## Living trusts in Illinois A **revocable living trust** (sometimes called a "revocable trust" or "RLT") is a legal entity you create during your lifetime to hold assets. You typically serve as your own trustee while alive and competent — and the trust seamlessly transitions to a successor trustee at your death or incapacity. ### When a living trust makes sense in Illinois Estates over $100K personal property or with real estate. ## What a living trust does **1. Avoids probate.** Assets titled in the trust skip probate court entirely — saving time, money, and family conflict. **2. Maintains privacy.** Probate is a public proceeding; trust administration is private. **3. Provides incapacity planning.** If you become incapacitated, your successor trustee takes over without court involvement (no guardianship/conservatorship needed for trust assets). **4. Allows distribution control.** You can specify exactly how and when beneficiaries receive their inheritance — including age-based distribution, education incentives, spendthrift protection. **5. Handles out-of-state property.** A single trust can hold property in multiple states — avoiding ancillary probate in each state. **6. Provides flexibility.** Revocable means you can change or revoke it any time during your lifetime. ## What a living trust does NOT do - **Doesn't reduce estate tax** — assets in revocable trusts are still in your taxable estate - **Doesn't protect from your creditors** — your creditors can reach trust assets while you're alive (different from irrevocable trusts) - **Doesn't avoid Medicaid look-back** — assets remain countable for Medicaid eligibility - **Doesn't avoid income tax** — trust uses your SSN; income reported on your 1040 - **Doesn't replace a will** — you still need a "pour-over will" for assets not titled in the trust - **Isn't automatic** — you must actually FUND the trust by retitling assets ## The big mistake — unfunded trusts Creating a trust document and not retitling assets into it is a common, expensive failure. Assets you forget to fund into the trust still go through probate. **What needs to be retitled:** - **Real estate** — new deed transferring to the trust - **Bank and investment accounts** — change account ownership - **Vehicles** (some states) — title transfer or beneficiary designation - **Business interests** — assignments / transfers of LLC or partnership interests - **Tangible personal property** — usually with an Assignment of Personal Property document **What does NOT need to go in (and shouldn't):** - **Retirement accounts (401(k), IRA)** — keep beneficiary designations; transferring to a trust triggers tax - **Life insurance** — usually keep beneficiary designations - **Health Savings Accounts (HSAs)** — beneficiary designations ## The pour-over will Almost every living trust comes with a pour-over will as a safety net. The pour-over will says: "If anything I own at death isn't already in my trust, transfer it into the trust now." This catches assets you forgot to fund. Pour-over assets still go through probate — but the will pours them into the trust for distribution under the trust terms. ## Living trust vs simple will A **simple will** is cheaper to create ($200-$1,000 typical), but assets covered by it must go through probate at death. A **living trust** package is more expensive upfront ($1,500-$5,000 typical) but generally saves more than that by avoiding probate. Net cost varies by state. In states with efficient probate (TX, etc.), the math may favor a simple will. In states with slow / expensive probate (CA, NY, etc.), the trust pays for itself. ## Joint trusts vs separate trusts **Married couples** typically choose between: - **Joint trust** — one trust for both spouses; simpler to administer; common in community-property states - **Separate trusts** — one for each spouse; better for blended families, second marriages, asset-protection planning, or where spouses have different beneficiaries ## Other types of trusts (different from revocable living trust) - **Irrevocable trusts** — once funded, can't be modified; provide creditor and tax protection - **Asset-protection trusts** — irrevocable trusts in specific states (NV, SD, AK, WY, DE, others) shielding assets from creditors - **Special-needs trusts** — preserve government benefits for disabled beneficiaries - **Charitable trusts** — for charitable giving with tax benefits - **Generation-skipping / dynasty trusts** — multi-generational estate-tax planning - **Qualified personal-residence trusts (QPRTs)** — estate-tax planning for the primary residence - **Spousal lifetime access trusts (SLATs)** — interspousal estate-tax planning ## What you should do If you have meaningful assets, real estate (especially in multiple states), minor children, a blended family, or just want to keep your affairs private at death — talk to a Illinois estate-planning attorney. Most Illinois estate-planning attorneys offer flat-fee living-trust packages that include the trust, pour-over will, financial and healthcare powers of attorney, and HIPAA authorization. Make sure to actually FUND the trust afterward — many attorneys handle the funding for an additional fee. --- *This guide is general information about Illinois law as of early 2026 and is not legal or tax advice. Living-trust analysis is highly individual. Talk to a licensed Illinois estate-planning attorney about your specific situation.*