A living trust can allow the creator of the trust to use the trust property during his lifetime, and when the creator dies, the trust assets can be immediately transferred to the creator’s beneficiary without the property having to go through probate. To create a valid living trust in Illinois, you need to draft a declaration that establishes the terms of the trust and all of the relevant parties. This declaration does not need to be filed with a court or clerk for the trust to be valid.
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Select a trustee to manage the trust property. For a living trust, you will generally appoint yourself trustee, so you can retain control of the assets. It is a good idea to also name one or two successor trustees to take over when you pass away or lose the ability to manage the property. For your successor trustee, consider appointing a trusted family member or friend who has a background in managing financial assets. If no one close to you meets that standard, consider hiring a professional trust manager or bank to act as your successor.
Identify the beneficiaries. The beneficiaries are those who will receive distributions from the trust and get to use trust property. During your lifetime, you may be the only beneficiary. When you pass on, you can name people in the declaration to take over as beneficiaries. The trust declaration can require the trustee to immediately distribute the trust assets to the named beneficiaries after your death, or it can require that the property remain in the trust and be managed for the benefit of the beneficiaries by the successor trustee.
Consider whether you want to make the trust revocable or irrevocable. If you create a revocable trust, you can change the terms of the trust at any time. If you create an irrevocable trust, you generally cannot change the terms of the trust. Despite the obvious benefit of being able to change the terms of a revocable trust, many people create irrevocable trusts to gain eligibility for Medicaid benefits, to protect their property from creditors and to avoid estate taxes.
Get professional help to draft and execute a Declaration of Trust. Drafting the actual document that creates a trust can be very difficult for a layperson to do. These trusts must not only comply with Illinois state law but with federal law, if the person wants to obtain tax and certain other benefits. Consider hiring a local attorney or acquiring an online generated living trust through an online document provider.
Transfer the titles of the trust assets. The trust only becomes effective after the trust has been funded. This requires transferring the assets of the trust to the trustee and placing the property under the name of the trustee. Illinois law requires that any real estate must be transferred by recording a deed in the county where the property is located. Bank accounts, stocks, bonds and other financial assets are transferred by the creator of the trust sending a “letter of direction” to the financial institution that holds the assets, telling the financial institution that the assets are now in the trust. Automobiles transferred in the trust must be registered with the Illinois Secretary of State. Personal property, such as furniture or jewelry, does not require any formal documentation to cause a transfer.