Your revocable trust is a legal entity that holds and manages your assets during your lifetime and distributes them to your beneficiaries according to your instructions after your death. But for your trust to do its work effectively, you need to actually transfer/fund your assets to the trust. By funding the trust, you typically transfer ownership of your assets from your individual name to the trust.
Here are some key reasons why funding a revocable living trust in Illinois is important:
- Avoiding probate: One of the primary reasons people create revocable living trusts is to avoid probate, which is the court-supervised process of distributing a deceased person’s assets. By funding your assets into the trust, they are no longer considered part of your probate estate, and they can be distributed to your beneficiaries without going through the probate process. This helps save time, money, and maintains privacy.
- Ensuring asset management during incapacity: A revocable living trust allows for the seamless management of your assets in case you become incapacitated or unable to manage them yourself. By funding the trust, you ensure that your chosen successor trustee can step in and manage the assets according to your instructions, avoiding the need for a court-appointed guardian or conservator.
- Providing flexibility and control: A revocable living trust allows you to have greater control over how your assets are managed and distributed. By funding the trust, you can specify detailed instructions on how you want your assets to be handled during your lifetime and after your death. This can be especially beneficial if you have complex family situations, minor beneficiaries, or specific wishes for asset distribution.
- Minimizing estate taxes: While revocable living trusts do not provide direct tax advantages, they can be part of an overall estate planning strategy to minimize estate taxes. Funding the trust allows you to plan for potential tax consequences and structure your assets in a way that maximizes tax efficiency.
It’s important to note that funding a trust requires taking the necessary legal steps to transfer ownership of assets into the trust’s name. This typically involves changing the titles and beneficiary designations of various assets, such as real estate, bank accounts, investment accounts, and other property.
Robert J Huguelet, P.C. will not only design an estate plan that aligns with your goals and objectives, but will also assist in transferring your assets to your trust to make it effective.