Trusts & Estate Planning
Revocable Trusts
Although many families already have established revocable trusts as part of their estate plans, many of these trusts have gone unfunded, in which case they may accomplish nothing at all. It is essential to transfer at least any real estate owned in the name of a single grantor (rather than jointly) into that grantor's revocable trust before his or her death, or else there will have to be a probate estate opened in order to transfer the title. It is also highly desirable to make similar advance transfers of tangible personal property, i.e., personal belongings, as well as most if not all investment accounts - - but not retirement accounts - - into the trust.
Powers of attorney may, if they are properly worded, enable the agents to make such transfers in trust on behalf of the principals prior to their deaths. However, there can be many complications that delay or prevent such last-minute transfers by agents. It is far better estate planning to fund the trusts in advance so that the ownership continues unchanged upon the grantor's death and the intended distributions - - or share allocations of a continued trust - - can take place immediately, outside of probate.
Regrettably, many families who already have revocable trusts have formed them, on questionable advice, as joint trusts, in other words, single trusts for both spouses. However, it is almost always preferable for transfer tax, asset protection, and other reasons, in both Illinois and Indiana, for each spouse to have a separate trust (fully funded) and related "pourover" will. Together with durable powers of attorney for property transactions and health care, these documents comprise the foundation of most sound estate plans for clients of any means.
The members of the firm have extensive experience with revocable trusts, which they constantly apply for the benefit of their clients.
Irrevocable Trusts
If the grantor of a trust makes it irrevocable and the trust is not for his or her benefit, but instead for the benefit of the children or other family members of the grantor, then the assets placed in the trust can be preserved intact for the intended beneficiaries as long as the trust lasts. This "spendthrift" protection applies to almost all legal claims upon or against the beneficiaries (with certain limited exceptions). The grantor may not make such gifts in trust in fraud of the grantor's own creditors, but the grantor may rest assured in almost all cases that the trust assets, while they remain in trust, will not become available to the beneficiaries' creditors - - and will only be distributed according to the grantor's wishes. These are two of the most important historical reasons for the use of irrevocable trusts, which are now in widespread use by middle-class families, not only by the very rich as was true in the past.
One of the most common examples of such irrevocable living trusts, in other words, irrevocable trusts established while the grantor is still living, is the irrevocable life insurance trust. Because the face amount of the life insurance owned by such trusts can itself exceed the insured's "exemption equivalent amount" for estate tax purposes, or at least augment the rest of the insured's or a surviving spouse's taxable estate well beyond that amount, irrevocable life insurance trusts are frequently used for the purpose of removing life insurance from both spouses' estates and thus saving estate taxes.
Mr. Sawyier has extensive experience with irrevocable trusts, including life insurance trusts, and will assist the firm’s clients for a surprisingly modest fee to establish and maintain them, even providing for a large measure of flexibility, where desired, through the use of trust "protectors."
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