Revocable TrustsThe name of the revocable trust is descriptive of its legal character.  As opposed to a testamentary trust, aka a trust created by will, the revocable living trust is an inter vivos trust, meaning a trust that a person creates during his or her lifetime.  The typical Illinois estate planning living trust is testamentary in nature, meaning that it is an estate planning too by which the creator of the trust disposes of property at death.  At death, the testamentary trust works with the last will and testament.

An estate planning trust is most often revocable.   This means that the creator of the trust is authorized  to amend or revoke the trust at any time during his or her lifetime. The term “revocable trust” will refer to a trust created while the creator is alive in which the right to revoke is reserved by himself or herself alone. The transfer of property to a revocable trust is not considered a gift because the right to revoke the transfer makes it incomplete for certain tax purposes. At death, the revocable trust becomes irrevocable, and the property transferred to the revocable trust (whether before and after the death of the creator) will be included in the taxable estate of the deceased creator at death.  Note that even though property transferred to the trust during a persons lifetime will not be included in the creator’s (or grantor’s) probate estate, the property will be included in the taxable estate.

The revocable trust is a very flexible estate planning tool and there are numerous tax and non-tax advantages that may be employed, In Illinois, our Chicago estate planning attorneys may counsel a family, individual or professional to establish a revocable trust in connection with their estate plans.

Revocable Trust Benefits

Our Chicago estate planning attorneys frequently employ revocable trusts to work in association with a last will and testament. Revocable trusts enable a person to effectuate a dispositive estate plan during that persons life, which will only have a practical dispositive impact at death. Thus, there are two important benefits in creating revocable trusts: 1) retention and control over assets during a persons lifetime, with the right to revoke or amend; and 2) a compliment to the last will and testament for effectuating the dispositive estate plan at death, which, if a persons assets are transferred properly during his or her lifetime, serves to avoid the probate process.  A person may fund the revocable trust during life, retaining the right revoke and amend the trust assets and the status of the selected beneficiaries until death.  Consequently, a person employing the revocable trust in his or her estate planning will maintain the most important qualities of asset ownership: the right to use and benefit from the property during life, and the right to control and manage the property as the trustee.  Upon death, the revocable trust becomes irrevocable and a trustee manages the property in accordance with the person’s specific directions.

As for unmarried or single persons as well as individuals in nontraditional relationships, revocable trusts may be one of the most flexible estate planning tools available. For example, a revocable trust may be more difficult to contest in estate litigation than a last will and testament (see Will Contests).  Additionally, a revocable trust is a private, non-public legal documents, and its contents and provisions will be kept confidential.