Estate Planning: Explore the Life-Altering Advantages and Slight Disadvantages of a Living Trust to Protect Your Legacy
April 30, 2023, by Jessica
Estate planning should be on the minds of anyone who owns a condo, house, or any substantial real estate holdings and other assets in Chicago.
Ironically considering the benefits and drawbacks of a living trust, a will, or (the much more popular one, it seems) having no plan became an essential topic after a prominent figure in the music industry passed away, leaving his estate unprotected. Let’s explore this further.
Unfortunately, it was no secret that Roger Nelson, also known as Prince, did not have a plan, which led to him not having the advantages of a living trust and, ultimately, being unprepared.
Within three weeks of his death, approximately 700 individuals claimed to be his half-siblings or descendants, according to reports! It took several years to sort through the claims before his estate was settled and reduced in size due to all the lawyer’s fees.
Surprisingly, Snoop Dog later disclosed that he had no arrangements to protect his assets in the event of an unfortunate circumstance. According to him, he isn’t concerned because he’ll be dead. Well, I was wrong. It sounds like he does have a plan. I hope he’s joking. But here are his thoughts on the topic. I can’t help but wonder if Prince felt that same way.
It’s concerning to think that these two highly successful individuals may not have considered the importance of safeguarding their assets.
But sadder still is Mark’s story; apparently, having just a will grants you the same result as not having anything at all.
LAST WILL AND TESTAMENT OF … (IT DOESN’T MATTER, IT’S NOT GOING TO HAPPEN ANYWAY)
Mark lived in Chicago and was a successful business owner. He had accumulated significant wealth over the years. He talked about estate planning and creating a living trust to ensure his assets would be distributed according to his wishes after his death.
However, he had never taken the time to do it and instead relied on a simple will to facilitate his wishes.
Unfortunately, some outraged family members contested the will after Mark’s death, and his estate went through a lengthy and costly probate process.
The items that Mark had intended to leave to specific beneficiaries were tied up in court for years, and the legal fees depleted a significant portion of his estate.
If Mark had created a living trust, his assets could have been distributed without going through probate, and his beneficiaries would have received their inheritance in a much more timely fashion.
WHY IS THIS?
I recently read an article online stating that 64% of Americans do not have a will. Most of these individuals (60%) have not created one due to procrastination, while others feel uncomfortable discussing their mortality and do not perceive it as a pressing matter.
I’m writing this article because my spouse and I recently embarked on safeguarding our home and possessions through a revocable living trust.
The process is similar to completing a mortgage application. Purchasing a home and going through the mortgage application process can be emotionally exhausting.
So is planning your estate! There are several important tasks that you must consider. These include creating a legally valid will, establishing trusts and making charitable donations to reduce estate taxes, selecting an executor and beneficiaries, and arranging your funeral details. So having snacks on hand is vital to keeping your energy levels up during this time.
If you possess property and assets in Chicago, it’s crucial to contemplate estate planning to guarantee their security and proper distribution following your desires after your demise.
A valuable way to manage your assets is through a living trust, a legally binding document that enables you to transfer ownership of your assets into it, safeguarding them while you’re still alive. The trust is overseen by a trustee who adheres to the stipulations you establish in the document.
By establishing a living trust, you can circumvent the often lengthy and costly probate process, which can potentially hold your assets hostage for several months, if not years.
Who’s got time for that nonsense? Furthermore, a living trust can aid in minimizing the estate taxes due after your demise.
In Chicago, the laws governing living trusts can be complex. Working with an experienced attorney ensures your trust is set up correctly and meets all legal requirements. As with any lifestyle choice, there are advantages and disadvantages to consider.
ADVANTAGES OF HAVING A LIVING TRUST
- Avoid Probate: Probate refers to the legal process of transferring the assets of a deceased person to their beneficiaries. However, in Illinois, probate can be a time-consuming and expensive procedure, with multiple fees and court costs that can reduce the value of your estate. A living trust can bypass the probate process, allowing assets to be directly passed on to beneficiaries.
- Flexibility: A living trust can be a flexible tool that allows you to change your estate plan as your circumstances change; unlike a will, which is a static document, a living trust can be updated to reflect changes in your assets, beneficiaries, or other factors.
- Privacy: Probate is a public process, meaning anyone can access information about your estate and beneficiaries. A living trust can offer more privacy, as the trust document is not generally a matter of public record.
DISADVANTAGES OF HAVING A LIVING TRUST
- Cost: Creating a living trust can be more expensive than creating a will, as it requires more complex legal work. However, the cost of building a living trust can vary depending on your circumstances.
- Maintenance: A living trust requires ongoing maintenance, such as transferring assets into the trust and updating the trust document as necessary. This can be time-consuming and may require additional legal fees.
- No Asset Protection: While a living trust can help you avoid probate, creditors can still go after assets in a living trust to pay off debts.
When my husband and I were organizing our revocable living trust, we had several questions that needed clarification from our estate planner. Our questions were common, so he provided us with a list of frequently asked and answered questions, which I have included in this article. Hopefully, this resource is helpful for individuals in a similar situation.
ESTATE PLANNING FREQUENTLY ASKED AND ANSWERED QUESTIONS
What is the difference between a revocable and irrevocable trust?
A revocable trust is a trust that can be changed or revoked by the person who created it. On the other hand, an irrevocable trust cannot be changed or canceled once it is created. Revocable trusts are more commonly used for estate planning as they offer more flexibility.
What assets should be placed in a living trust?
Assets typically placed in a living trust include real estate, investment accounts, and valuable personal property. However, not all purchases need to be placed in a trust, and the decision should be based on your circumstances.
Do I still need a will if I have a living trust?
You should still have a will, even if you have a living trust. A will can be used to designate guardians for minor children, name an executor, and distribute any assets that were not transferred to the living trust.
Cost to Create a Living Trust?
The cost to create a living trust can vary depending on your circumstances, such as the complexity of your estate and the fees charged by your attorney. Generally, you can expect to pay between $1,000 and $3,000 to create a living trust.
Reasons for Infrequent Use?
While a living trust can be a helpful estate planning tool, not everyone needs one. Living trusts are typically used by people with larger or more complex estates and may not be necessary for those with more straightforward estates. Some may also prefer a will or other estate planning tools instead of a living trust. The decision to use a living trust should be based on your circumstances and goals for the estate.
Is Estate Planning Only for the Wealthy?
That is a myth! Contrary to what most people believe, it extends beyond what to do with assets and liabilities. It can also answer questions about the guardianship of minor children and pets, what to do when it comes time for your funeral, and what charities you want to support after you die.
I hope the questions answered in this article have given you a good understanding of the process at hand. Although there may be more inquiries, I’m confident enough information has been shared to get you started.
An experienced attorney or estate planner can help you with any additional questions. Let’s see if we can reduce the number of people unprepared for their exit from this world.
As mentioned previously in the article, this procedure may take a considerable amount of time and effort. However, once it is completed, you only need to maintain it. Even though many people may not prefer it, it is not solely for our benefit.
Instead, it is for the sake of our loved ones whom we leave behind. Why would you want your family members to struggle and endure unnecessary hardships over something that could have been easily managed?
In conclusion: Estate planning and a living trust can be valuable tools for individuals who own property and assets in Chicago. It provides privacy, flexibility, and control over how assets are distributed after the trust creator’s death while avoiding the probate process.
Additionally, a living trust can offer protection if the creator becomes incapacitated. It can be distressing to witness or hear about individuals who believed they were bequeathing a legacy to their loved ones, only to have it consumed by bureaucratic processes and legal battles.
If you possess assets and property in Chicago, establishing a living trust can prove advantageous in managing them, all while offering comfort to yourself and your dear ones.
Now on a different note … Have we met yet?
Selling a condo can be stressful, but it doesn’t have to be complicated. My name is Jessica, and If you’re a condo owner considering selling, I provide a consultation service with no obligation. You may contact me by calling or texting 312-600-8121 or simply clicking on this email link provided. I will respond within 24 hours.