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Lombard living trusts attorneyWhen you are beginning to prepare an estate plan, it is important to remember that you are not just planning for the time after your death. An estate plan is necessary for more than just the rich—though that designation can be quite misleading. An estate plan is an outline set up by anyone—including those in lower- and middle-class income sectors—that determines what will happen to one’s assets and property. For those who may tend toward the higher end of the socioeconomic spectrum, it may be in your best interest to establish a living trust, which is a tool that can be used to manage your assets while you are still alive. Among other benefits, living trusts can useful in protecting certain assets and maintaining eligibility for government financial aid programs such as Medicare and Medicaid.

Two Types of Living Trusts

There are two main types of living trusts: irrevocable and revocable. The vast majority of living trusts are revocable, meaning that they can be amended or revoked at any time by the creator. When you create a living trust, the assets you select are transferred to the trust and ownership is in the trust’s name rather than in the name of an individual. Your designated trustee then administers the trust, meaning that the trustee makes decisions for the leveraging, sale, or gift of any assets in the trust. Most people name themselves the trustee of their own living trusts, meaning that there is essentially no difference in the way that one administers his or her own assets—only that they are now technically owned under the umbrella of the trust.

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Lombard estate planning lawyerWhile you may not know the specific requirements that make one valid in the eyes of the law, you are probably familiar the concept of a will. You most likely realize that most people use a will to specify how their assets will be handled after their death. Many individuals also utilize trusts in the process of estate planning. But, what exactly is a trust and how can they help with your estate planning needs?

What Is a Trust?

A trust, at its most basic, is a fiduciary relationship that allows a person—a trustor—to give the right to hold property or assets to another person—a trustee—for the benefit of a third party or parties. There are several types of trusts that are commonly used in estate planning, but each of them has a similar structure. Assets and property are typically placed in a trust to be distributed at a later date—or over time—to the trustor’s named beneficiaries.

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