Estate planning is a process that involves professional advisors who are familiar with your goals and concerns for distribution of your assets after your death. Your family structure, including children and aging parents, are considered. This process can involve the services of a variety of professionals, including a lawyer, accountant and/or financial planner.
The core documents most often associated with estate planning are advance directives, namely durable Powers of Attorney for both financial and health care matters, a Last Will and Testament, and in certain situations a Trust may be appropriate.
As laws are amended, family and friends’ relationships change, or there is a change in financial status, it is suggested that your estate plan be revisited annually when you file your tax returns.
Estate planning is a complex journey, and working with knowledgeable professionals along the way can help ensure that your wishes are carried out and survive you.
Communicate your plans to the individual you have appointed to carry out your wishes. Remember that they need to know what you want and what is important to you. Advise them where your documents are kept so they can do their job as your agent or executor the way you desire it to be done.
POWERS OF ATTORNEY
If you were to become incapacitated and unable to make financial or medical decisions for yourself, the general rule is that the court would step into your life and appoint a guardian of your person and estate to make decisions for you. If properly done in advance, the need for a guardianship is generally avoided through the creation of separate durable powers of attorney documents – one for finances, and one for health care. A power of attorney document is recommended for people over 18 years of age.
Property Power of Attorney is a separate document in which you appoint someone you trust implicitly to pay your bills, pay your taxes, and tend to all of your other financial matters if you are not able to do so yourself. Not all power of attorney documents are created equal. Be sure to seek advice from an attorney in the preparation of your property power of attorney as there are provisions that can be added to the document that may have far-reaching consequences based on your wishes and your unique situation.
Health Care Power of Attorney, sometimes referred to as an Advanced Directive for Health Care, allows you to appoint a trusted person who makes health care and medical decisions for you if you are not able. This person must be someone you trust who will speak on your behalf and advocate for the care you would want if you could make the decisions yourself.
WILLS and TRUSTS
Last Will and Testament is a document in which a person specifies what is to be done with his or her assets at the time of death. A Will also directs that your bills and taxes are paid prior to distribution of your assets.
Trusts are sometimes referred to as revocable, irrevocable, or a Living Trust. With a properly funded trust, an individual may avoid the need to pass assets through Probate upon death. A Trust can be thought of as a written agreement in which one person (trustor, grantor) transfers property to themselves or another person or organization (trustee) to hold the property for the benefit of another (beneficiary). If you own real estate or the value of your estate is over $100,000, you may want to consider the benefits of creating a Revocable Living Trust and whether it makes sense for your circumstances.
Under Illinois law, a person who dies holding title to more than $100,000 of assets that do not have designated beneficiaries or are held jointly with another individual requires those assets to be probated through the local court system. Also, all real estate that is owned individually by the decedent must pass through probate. The time and expense of a probate estate is substantial and can be avoided with the use of a Revocable Living Trust. If the value of your estate is significantly over $100,000, you may want to consider the benefits of creating a trust and whether it makes sense for your circumstances.