What Is A Dynasty Trust? Do I Use It To Protect My Estate?
A dynasty trust is a trust you’ll create to go into effect after you’re gone for the benefit of your descendants. Usually, you have a trustee who is in control of the distribution of the assets. You and your succeeding beneficiaries would have some degree of comfort that they will be able to make suggestions to that trustee as to how those assets will be invested and distributed. The beneficiary doesn’t have legal control but they do have the right to benefit from the investments that are retained inside the trust. As long as they’re retained inside the trust, they would be protected from creditors, spousal orders, and estate taxes. As long as the beneficiaries don’t have the unfettered right to take assets out or determine where those assets will be distributed, dynasty trusts in Illinois can remain in force forever.
What Is A Will? Do I Need One If I Have Other Estate Planning Tools In Place?
Everyone should have a will because you need to have a will in order to name the guardians for your children and to name your executor.
What Happens When Someone Dies Without An Estate Plan Or A Will In Place?
If you don’t have an estate plan, your assets will have to go through probate. The will would be filed in the probate court and you would file a petition for the appointment of an executor. If the assets are less than one hundred thousand dollars, you can do a small estate affidavit. Even if they have a will, it would list who the executor is, based on the will, and who the beneficiaries are. Then, the assets can be distributed without going through probate. If there are assets, you either have the option of probate or a small estate affidavit.
You publish for creditors in a legal newspaper and the creditors need to file a claim within six months of the appointment of the executor. They have to file a claim with the executor or file it in court and then, you also would prove who the heirs are. You file an affidavit of heirship as to who the heirs are. You could have a probate with an independent representative, which is much more efficient and faster. You would usually make that choice in your will. It makes it much less costly to have a probate because you don’t have to ask the judge for permission to sell assets, buy assets, or pay claims with an independent representative.
If you don’t have an independent representative or if there is some distrust between family members, they may ask the court for you to convert the estate or maintain the estate as supervised. The executor would have to seek the court’s permission for everything they do. This becomes a lot more costly. A will can also be contested by someone who, for example, would have received the estate on a prior will, or someone who thinks that they should have been a beneficiary of the will but one of the other beneficiaries of the will has exercised undue influence or coercion. A will contest is just like any other lawsuit. You’re entitled to a jury and discovery. You can have expert witnesses. It can become a complicated process.
If you have all your assets in trust then you don’t need a probate. The trustee takes over and administers the assets in the trust in accordance with the terms of the trust. It could be distributed right away if that’s what the terms of the trust provide, or they could be held in trust in accordance with the provisions of the trust for the lifetime of the surviving spouse. After that, they would be distributed or held in trust for the children. If the estate is four million dollars or more, you need to file a state Illinois estate tax return.
It is a myth that you pay estate taxes only if you’re an estate of over four million dollars. Federally, there’s an 11.4 million dollar exemption per person. Before that, it was approximately five and a half million. It might be beneficial to file a federal estate tax return, even if there is no tax, because there’s another issue called portability, which means that any exemption you don’t use, federally, can be transferred over to the surviving spouse. This only applies if you’re married, of course.
For more information on Dynasty Trusts In The State Of Illinois, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (312) 236-7005 today.
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