Revocable living trusts are governed by the state in which the trust creator -- known as a settlor or grantor -- resides. In Illinois, most of the laws governing revocable trusts are found in Chapter 760 of the Illinois Civil Code, "Trusts and Fiduciaries." As in other states, a revocable living trust bypasses probate to distribute trust assets to your heirs after death.
Revocable living trusts operate in Illinois as they do in other states. You, as settlor, draw up the trust, name a beneficiary -- which in Illinois can even be a pet -- and place assets into the trust. If you name yourself as trustee, you can continue to use and control the assets without invalidating the trust in any way. At your death, a successor trustee will distribute the assets according to your written instructions, or manage them for a pet, a minor child or a disabled beneficiary.
When you create your Illinois trust, you can specify in the trust declaration exactly what authority you want your successor trustee to have. If you don't set limits, the state gives the trustee the power to sell trust assets; borrow money or mortgage assets; hire attorneys with trust funds; and lease trust property, even if the lease will last longer than the trust. If the trust holds stock, a trustee cannot vote as a shareholder or assign a proxy to do so.
Small Trust Termination
As settlor, you can revoke a trust at any time while you're alive. After your death, a trust normally become irrevocable until it has accomplished its purpose -- the assets have been given to your heirs or your minor child comes of age, for example. If the trust assets are worth less than $100,000, however, Illinois law allows your successor trustee to terminate the trust if the costs of maintaining the trust will interfere with your intentions. A successor trustee cannot make this decision if she's also a beneficiary.
If you and your spouse divorce -- or receive an annulment or dissolve the marriage in some other way -- Illinois law revokes all provisions in the trust declaration applying to your spouse. When the trust distributes your assets, it will ignore your ex, just as if she were already deceased. This only applies if you created the trust before your marriage. It doesn't apply if you state in the divorce agreement or the trust declaration that the trust provisions remain valid.
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