Living trusts are one of the most popular estate planning tools, as they allow those who create them, (trustors) to retain some control over their assets, while also ensuring the contents of those trusts are transferred to specific beneficiaries without the need to go through probate.
Creating these trusts can be a difficult process, as can revoking or terminating them in the event of a life change. If you are interested in creating a living trust, or have already done so and wish to revoke it, you should contact attorney Alan G. Orlowsky who can help advise you throughout the process.
What are Living Trusts?
Living trusts are created by trustors who transfer their property to an appointed trustee. That individual then holds the property for the beneficiaries and in some cases, invests trust assets and administers its terms according to the trustor’s directions. Trusts generally fall under two categories: testamentary trusts or living trusts, the first of which is activated by a provision in the trustor’s will at the time of his/her death. On the other hand, a living trust goes into effect once the formalities of creation are in place and the trust has been funded. Living trusts can be either revocable or irrevocable, with the former giving the trustor some authority over what happens to a trust’s funds until his/her death.
How and When do Living Trusts Terminate?
The way a trust terminates depends in large part on the type of trust it is. For instance, the trustors of revocable living trusts and testamentary trusts retain the authority to terminate their trust at any time and for any reason. On the other hand, if the trust is an irrevocable living trust, a trustor won’t have the authority to terminate a trust once it has been established. The terms of a trust can also dictate when a specific trust terminates by including:
● A certain date on which the trust must terminate; or
● A triggering event, causing the trust to terminate.
The latter scenario is especially common. For instance, many trustors who establish living trusts choose to include a provision stating that the trust will only terminate upon the marriage of the trust’s beneficiary, or upon the youngest beneficiary reaching a certain age. Another way a trust could terminate is if the trustor gave the trustee discretion to terminate the trust when its purpose has been fulfilled or when trust assets diminish to a certain degree.
Terminating an irrevocable living trust tends to be even more complicated – unless it has a built-in termination date or provision giving the trustee authority to terminate the trust. Otherwise, a court may need to step in to terminate it on the party’s behalf. However, courts are generally only willing to take this step when there is a compelling reason for doing so.
Experienced Chicagoland Estate Planning Lawyers
For more information on creating or terminating a living trust in Illinois, please call Orlowsky & Wilson, Ltd. Attorneys at Law at 847-325-5559 today.