If you’re in the process of making estate plans, or even just someone who owns your own home, then you should know about revocable living trusts for Real Estate. A revocable living trust can be an extremely valuable tool for managing your property. In this blog post, we’ll explain what a revocable living trust is and how it can benefit almost anyone who owns real estate.
While revocable living trusts are not new, in the last several years they have become more common and accessible to ordinary families. The benefit that is probably most appreciated by the person who creates the revocable living trust, called a grantor, is how the legal instrument is able to allow loved ones to bypass probate court after your death. Probate is the court-supervised process of gathering and distributing your assets after you die. This is not a free service, and Illinois probate courts require an attorney to handle the probate case, so setting up a living trust can save your beneficiaries lots of money on expensive legal fees. Most people who set up these trusts find peace of mind knowing that everything will go according to their wishes after they die, during what will likely be a difficult time for their loved ones.
In order to understand a living trust, it helps to compare a revocable living trust to a will. Both are legal documents that have been around for hundreds of years. With both legal instruments, the grantor names who should receive assets, along with instructions in which you name someone to handle your affairs upon death. In a will, this person is called an executor or an administrator. In a living trust, this person is called a trustee.
This is where the similarities end. A living trust, unlike a will, avoids probate for the intended beneficiaries when you die, as stated above. It also allows control of all of your assets during your lifetime and after your death. In addition, if you become incapacitated, an appointed successor trustee can step in and manage your affairs without going through the court-supervised process for an adult guardianship appointment. This also allows you to pre-select someone you trust to manage your affairs, rather than leaving it up to the court to decide who will manage your trust, when you are unable to do so.
There are several other important benefits to setting up a revocable living trust:
- Provides maximum privacy
- Allows quick distribution of assets to intended beneficiaries, or
- Lets assets stay in the trust until you want your beneficiaries to inherit
- Prevents unintentional disinheriting, and
- Reduces or eliminates estate taxes
Real estate is oftentimes a person’s biggest asset and the one asset that will generally result in an estate needing to go through probate. In Illinois, probate is required unless the overall estate is valued at or less than $100,000 and does not include real estate assets. This stipulation is why it is important for the average person to understand that a revocable living trust can help even them.
When you set up a revocable living trust, you “fund the trust” by transferring your real estate from your name to the name of your trust. The process of funding a trust can be complex, so it’s important to get legal advice before you make any decisions. Once your property is in the trust, the trustee (usually you) has the authority to manage the property for the benefit of the beneficiaries (usually you or your family). For example, you can record a Quit Claim Deed or a Warranty Deed transferring the real estate from “Joe and Jane Smith, husband and wife” to “Joe and Jane Smith, trustees of the Smith Family Trust dated (insert the date you sign your trust).”
As trustee of your revocable living trust, you can do anything with your real estate that you could do before you put it in your trust. You can buy and sell the real estate, change your trust or even cancel it—that’s why it’s called a revocable living trust.
A living trust is a great way to ensure your loved ones are taken care of after you’re gone. If you want to make sure your estate planning is done right, contact our offices for a free consultation. We can help you set up a trust so that you can relax with your family and friends, knowing there will be a happy ending because of your good planning.