At its most basic, a trust is a relationship between 3 people. These people are called the Grantor, the Trustee, and the Beneficiary.

• The Grantor sets up the trust and puts property into the trust.
• The Trustee is the manager of the trust.
• The Beneficiary is the person who benefits from the trust.

The relationship between Grantor, Trustee, and Beneficiary is called a trust relationship. The paper documents help to make sure that all of the parties involved know exactly what is expected of them.

Example:  When I gave money to my mother and asked her to buy my father a gift on their last vacation. I was the Grantor because it was my money that went to buy the gift. My mother was the trustee because she decided what to buy and when to buy it. My father was the Beneficiary because he got the gift.

The Grantor and the Trustee can be the same person. In fact the same person can be Grantor, Trustee, and Beneficiary. This is common when a Living Trust is created. The person putting the property into the trust can manage it himself for his own benefit.

Example: If Mr. and Mrs. Smith set up a trust they would put their property into the trust they would be the grantors of the trust. It is very common for people setting up a trust to decide to stay in control of the property they have put into the trust. In order to be in control of the trust assets the Smiths would name themselves as the trustees of the trust.

Since Mr. and Mrs. Smith will use the assets in the trust for their own needs, they are also the beneficiaries of the trust. In this case the Smiths are grantors, trustees, and beneficiaries of their trust.

Mr. and Mrs. Smith can name someone to take over management of the trust incase they become ill or die. This “successor trustee” may be a family member, a trusted friend, or a professional trustee. The successor trustee would have all of the same management powers that the Smiths had. The Smiths would also name future beneficiaries so the trust property will pass to them when both Mr. and Mrs. Smith have died. Since these matters have already been agreed upon, probate proceedings can be avoided.

Contact me.

My office phone is (773) 905-1193

My office is located at 9924 S. Walden Parkway, Chicago, Illinois 60643

You can contact me by e-mail at: tom@mytrustlawyer.com

How To Choose a Trustee

Many of my clients have asked me, “Who should I name as my Trustee? Should I name a family member, the trust department of a local bank, or an independent trust company?”

A trust is created to last many years for the benefit of people you select.  It is hard to predict how the world will change over the life of the trust.  Laws may be different in a few years and investment strategies come and go.  Because of this, it is to your benefit to select a trustee who will supervise the trust assets in the way you intend.  

In some cases the grantor will serve as the trustee of his or her own trust.  If you have a revocable trust, and serve as the trustee, your service ends when you become incapacitated or when you die.  If you create an irrevocable trust then you must usually name someone else to serve as a trustee.  In most cases, at some point, a person other than yourself will serve as trustee.

A trustee has several responsibilities.  The main responsibility is to interpret and carry out the grantor’s instructions.  Such interpretation should be done impartially and without any conflict of interest.  Some other responsibilities include:

· Meeting the needs of the beneficiaries
· Making sure that the trust assets are secure
· Preparing accountings for the beneficiaries
· Maintaining records
· Filing tax returns

Since it is an important job, you should select a trustee that you believe will take the proper care needed in order for your trust to function properly.  An individual may not have enough time available to properly address all the needs of your beneficiaries.  A local bank may be subject to unfavorable state regulations which do not offer the best environment for investing or reporting the trust assets, or worse still, the local bank may merge with or be purchased by another bank.  A professional trustee in another state may have favorable regulations, but may not understand your wishes due to a lack of local connection.

Individuals, banks, and professional trustees each have positive and negative aspects. Your ultimate trustee determination relies most upon your confidence that the trustee you choose will follow your wishes.

5 Important Benefits of a Will

A will does 5 very important things. 

• Cancels your old will.
• Names a personal representative (executor).
• Waives the bond on the personal representative.
• A will can act as a back-up document to a living trust.
• Names a guardian for minor children and for special needs children.

There are several ways to cancel your old will. You can tear it up. You can burn it. You can write “revoked” across the pages or draw large X’s on each page. The most common way is to write a new will. The first paragraph of your will normally revokes all of your former wills.

When your will goes to probate a person is put in-charge of the paperwork. This person is called a personal representative. They may also be called an executor. Most people have someone in-mind for the job. Your will should name a personal representative and a back-up in case your first choice is not available.

A bond is an insurance policy that guard against mismanagement or dishonesty by your personal representative. It helps make sure that assets that end up going through probate will not be stolen or wasted. Since many people name their spouse or a trusted family friend as their personal representative it seems unecessary to require that person to be bonded.

Every Living Trust should be accompanied by a short will, know as a “pour over will.” This legal document is set up to make sure that assets are put into the trust if the Grantor did not get them into the trust during their lifetime.

The most important job that your will does is to name a guardian for your minor children or for children with special needs.  If you do not name a guardian then the court may need to appoint one. Most people tell me that they want to make these choices rather than leaving them up to the Judge in probate or guardianship court.