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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 attorneyIn Part 1 of this series of posts, we talked at length about how a divorce could impact the provisions and enforceability of a person’s will. A will, in many cases, is just one component of a comprehensive estate plan, which means that there are other estate planning instruments that could be affected by a divorce. For example, you may have established one or more trusts to protect and transfer your property to your chosen beneficiaries. The types of trusts that you have set up will determine how they are affected by your divorce.

Revocable Trusts

Illinois law provides that any provisions, appointments, or nominations made regarding a person’s spouse in the person’s will are automatically revoked when a judgment of divorce is issued. The law is similar in regard to trusts but with some important differences. The differences are caused by the nature of certain kinds of trusts and the rules that apply to them.

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