of your death. Upon transfer of the property to the trustee, the trust becomes effective.
There is also at least one person or entity who receives the benefits of the trust according to the terms that you set. This person is the beneficiary. The trustee has the responsibility to act in the beneficiary’s interests when managing the trust. A trust can have more than one beneficiary, and it is possible to name yourself as one of the beneficiaries although, depending on the type of trust you create, it may not be necessary.
The information in this article is not intended as legal advice but provided for educational purposes only.