Trusts Attorney Serving Cook County & Lake County, Illinois

In life's complex journey, one often has to make crucial decisions regarding the protection and distribution of their assets. It can be an overwhelming process, but thankfully, there are legal structures in place that can provide peace of mind. One such structure is a trust. Setting up a trust not only ensures that your assets are safeguarded, but also distributed according to your wishes. 

The concept of a trust might seem intimidating at first, but it's essentially a legal agreement that allows you to ensure your assets are handled exactly as you intend. Whether it's for the benefit of your loved ones or charitable causes you hold dear, a trust can provide a clear roadmap for how your assets are managed and dispersed.  

If you're in Cook County or Lake County, Illinois, you have a reliable partner in this journey — the Law Offices of Steven H. Peck, Ltd. With a deep understanding of trusts, Steven H. Peck can guide you through every step of the process, ensuring your peace of mind. So why wait? Schedule a consultation today and start protecting what matters most. 

Overview of Trusts 

A trust is a legal instrument that provides a structured means of managing and distributing your assets. At its core, it involves three parties: the trust-maker, the trustee, and the beneficiaries. The trust-maker is the individual who creates the trust, the trustee is responsible for managing it, and the beneficiaries are those who receive the assets or income from the trust. So how is a trust different than a will? Unlike a will, a trust can help avoid probate — a lengthy and often costly court process required to distribute assets after death. 

What Types of Trusts Are Available? 

There are two main types of trusts—Testamentary Trusts and Living Trusts. 

Testamentary Trusts 

When a person drafts a will, the individual doesn’t always want the inheritance to go directly to the spouse or child. Sometimes, they would prefer that the assets be managed for the beneficiary’s protection over an extended period of time. In this case, a trust attorney can create a Testamentary Trust to manage the inheritance for the beneficiary. Testamentary trusts are created within wills, and like wills, they are court-supervised as part of the required probate court proceedings. 

Inter Vivos or Living Trusts 

Unlike Testamentary Trusts, Inter Vivos or Living Trusts go into effect immediately upon signing. Therefore, they offer lifetime planning opportunities such as instructions for managing your assets should you become disabled, for instance. A properly designed Living Trust can provide: 

• Incapacity planning 

• Legitimate tax avoidance 

• Asset protection for the surviving spouse 

• Individualized planning to protect your spouse and children 

• Enhanced privacy 

Revocable Living Trust 

With a Revocable Living Trust, the instructions regarding the management of assets and properties can be altered at any time, so long as the Trustmaker is still legally competent. In addition, property can be removed or added to the trust per the Trustmaker’s wishes. These types of trusts are popular because they provide the Trustmaker with the maximum amount of flexibility. 

Irrevocable Life Insurance Trust 

An Irrevocable Life Insurance Trust is established for the benefit of someone other than the Trustmaker, usually the Trustmaker’s spouse or children. Unlike Revocable Living Trusts, Irrevocable Life Insurance Trusts cannot be revoked or amended once they have been established. This type of trust can be extremely beneficial, however, in that it removes life insurance death proceeds from your estate and thereby reduces the value of your estate for estate tax purposes (meaning you will pay fewer taxes). It also allows you to direct how the proceeds of your life insurance will be passed on to your beneficiaries. 

Qualified Personal Residence Trust 

A Qualified Personal Residence Trust is an irrevocable trust that allows the Trustmaker to reserve the right to continue living in his or her home even after it is transferred to the trust. Under this type of trust, you are entitled to use your home for a predetermined amount of time after which ownership of the residence will be transferred to your children. This will remove the property from your taxable estate and entitle the asset to a valuation discount while simultaneously reserving your right to inhabit the house. 

Dynasty Trust 

A dynasty trust is a special type of trust designed for those who wish to pass their assets on to their grandchildren or other descendants without being heavily taxed. By leveraging the Generation Skipping Tax (GST) exemption, Dynasty Trusts allow individuals and couples to secure a certain amount of money in trust for the benefit of succeeding generations. The wealth in this trust will then pass from generation to generation and provide necessary funds for the beneficiaries’ health, support, and education. This protects and allows the beneficiary to maintain a certain lifestyle while avoiding taxes associated with a larger estate. 

Minor's Demand Trust 

A Minor’s Demand Trust is another option for parents or grandparents who wish to leave lifetime gifts for their descendants. This type of trust provides special tax exemption by allowing for annual monetary gifts that do not exceed the amount required to be eligible for the gift tax exemption. Minor’s Demand Trusts are flexible because the gifted funds are not limited to the beneficiary’s educational needs; instead, the Trustee can use the funds for any reason so long as it benefits the child. 

Common Trust 

A Common Trust is a good estate planning option for couples with more than one child. In a Common Trust, funds are preserved for children and disseminated on an “as-needed” basis. There are many different variations of Common Trusts, but the cornerstone of every Common Trust is to provide for all your children’s needs just as you would if you were still alive. Any number of detailed instructions can be provided to the Trustee within the Common Trust to address special considerations regarding the needs of each individual child. 

Special Needs Trust 

Estate planning laws recognize that in some families, a child may never be able to provide for himself due to a physical or mental disability. In these cases, a Special Needs Trust can be beneficial. A Special Needs Trust designates a Trustee who is responsible for providing for the financial and medical needs of the child per the written instructions left by the deceased parent. In a Special Needs Trust, you may also appoint a guardian who will see that the child’s emotional, religious, and social needs are met. 

Tax-Sheltered Family Trust 

A Tax-Sheltered Family Trust, sometimes referred to as a Credit Shelter Trust or Bypass Trust, is helpful for couples who wish to legally avoid or reduce estate taxes. In a Tax-Sheltered Family Trust, property is transferred to the trust at the time of the first spouse’s death, rather than directly to the surviving spouse where it would be taxable in that spouse’s estate. 

Charitable Remainder Trust 

A Charitable Remainder Trust (CRT) is a special type of irrevocable trust in which the assets donated are shared between the Trustmaker and the charitable beneficiaries. Typically, a CRT pays income to the Trustmaker for an extended period of time, or even for his or her entire life. Any remaining principal is then paid to the designated charities. CRTs allow individuals to benefit from the sale of property that that they may otherwise be penalized for in the form of capital gains taxes. Since the assets in a CRT are removed from your estate, you can also benefit from estate tax savings. 

Charitable Lead Trust 

In a Charitable Lead Trust (CLT), the recipients of income and assets are reversed. With a CLT, the designated charities receive the trust’s income, and the Trustmaker (or his or her beneficiaries) receive any remaining assets once the trust has been terminated. As with other types of Charitable Trusts, CLTs can also result in significant tax benefits. 

Stand-Alone Retirement Trust 

The Stand-Alone Retirement Trust is designed for those who want to have control over their wishes for tax-deferred accounts. This is a separate trust intended to protect assets that are passed on to one or more beneficiaries by enforcing exactly how and when the assets will be distributed. All distributions are paid into the trust, and then the trust can pay out directly to the beneficiary, accumulate assets in the trust for a certain period of time or pay out according to specific instructions, such as money earmarked for the beneficiary’s college education. Another benefit for leaving retirement accounts in trust is that the U.S. Supreme Court ruled that accounts left directly to a beneficiary, other than a spouse, don't have creditor protection. 

Gifting Trust 

This irrevocable trust is designed to help the grantor distribute family wealth while avoiding the gift tax. The gifting trust makes use of a special type of trust, such as a Crummey trust, to allow the grantor to give assets in excess of the annual gift tax exclusion. The trust offers withdrawal rights to the beneficiary for a limited time, which puts the gift in the “present interest” category, rather than the “future interest” category – and thus, is it not subject to gift taxes. 

Offshore Trust 

An offshore trust is a trust created outside of the legal jurisdiction of the United States. These offshore trusts are effective in protecting assets simply because the laws of the nations in which they are drafted provide better creditor protection that the protections provided in the U.S. Offshore Trusts do not require that the assets themselves be moved from U.S. soil, nor do they require that the Trustmaker relocate. As long as the ownership of the assets and the jurisdiction governing the trust reside in a trust-favorable nation, the Trustmaker receives full asset protection.

These types of trusts can come with significant maintenance fees, but the peace of mind that comes with this planning option is often well worth the investment. An experienced trust lawyer with a firm grasp of estate planning laws can help you decide whether this means of asset protection is right for you. 

Pet Trust 

Trusts & Pet Wills 

When planning your estate, one of the main goals is to continue providing for your loved ones after your death. If you’re like the many Americans who consider their pets their loved ones, then you should be considering the long-term care of your pet in the event of your death or disability. 

Pet Wills vs. Pet Trusts 

There are many ways to provide care for your pet within your estate plan, but two of the most common are through pet wills and pet trusts. Although you can include a bequest for your pet within your will to provide for pet care after death, this may not be the best option. 

Why? Because at the time of your death, your will (like all other wills) will go through probate. This can be a long and grueling process, one that your pet simply doesn’t have time for. Unlike your spouse or your adult children, pets don’t have the capacity to take care of themselves. They need immediate attention. During probate, your pet’s care and ownership can come into question. Since wills often leave pets vulnerable, many people are now turning to pet trusts to assist them in providing necessary funds, protection, and instructions for the care of their beloved pets. 

Why You Need a Pet Trust 

Unlike pet wills, pet trusts do not have to go through the probate process. Therefore, with a pet trust, your wishes regarding the care of your pet will be implemented immediately upon your death or disability. You and your attorney can work together to create a proper pet trust for pet care after death which includes specifics regarding the daily care, medical treatments, ownership, and even burial of your death. 

Types of Pet Trusts 

Common types of trusts for pet care after death include: 

• Statutory Pet Trusts 

• Honorary Trusts 

• Traditional Legal Trusts 

The Law Offices of Steven Peck can help you determine which type of pet trust is best for you and your individual circumstances as well as how much you should leave to provide adequate care for your beloved pet. 

Process of Creating a Trust 

The process of creating a trust may appear complex, but with appropriate guidance, it can be streamlined into manageable steps: 

1. Identify the Purpose of the Trust: The first step in creating a trust is to identify its purpose. Whether it's to safeguard assets for underage children, provide for a disabled loved one, or minimize estate taxes, the purpose will guide the structure and terms of the trust. 

2. Choose the Type of Trust: Based on the purpose and your personal circumstances, choose between a revocable or an irrevocable trust. Consult with an attorney or financial advisor to make an informed decision. 

3. Appoint a Trustee: Choose a reliable and trustworthy individual who will manage the assets and distribute them according to the terms of the trust. This could be a friend, family member, or a professional trust company. 

4. List the Beneficiaries: Identify the individuals or organizations who will receive the benefits of the trust. This could be family members, friends, or charitable organizations. 

5. Transfer Assets into the Trust: Once the trust is created, you need to transfer your assets into it. This might involve changing the titles of property or accounts, or creating new accounts in the name of the trust. 

6. Create and Sign the Trust Agreement: Finally, you need to create the trust agreement document which outlines the terms of the trust. This document should be drafted by a professional and signed in the presence of a notary. 

Remember, trusts can be complex, so it's always recommended to seek professional advice when creating one. 

Why Having a Trust Is Important 

In the realm of financial planning, establishing a trust stands out as a critical step for many reasons. It is not just about wealth preservation; a trust opens avenues for effective asset management, tax planning, and certainty in asset distribution. It's important to understand the importance of having a trust and the unique advantages it can offer: 

• Avoids Probate: A trust allows for the immediate transfer of assets after death, bypassing the often lengthy and expensive probate process. 

• Secures Privacy: Unlike a will, which becomes part of the public record, a trust can maintain your family's privacy as it does not become public. 

• Asset Protection: An irrevocable trust can protect your assets from creditors or lawsuits, ensuring your beneficiaries receive what you intended. 

• Control Over Asset Distribution: A trust enables you to specify the terms of asset distribution. For instance, you can set conditions for a beneficiary's inheritance or stagger distributions over a period of time. 

• Provision for Special Needs: A trust can be set up to provide for loved ones with special needs without disrupting their eligibility for government benefits. 

• Reduced Estate Taxes: Certain types of trusts can reduce or eliminate estate taxes, preserving more of your estate for your beneficiaries. 

• Charitable Goals: Trusts can be an effective way to give to charity during your lifetime or as part of an estate plan, sometimes providing tax benefits. 

The benefits of a trust extend beyond avoiding probate. A trust allows for assets to be kept in it until a future date – perhaps when a beneficiary reaches a certain age or achieves a particular life milestone. This feature can protect assets from potential misuse. Moreover, in the event of mental incapacitation, a trust ensures that a designated trustee manages your assets. Unlike a will, a trust is a private document and does not become public record, offering an added layer of confidentiality. 

Why Do I Need a Trust? 

There are so many advantages to trusts that recent studies report that up to half of all people who now plan their estates are using trusts instead of wills. Riverwoods Trusts Lawyer Steven Peck is available to answer your questions about the difference between a will and a trust or why you need one. 

Many people find trusts preferable to wills because with a trust, you can often avoid the lengthy and complex probate process. Plus, with wills, attorneys are only able to do so much to protect your assets. Trusts provide many more options for safeguarding yourself, your property, and your family. 

Choosing a Trustee and Beneficiaries 

Choosing a trustee and beneficiaries is a critical decision when setting up a trust. These choices will greatly impact how your trust is managed and who will receive the benefits of your assets. 

Choosing a Trustee 

The trustee holds a significant responsibility as they manage and distribute the assets in the trust according to your wishes. Therefore, it is crucial to select someone who is trustworthy, responsible, and has the time and ability to manage a trust. This can be an individual like a friend or family member, or a professional entity such as a bank or trust company. When choosing a trustee, consider their financial savvy, understanding of your intentions, and their willingness to serve in this capacity. If the trust is complex, you might consider a co-trustee arrangement with an individual you trust and a professional trustee. 

Choosing Beneficiaries 

Beneficiaries are the individuals or organizations who will receive the assets or income from the trust. When selecting beneficiaries, consider the purpose of your trust, your relationship with potential beneficiaries, their needs, and your wishes for the distribution of your assets. This can include family members, friends, or charitable organizations.  

Keep in mind that the decisions regarding trustees and beneficiaries can be revised in the case of revocable trusts. As your life circumstances change, you may need to update these designations. It's recommended to review your trust details periodically to ensure they still align with your current wishes and goals.