Land Trusts - In Illinois, a land trust is a legal arrangement in which the trustee holds legal and equitable title to real property, but all managerial, decisional, and operational powers over the trust assets remain under the control of the trust beneficiaries. Illinois is one of a few states that recognize the use of land trusts and, like all planning devices, there are good and bad features of a land trust.
Living (Revocable) Trusts - Living Trusts are suggested on a regular basis today for individuals to "bypass probate." Living Trusts can also be used to avoid estate taxes by taking the fullest use of the tax laws for individuals with large estates (in excess of $5,000,000).
The concept of the trust is relatively simple. You establish a trust (a contract between you and, generally, you) which sets forth the rules for management of your assets while you are alive and a distribution plan when you are gone. The trust will have people you trust to act as trustees in the event of your death or incapacity. Then, should something occur, your successor trustee will be able to manage your trust without the need to go to probate court to obtain the courts' permission.
Irrevocable Trusts - This type of Trust is not used very often. Why? Because, as its name implies, you can not change the terms of the Trust once it is established regardless of how circumstances change. Placing assets into this type of trust is basically "giving them away" and, once you do, you no longer will have control of whatever you place (i.e. your home, cash assets, stocks or similar assets) in the Irrevocable Trust. However, under limited circumstances, this type of Trust may be beneficial.
Before you ever consider signing this type of Trust, please consult with your wise legal advisor and a tax professional.
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