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Recent Blog Posts
What a Will Can and Can't Accomplish
A will is a guideline for your loved ones and, sometimes, the state where you live to fulfill your last wishes on earth. It is up to you to maintain those wishes in a legal document otherwise they could be decided for you by the state that you live in. The states desire to come as close as possible to the deceased last requests, yet their generalized approach often leaves something to be desired. In order to regain control over these last plans, it is integral to draft a will.
But what is the scope of a will? What does it do and what is outside of its grasp? The main goal of a will is to distribute property to family, friends, and other beneficiaries. There are certain restrictions that vary from state to state, which is why it is essential to review these documents with an experienced estate planning professional. For example, there are certain restrictions on property that falls of a probate estate, like joint property.
Previous Arrangements may Override Your Will
Having a will may not always be enough, according to an article in the Chicago Tribune. If you have made other arrangements, they may take precedence over your will. For instance, if you own a home jointly with rights of survivorship, the owners get the property when you pass on, no matter what your will says. Additionally, any property that has a named beneficiary (e.g. retirement and savings accounts, annuities and life insurance) goes to the beneficiary despite what your will dictates.
When making a will, it is very important to go over the details with an experienced estate planning attorney. You should bring your attorney a list of all your assets with named beneficiaries. If you want to change the beneficiary of any of your assets, the documents dictating the disposition of that asset need to be updated. If the documents have been signed by you and other people, it is necessary to get their permission first.
Property that is individually owned and without a named beneficiary passes by will. It is possible that all of your assets have named beneficiaries or are held jointly with rights of survivorship. In this case, you may not have any property that would pass by will. However, a will could become useful in any case. For example, you can name beneficiaries in your will for assets that you do not have yet but expect to get later. You can specify guardianship arrangements for your children, and you can define how your personal property will be distributed.
An Important Aspect In Your Will: Guardianship
In today's world, money is often the main topic of discussion and prime concern in almost any situation. Financial assets and property are talked about a lot in estate planning too, but there is one aspect of estate planning that is even more important: children.
Children are talked about a lot as far as last wills and financial security go, and while providing for you children is highly important, there is one thing that will govern their futures even more. We are, of course, talking about guardianship. If something happens to you, it is important to have a guardian planned for your children, so that they can continue living in a safe environment.
Choose someone you trust fully and who you know will be a good parent. This should of course be a decision you do not make hastily. It is, indeed, your children's futures that are at stake. When you have decided who should be the guardian, the legal aspects need to be considered.
Illinois Healthcare Powers of Attorney
A healthcare power of attorney is a legal document that allows an individual (the "Principal") to give another person (the "Agent") the authority to act on his or her behalf as far as decisions regarding healthcare. Under the Illinois Power of Attorney Act, this document can limit the authority of the Agent, specify when the Agent's authority begins and ends, detail the duties that the Agent's authority covers, and set forth any limitations on the Agent's authority.
One common provision of a healthcare power of attorney, for instance, deals with decisions about whether to give or withdraw life-sustaining treatment. If a Principal has certain religious beliefs that prohibit or discourage certain types of medical treatment, a healthcare power of attorney can leave various instructions for the Agent regarding those types of treatment should the situation arise.
The Basics of a Revocable Living Trust vs. a Will
There are two different tools of estate planning which sound the same but serve different purposes beyond leaving behind property to beneficiaries. The two types of documents that can leave behind your wishes are living trusts and wills. Not only can both name beneficiaries to property, including young children, but both are revisable as your wishes change throughout your life. The ability to revise a document is also termed revocable in legal terms.
The difference between a trust and a will are in smaller details. For example, with a trust, you have the ability to avoid probate altogether. Probate is the very lengthy process of testing if a will in valid so that the property can be transferred to the new owners. The process itself is lengthy and expensive. A trust can also reduce any beneficiaries from contesting the estate in court because the integrity of the trust is absolute.
The Technical Aspects of Probate
Taking care of your material possessions is important if you have loved ones that need to be protected. If you have drafted a will, then whoever you assign as your personal representative will be in charge of whether probate court is necessary in regards to your remaining estate. If you have not designated one in a will, then the probate court may assign someone impartial to manage your estate. This person will then be responsible for your earthly goods to make sure they are legally transferred to others.
The probate court acts to oversee your property after your death. While all probate courts are different state to state, there are some processes which remain the same. The probate court swears in your personal representative to manage your estate. The court also is in charge of notifying your heirs, creditors and others that you are indeed, dead. They also inventory the property of the estate to verify that the assets are still real and have not been dispersed. The ultimate step of a probate court is to pay off debts, pay applicable taxes, and distribute the remaining estate to the heirs.
Childless People Benefit Greatly from Powers of Attorney
Susan Sommers is a fashion consultant in her sixties. She has a sister but no children or husband. Her sister Louise is likewise childless. Together they took care of their mother who died a while ago at the age of 94. The sisters made sure that their mother's rights were upheld and her needs were properly addressed. But what will happen to Susan Sommers or her sister, when they can't take care of themselves or each other any longer?
The problem doesn't concern only the Sommers sisters. Nowadays, there are more childless people than in the past. In 2010, almost 19% of 40-44-year-old women were childless, almost 9 percentage points more than in 1980.
Children are usually the "de facto" caregivers of their parents, if they become incapacitated or otherwise require assistance with matters the parents can't cope with themselves. But childless people obviously don't have that alternative. That is why it's important that especially people without children secure their rights with the help of professional lawyers. In Illinois, it's possible to appoint someone you trust to make healthcare decisions on your behalf or to take care of your financial and property affairs in the event of your incapacity. Your "agent" can be almost anyone, from family members to friends and neighbors. Legal documents can also detail many types of other preferences, for example, a particular type of assisted living facility. Without the documents, a court appointed guardian might take control of your affairs and not necessarily make decisions you approve of.
Estate Planning in the Digital Age: New Challenges
Traditional estate planning has always involved the creation of documents designed to avoid costly and lengthy probate proceedings and minimize taxes, such as wills, trusts, and other related documents. However, estate planning attorneys are facing new challenges as an increasing amount of people store their financial information online and handle their assets digitally. As these digital assets are typically secured behind usernames, passwords, and security questions that surviving spouses and family members may not be aware of, dealing with or even finding these assets following a person's death can be difficult or even impossible in some circumstances.
According to a recent article in Smart Money, 36% of adults aged 45 and older are now doing banking online, and those numbers continue to grow. Unfortunately, traditional estate planning documents tend not to address online accounts, and the estate-planning industry has been slow to advise its clients about the need to address and deal with these digital assets so as to properly preserve them for their heirs in the future, and to ensure that those assets are not lost altogether.
It's Never Too Early - or Too Late - to Avoid End-of-Life Taxes
No matter what stage you are at in life, avoiding end-of-life taxes is a smart move. By taking certain steps, you can reduce your income taxes, federal estate taxes, and state estate and inheritance taxes. Although a recent Chicago Tribune article states that these techniques work best for a U.S. citizen who is married to his or her U.S. citizen spouse, with living descendants, they can also work as a starting point for people in other, more complex, situations, as well.
First, granting a power of attorney for your spouse will allow him or her to make financial, tax-saving decisions in the event that you become incapacitated. This saves your spouse from having to pursue lengthy guardianship proceedings in court and potentially miss important tax deadlines at the end of the year.
Next, ensure that you and your spouse have separate investment accounts. This move allows you to freely transfer assets back and forth between spouses so as to minimize taxes in various situations.
Baby Boomers and the Truth about Estate Planning
Estate planning for baby boomers is becoming increasingly important. The reality of the situation is that people are living longer yet they often don't continually update their wills, trusts and other important financial planning documents to reflect the changes they experience. Just as you would continue to see the doctor every year to make sure your body is in top health, make it a priority to visit your estate planning attorney every couple of years to keep up with changes in laws, taxes and other situations in life.
Most people experience changing priorities and changing friendships throughout their lives. When you are younger, you should have different goals than when you are advanced in age. If you have young kids, it is important to guard their futures with the proper estate planning concerning guardianships and trusts. When those kids have their own families, you may reconsider how you're planned your estate and eliminate protective devices you have detailed in your plan.
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