The most common reason people create revocable living trusts is to avoid probate. When you die, assets in your revocable trust pass directly to your beneficiaries according to the trust terms, without court involvement. This provides:

• Speed: Distribution can happen within weeks instead of 6-18 months
• Cost Savings: Avoid probate attorney fees, court costs, and executor bonds (typically 3-7% of estate value)
• Privacy: Trust terms remain confidential, unlike wills which become public record
• Simplicity: Avoid complex court procedures and requirements

In Illinois, probate can be particularly time-consuming and expensive, making probate avoidance a compelling reason to establish a revocable trust.

A revocable trust provides seamless management of your assets if you become incapacitated. Your successor trustee can step in immediately to manage trust property without court intervention, avoiding the need for guardianship or conservatorship proceedings.

Without a trust, if you become incapacitated, your family would need to:

• Petition the court for guardianship (expensive and time-consuming)
• Expose your incapacity and finances publicly
• Accept the court's choice of guardian (may not be your preference)
• Submit to ongoing court supervision and annual accountings

A trust avoids all of these issues by providing for private, immediate succession of management.

If you own real estate in multiple states, a revocable trust is invaluable. Without a trust, your estate would require separate probate proceedings in each state where you own property (called ancillary probate), multiplying costs and delays.

A revocable trust holds all real estate regardless of location, allowing your successor trustee to manage and distribute all property through a single administration process.

Trust documents are private contracts that never become public record. This protects your family from:

• Public knowledge of your assets and their values
• Identity thieves and scammers who target beneficiaries
• Unwanted publicity about family wealth
• Competitors learning about business interests

For business owners, high-net-worth individuals, or anyone who values privacy, this confidentiality is extremely valuable.

An ILIT owns life insurance policies on your life, removing the death benefit from your taxable estate. This is particularly valuable for Illinois residents facing estate tax exposure, as Illinois has one of the lowest estate tax exemptions in the nation ($4 million as of 2024).

Key Benefits:

• Life insurance proceeds avoid estate tax (both federal and Illinois)
• Provides liquidity to pay estate taxes and debts
• Protects insurance proceeds from beneficiaries' creditors
• Allows control over how and when beneficiaries receive proceeds

How It Works: The trust owns the policy, pays premiums (you make gifts to the trust to cover premiums), and receives the death benefit when you die. The trustee then distributes proceeds according to your instructions without estate tax.

A MAPT allows you to protect assets from nursing home costs while potentially qualifying for Medicaid to cover long-term care. This is crucial planning for many Illinois families, as nursing home care costs $8,000-$12,000+ per month.

Key Features:

• You transfer assets to the trust but often retain the right to income
• After a 5-year look-back period, assets are protected from Medicaid estate recovery
• You can name family members as trustees
• Your home and other assets are preserved for your heirs

A CRT allows you to donate assets to charity while retaining an income stream for a specified period. This sophisticated planning tool can provide significant tax benefits while supporting causes you care about.

Benefits:

• Immediate income tax deduction for the charitable gift
• Avoid capital gains tax on appreciated assets
• Receive income for life or a term of years
• Reduce estate tax
• Support charitable causes

Ideal For: People with highly appreciated assets (real estate, stocks) who want to sell without paying capital gains tax, generate income, and benefit charity.

A special needs trust provides for a disabled beneficiary without disqualifying them from government benefits like SSI or Medicaid. This is essential planning for families with special needs children or dependents.

Two Types:

• Third-Party SNT: Created by a parent or grandparent to benefit a disabled individual using the creator's assets. No payback requirement to the state.
• First-Party SNT: Created using the disabled individual's own assets (often from a personal injury settlement or inheritance). Must include Medicaid payback provision.

The trust pays for supplemental needs not covered by government benefits—vacations, entertainment, education, therapies, etc.—while preserving eligibility for essential benefits.

Asset protection trusts shield assets from future creditors, lawsuits, and judgments. While Illinois doesn't have a domestic asset protection trust statute, you can establish an APT in states that do (like Delaware, Nevada, or South Dakota) or create offshore trusts.

Who Needs Asset Protection:

• Medical professionals facing malpractice risk
• Business owners with liability exposure
• Real estate investors
• Anyone with significant wealth concerned about lawsuits

A GRAT is an advanced estate planning technique used to transfer appreciating assets to beneficiaries with minimal gift tax. You transfer assets to the trust, retain an annuity payment for a term of years, and at the end of the term, remaining assets pass to beneficiaries gift-tax-free.

Ideal For:

• Transferring business interests
• Gifting stock or investments expected to appreciate significantly
• High-net-worth individuals seeking to minimize gift and estate taxes

GRATs are complex and require careful planning with experienced estate planning and tax professionals.

A married couple with a combined estate exceeding Illinois's estate tax exemption ($4 million as of 2024) might use:

• Revocable Living Trust: As the foundation, holding most assets and avoiding probate
• Irrevocable Life Insurance Trust: To own life insurance policies, removing death benefits from the taxable estate
• Credit Shelter Trust (becomes irrevocable at first death): To maximize both spouses' estate tax exemptions

This combination provides flexibility during life, asset management during incapacity, probate avoidance, and significant estate tax savings at death.

A family with a special needs child and other children might use:

• Revocable Living Trust: For the parents' primary assets, with provisions for typical children
• Third-Party Special Needs Trust (irrevocable): To provide for the special needs child without affecting government benefits

The revocable trust can include provisions that pour a portion of assets into the special needs trust at the parents' death, ensuring the disabled child is cared for without jeopardizing essential benefits.

A physician or business owner concerned about liability might use:

• Revocable Living Trust: For liquidity needs, retirement accounts, and assets needed for daily living
• Domestic or Offshore Asset Protection Trust: For significant wealth that isn't needed for current living expenses, protecting it from future lawsuits

This provides access to needed assets while shielding wealth from potential creditor claims.

An elderly individual planning for potential long-term care needs might use:

• Medicaid Asset Protection Trust: To hold the family home and other significant assets, protecting them from nursing home costs after the 5-year look-back period
• Revocable Trust: For liquid assets needed for current living expenses and emergencies, providing access and flexibility

As assets are spent down on care, eventually only the protected assets in the irrevocable trust remain for heirs.

While irrevocable trusts are generally permanent, there are some circumstances where they can be modified or terminated:

• Consent of All Parties: If the grantor and all beneficiaries agree, Illinois law may allow trust modification or termination
• Court Approval: Courts can modify trusts if circumstances have changed and modification furthers the trust's purposes
• Trust Protector: Some trusts include a trust protector with power to make certain modifications
• Decanting: Illinois allows trustees to "decant" (pour) assets from one trust to another with better terms
• Non-Judicial Settlement Agreements: Interested parties can agree to modifications without court involvement in some cases

However, these options are limited and require specific circumstances. Assume an irrevocable trust is permanent when creating it.

Yes. When you die, your revocable trust automatically becomes irrevocable because you (the person with the power to revoke it) no longer exist. At that point, the trust terms are fixed and must be carried out as written. Your successor trustee distributes assets according to the trust instructions, but cannot change those instructions.

For a revocable living trust, there's no minimum net worth requirement. Even modest estates benefit from probate avoidance and incapacity planning. As a general guideline:

• Under $100,000: A simple will may be sufficient (small estate affidavit available in Illinois)
• $100,000 - $500,000: A revocable trust often makes sense, especially if you own real estate
• Over $500,000: A revocable trust is typically recommended
• Over $4 million (Illinois): Irrevocable trusts for estate tax planning should be considered

However, the decision depends on many factors beyond net worth, including your goals, family situation, and assets types.

This is a critical consideration before creating an irrevocable trust. Once assets are transferred, you generally cannot get them back. However, irrevocable trusts can be structured to provide some access:

• Retained Income Interest: You can retain the right to receive trust income (though this may affect some benefits)
• Trustee Discretion: The trustee may have discretion to distribute principal for specified purposes like health or education
• HEMS Standard: Trust can allow distributions for health, education, maintenance, and support
• Loans: Some trusts allow the trustee to make loans to the grantor

The key is to transfer only assets you can afford to part with permanently, keeping sufficient assets outside the trust for your needs.

Generally, no. If you serve as trustee of your own irrevocable trust, you may lose many of the trust's benefits:

• Assets may be included in your taxable estate
• Creditor protection may be compromised
• Medicaid planning benefits may be lost

Instead, name an independent trustee (a trusted individual, professional fiduciary, or corporate trustee). You can serve as a co-trustee with limited powers in some situations, but this requires careful planning with your attorney.

Yes, absolutely. Whether you have a revocable or irrevocable trust, you still need a "pour-over will" that:

• Catches any assets not transferred to your trust and directs them into the trust
• Nominates guardians for minor children (cannot be done in a trust)
• Nominates an executor to handle any probate assets
• Serves as a backup in case any assets were missed

The pour-over will works in conjunction with your trust as part of a comprehensive estate plan.