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We’re answering common questions about Trusts.
We get a lot of questions about what a trust is and what it can do. Here are the answers to frequently asked questions from our Trust Team.
A will (sometimes referred to as a Last Will and Testament) is only valid after the testator dies. The Testator is what we call the person who created the will. Until the testator dies, the will does not control anything, and the people named to execute the will have no power over the property owned by the testator. Once the testator dies, the executor, who is the person in charge of administering the will, would need to provide a death certificate and Letters of Office, issued by the court, showing they now have authority to act.
As the name implies, a revocable trust can be modified or revoked at any time by the grantor. A grantor can make as many modifications as he or she wants to the trust document, provided he or she is competent to do so. Often, the grantor of a revocable trust acts as the trustee also, which means he or she has control over all the trust assets. When the grantor of a revocable trust dies, the trust becomes irrevocable, which means that further changes generally cannot be made, and the trust cannot be revoked any longer.
An irrevocable trust is one that cannot be changed. A grantor can create an irrevocable trust, but generally, the grantor does not act as the trustee, and must give up control of the assets held in trust. This is generally done for tax planning reasons.
If the current trustee dies, the trust document generally names a successor trustee. However, there are times when the person named as successor trustee can’t or won’t act. The trust document usually addresses how to appoint a new successor trustee, and whether or not there are parameters for who can be appointed (for example, the document may limit an appointment to a banking corporation with fiduciary powers such as American Bank and Trust). Generally, the current income beneficiaries may agree to appoint the successor trustee. Some documents are now including a position called a Trust Protector, which can make this decision also. We recommend that the list of successor trustees includes a bank or trust company, to prevent a situation where no one appointed is willing or able to act.
Generally, the answer to this question is no. The person with authority over a trust account is the trustee. The power of attorney has authority over the finances of an individual person. If the grantor has named two different people to the roles of trustee and power of attorney, the trustee would handle trust accounts, and the power of attorney would handle financial affairs still controlled by the individual.
If an IRA owner is alive, then the answer is NO, a retirement account cannot be titled in the name of a trust. A retirement account must be owned by an individual. If the IRA owner dies, a trust can be the beneficiary of an IRA, and those IRA dollars can be transferred into the trust over time.
A trust amendment is a document that changes a portion of the revocable trust. Generally, it states that the rest of the trust is still in effect, references the section or sections to be changed, and then revises those sections.
The grantor can create as many amendments as he or she wants. Most attorneys, after one or two amendments, will draft a new trust document, which is normally referred to as a restatement of trust. This just means that all the prior amendments are merged into the new document. The first several paragraphs of the restated trust will reference the date the original trust was created, the amendments to the original, and the fact that all the amendments are now being captured in the new document.
“Why do they not require notarization?”
The Illinois trust code does not require notarization for trust documents or amendments. As a good practice, most attorneys will make sure the trust documents they draft for their clients are notarized.
A trust checking or savings account can be closed by the trustee. Generally, the powers given to the trustee include the power to open and close bank accounts. If the trust is revocable and the grantor and trustee are the same person, he or she is operating in his or her capacity as trustee to close the account.
NO! Our department handles much more than just trust accounts! We manage retirement accounts for individuals, in which we help them through retirement planning, and make sure required minimum distributions are made. We also manage individual investment accounts for individuals and organizations, and assist with investment decisions and asset allocation. We can act as power of attorney for financial decisions for individuals. We can act as executors or administrators of estates. We can be a guardian of the property or conservator through a court appointment for someone who has been declared unable to handle their financial affairs.
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