The pandemic has made many of us more acutely aware of our own mortality.  It has also forced us to confront the difficult question of what our end-of-life wishes would be if we were to become seriously ill.

A living will is a legal document that allows you to spell out your preferences for medical treatment in the event that you are unable to communicate them yourself. Creating a comprehensive estate plan, including a living will is important regardless of your current age or health.  It is especially important if you have a chronic or terminal illness, or if you are over the age of 65.

What Does a Living Will Cover?

A last will and testament describes how your earthly possessions are distributed to heirs. A living will, on the other hand,  is all about your healthcare and treatment preferences. It allows you to make decisions in advance about the kind of medical care you would or would not want to undergo if you were extremely sick. This spares your loved ones from having to guess what your wishes are.

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The last will and testament is the fundamental estate planning document. However, there are many other estate planning tools that can better meet unique financial needs and personal objectives. Unlike a will, a trust is a separate legal entity that can own assets and distribute them according to the terms of the trust agreement. A key advantage of a trust is that it can help avoid probate, which is the legal process used to validate a will and distribute a deceased person's assets.

There are two main types of trusts: irrevocable and revocable. As the name suggests, an irrevocable trust cannot be modified or revoked once it has been created. A revocable trust, on the other hand, can be modified or revoked at any time by the grantor, as long as they are alive and competent. Both types of trusts have their own advantages and disadvantages that should be considered before deciding which is right for you.

Advantages of an Irrevocable Trust

Asset Protection - One of the main advantages of an irrevocable trust is that it can protect your assets from creditors and lawsuits. Once you transfer assets into an irrevocable trust, they are no longer legally owned by you. This means that creditors cannot go after them to satisfy your debts.

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Estate planning is important for anyone of any age or health. Unfortunately, life is nothing if not unpredictable and none of us know what day will be our last. Although it can be an uncomfortable topic to think about, planning for the possibility of incapacitation and death is crucial to protecting your loved ones and ensuring your final wishes are fulfilled. A living will is an advanced directive used to describe your decision regarding end-of-life care and other essential matters.

A Living Will Ensures Your Medical Wishes Will Be Followed

Most people are familiar with a last will and testament. A will is used to describe how property should be distributed to heirs after someone passes away. However, fewer understand the purpose of a living will. A living will is a document that spells out a person’s wishes regarding medical care at the end of their life. If a person is in a coma, suffers from dementia, or has other disabling medical conditions, he or she may not be able to communicate with doctors and loved ones. A living will is used to make medical decisions about end-of-life care in advance, so there is no question about the types of medical care an individual should receive.

A living will may be used to specify your wishes regarding:

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For many people, the process of creating an estate plan will involve decisions about how a person’s assets will be passed to their heirs after their death. However, estate planning may also address a person’s needs throughout the remainder of their life, including ensuring that they will receive the proper medical and personal care and that their finances will be managed correctly. One way of doing so is through durable powers of attorney. By understanding how these agreements can be used and the benefits they provide, a family can make sure a person’s wishes will be followed, no matter what happens.

Reasons to Create Durable Powers of Attorney for Healthcare and Finances

A power of attorney is an agreement in which a person (known as the “principal”) will give someone else (known as their “agent”) the authority to make decisions for them. A power of attorney for healthcare will address issues related to the medical care a person receives and other personal needs, while a power of attorney for finances or property will address issues related to a person’s income, assets, financial resources, and expenses. Powers of attorney are considered to be “durable” if they contain provisions that state that the agent’s authority will remain in effect even if the principal becomes incapacitated. That is, if a person becomes unconscious due to an illness or suffers from dementia or other mental health issues that affect their ability to make their wishes known, their agent will continue to have the authority to make decisions on their behalf.

Benefits of a durable power of attorney include:

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The topic of estate planning is important, but it can seem daunting to think about. When a person dies, an estate tax is imposed on the value of the estate left behind, before any beneficiaries (family members or close friends) inherit anything.

An inheritance tax is imposed on an individual who receives any type of inheritance. Although some states do have inheritance taxes, there is no federal or state tax imposed on inheritances in Illinois. It is important to distinguish between these two kinds of taxes in order to protect the rights of those on the receiving end.

Understanding the Illinois Estate Tax

There is both a federal estate tax and an Illinois estate tax, however, the size of the estate must be significant for either one of these types of estate tax to apply. The Illinois estate tax rate is graduated and can go up to 16 percent, but it is only applied on estates worth more than $4 million. This means that if a decedent’s total estate is worth less than $4 million, the estate does not have to pay anything to the state. If an estate is worth more than $4 million, there is a progressive estate tax rate, and the estate will have to pay before money can be distributed to any heirs.

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