Revocable Trust for Individual with Spouse or Partner
(Separate Share Trusts for Children) (IL)

Summary

This template is a revocable trust for a married person in Illinois with children or a person with a partner and children. At the death of the survivor of the settlor and his or her spouse or partner, trusts are created for the benefit of the settlor's children. This template contains practical guidance, drafting notes, alternate clauses, and optional clauses. Living trusts (also called "revocable" or "inter vivos" trusts) are often used as a will substitute for those individuals who wish to avoid probate of part or all of their estates upon death. A living trust is a written legal document through which the person who creates the trust, known as a settlor, will place assets into the trust for their benefit during their lifetime. The successor Trustee will distribute the trust assets to the settlor's designated beneficiaries upon the settlor's death. A trust is an abstract legal entity, which serves an endless number of purposes depending on the settlor's intent, whatever it might be. One way to conceptualize a trust is to think of it as a bifurcated gift, where the donor is the settlor, and the donees are Trustee(s) and beneficiaries. The settlor transfers legal title to the Trustee(s), and equitable title to the beneficiaries. The Trustee holds and manages the property for the benefit of beneficiaries. The trust may be the most flexible arrangement the law has conceived. A trust can be used for virtually any purpose, for example, to avoid probate, to hold property for a minor or incompetent person, for a variety of estate planning tax purposes, to try to influence the beneficiaries' behavior, etc. The most important thing is to read each trust carefully to ascertain the particular purpose or purposes of each trust. As long as the purpose of the trust is not illegal or against public policy, the Trustee must hold, and distribute the trust property as directed by the trust terms. A trust has two components, i.e. the principal and the income. Principal, sometimes referred to as the trust res, corpus or body of the trust, is the property that the trust owns. The principal is all the property that is available to produce ordinary income, such as dividends, interest, or rents, etc. As a Trustee makes payments, some may come from the trust's principal, and some from the trust's income. Others, such as beneficiary payments, come only from the income. Therefore, a successful trust administration can be achieved when a Trustee properly allocates money to either the trust's principal or income. Very often people who are entitled to receive the income may not be the same people entitled to receive the principal. Also, a good Trustee should not favor the income interest over the principal interest, or vice versa. Upon the death of the survivor of the settlor and his or her spouse or partner, all assets are left to the settlor's children in separate shares, each of which is directed to its own individual trust. The individual trusts, which are irrevocable, provide an equal share of principal for each child. Until the child reaches a certain age, they will not have direct access to the assets; rather, the Trustee will manage the trust assets and make distributions to the child. The Trustee has broad discretion in providing for each child from his or her own trust. For a full listing of key content on creating an estate plan for an individual with a spouse or partner residing in Illinois, see Estate Plan for Individual with Spouse or Partner Resource Kit (IL). For more information on revocable trusts, see Characteristics and Uses of Trusts (IL), Requirements and Restrictions on Trust Purposes and Administration (IL), and Revocation, Amendment, and Termination of Trusts (IL). See also Letter to Client (Enclosing Drafts of Wills, Trusts, and Accompanying Estate Planning Documents for Couple) (IL).