Estate Planning FAQs
- Do I need an estate plan?
- What is a trust?
- How does a trust avoid probate?
- What is a will?
- What does a will accomplish?
- Do I need a will?
- What happens if I die without having a Will?
- When should I review my existing Will
- What special planning should I do for my special needs child?
Anderson & Associates, P.C. provides sophisticated and personal estate planning and probate services to all clients, regardless of the size of their holdings. Our experienced estate planning lawyers are committed to providing the individualized services and timely response and follow-up that are essential to meeting each client's personal needs.
Whether you are younger or older, married or single, a parent or without children, you need to invest in an estate plan. There is a lot to be gained by you and your loved ones through estate planning; moreover, even more can be lost if you don't.
Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. An estate plan aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death.
Estate planning is much more than having a will. Proper estate planning will avoid the chaos and wasted assets of an unplanned estate, enhance your sense of security, and provide a dimension of personal well-being to your loved ones.
Wills and trusts are common ways in which individuals dispose of their wealth. Trusts, unlike wills, have the benefit of avoiding probate, a lengthy and costly legal process that oversees the transfer of assets.
Generally, a trust is a right in property (real or personal) which is held in a fiduciary relationship by one party for the benefit of another. The trustee is the one who holds title to the trust property, and the beneficiary is the person who receives the benefits of the trust.
A trust is a form of property ownership. The person who sets up a trust is called the "grantor" or "settlor." The trustee is the "legal" owner of the trust property, and her name is on any document of title. The beneficiary is the person who receives the benefits of ownership, such as the right to receive the income from the trust's investments. A "living" or "inter vivos" trust is one that is set up and funded while the grantor is alive. Usually the grantor names his or her self as both trustee and beneficiary. In contrast, a trust which comes into being under the terms of a will, after the grantor's death, is called a "testamentary" trust.
When an estate is conveyed through a Will, the probate court must validate the Will before its provisions can be executed. The probate process can require up to two years. Assets held in a Living Trust, however, are not subject to probate. The advantages of avoiding probate are several.
- Expedited distribution: A Living Trust allows assets to be distributed to your heirs as quickly as your trust agreement instructs and the taxing authorities allow, without the additional delays of probate. Your spouse, for instance, could receive income to provide for living expenses immediately.
- Expense reduction: The expenses of probate are completely avoided for all assets held in your Living Trust.
- Privacy and confidentiality: When a Will is entered into probate, all of its provisions become a matter of public record. Since a Living Trust is a private arrangement, its terms are not made public at your death. Your assets and intentions are known only to your trustee and beneficiaries.
A will is a written statement directing who will wrap up your financial affairs, and who will receive your money and other property, when you die. The property left in your name at the time of your death is called your "estate." The ones you name in your will to receive your property upon your death are called "legatees." They may or may not also be your "legal heirs."
The person named in your will to be in charge of your estate when you die is called the Executor. The job of the executor is to investigate what you own at the time of your death, make a list of all of your property, collect all of your property, care for your property until it is sold or passed on to the people you have selected to inherit it from you, pay your bills, file your final tax returns, and finish up any other financial business required of your "estate" after your death.
Once everything is done to wrap up your financial business, the remaining money or other property can be distributed to the legatees named in your will. Money and property held in joint tenancy ownership, such as a bank account or house, goes automatically to the surviving co-owners upon the death of one owner. Similarly, property held in trust, or in a payable-on-death account, goes automatically to the named beneficiary upon the death of the owner. Life insurance proceeds go automatically to the named beneficiary on the death of the insured person. These types of property are not affected by your will.
A carefully crafted will is your most reliable guarantee that distribution of your assets is conducted according to your wishes. In addition, your will:
- Enables you, if your family includes minor children, to specify who will assume responsibility for their upbringing as well as the manner in which you wish them to be raised
- Presents the most dependable way of communicating any special intentions you have (arrangements for the continuing care of pets, for example)
- Provides the best means of indicating who should receive items and "keepsakes" that hold sentimental value
You may believe that you don't need a will. Perhaps you assume that a will is unnecessary since states laws exist that, absent a will, govern the division and distribution of your assets after your death. Or, you may feel that the size of your estate doesn't warrant a will.
Not having a will means that you:
- Surrender to the state all important decisions affecting the well-being and future security of your heirs
- Are at risk of having your property divided in a way that's not to your liking
- Forego opportunities to reduce taxes through trust arrangements
Your will may be changed as often as you wish. If the change you desire is relatively simple, an amendment to the document, known as a codicil, is executed with the aid of an attorney. If you decide to write a new will altogether, the new document should specifically revoke all prior wills. (Remember that revoking a will automatically revokes its codicils, but revoking a codicil does not necessarily revoke a will.)
In addition, you should review your will when any of the following events occur:
- A change in marital status
- The birth of a child
- A change in your state of residence
- A significant change in the value or character of your assets
- A change in intended beneficiaries
- The death of a beneficiary
- The death of a guardian, trustee, or personal representative named in your will
- A change in tax laws affecting federal estate tax deductions and calculations
- Once every five years
If you believe a change to your will is necessary you should consult an attorney who is familiar with the probate code of the state in which you live. He or she will know how best to comply with various state requirements.
Special Needs Planning
Anderson & Associates, P.C. assists families in planning for disabled children, or other family members who are, or are likely to become disabled, and who require special protection. Through the use of special needs trusts, asset planning and coordination of private and public resources, our experienced attorneys help families to maximize resources and enhance quality of life for loved ones.
Relatives should take steps to protect an inheritance or gifts planned for a disabled family member, if the disabled person will be unable to properly manage money, investments and other property independently. It is unwise to allow the disabled relative to receive or inherit property that may be lost or wasted through poor judgment, exploitation, or neglect, or which might jeopardize eligibility for important governmental benefits.
The best way to protect such property is to set up a trust where a responsible person, or trust corporation, can manage it for the disabled relative. Unlike giving money to relatives in the hope that they will "do right" by the disabled person, a trust imposes a legal duty on the trustee to act in the person's best interests.
The type of trust selected depends on the goals and circumstances of the donor or grantor who is giving money and property to the disabled relative. Trusts may be revocable or irrevocable. Property in a "support" trust is available to meet the disabled person's financial needs, but may disqualify her from receiving means-tested governmental benefits.
Third-party discretionary "special needs" or "supplemental needs" trusts have been used for many years as a planning device to protect the governmental benefits eligibility of disabled individuals who are to receive assets through inheritance or gifting from third parties. These trusts are customarily known in Illinois as "Phillips" trusts.
The key features of a "special needs" or "supplemental needs" trust are (1) a clearly stated purpose to supplement, and not to replace, funds available from governmental programs or charitable sources, (2) a trustee with complete discretion to use the funds in any way, for the benefit of the beneficiary, except as limited by the trust document, and (3) a prohibition on utilization of trust funds to meet basic support needs that are adequately met by governmental or charitable programs. The beneficiary has no legal right to access the funds in such a trust for her own support. Property in a "special (or supplemental) needs" trust does not affect the child's eligibility for such benefits, and, with proper planning and administration, may be devoted to enhancing the disabled child's quality of life.
For experienced legal representation in estate planning matters, contact the lawyers of Anderson & Associates or call 312-345-9999 (Chicago) or 847-995-9999 (Schaumburg office) or 630-653-9400 (Wheaton office) to schedule a free consultation.
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