Articles Posted in Estate Planning

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An increasing number of our day-to-day activities are moving online. Whether financial, social, work, or leisure, all aspects of our lives have a growing presence on our computers or the internet. Because of this, smart estate planning should include addressing digital assets.

Historically, estate planning consisted primarily of physical and financial assets such as real estate, jewelry, collections, and other physical items – but today, digital assets also needed to be considered.

Planning for administration of digital assets poses unique challenges because online policies regarding this assets are constantly evolving. However, incorporating digital assets into your estate plan as well as setting up a regular process for updating this information are important to ensure your survivors can easily manage these assets and that your wishes for them are fulfilled.

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Using DIY wills for estate planning can have unintended negative consequences according to Marguerite Lorenz, a writer for marketwatch.com. She reports having recently seen a DIY service that had many typos on its website and that its estate planning “packages” had a document labeled with three different names. This service – like many other estate planning sites – has its own attorneys, but access to specific help for your personal documents is rarely available. If personal advice is offered, it then appears to cost a great deal to receive.

So which is better, DIY wills or an online professional? For people with complicated personal and financial lives, a do-it-yourself service might not fully address your complexities. If you do estate planning by yourself, you might never know the results of your work, but your loved ones will.

According to Lorenz, there are a lot of DIY options for completing your own estate plan, and they have been available almost as long as we have had the internet. With the ease and availability of these programs, you would think that more of us would have an up-to-date estate plan.

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When same-sex marriage was legalized in 2015, many legal issues that same-sex couples faced were ratified. But other areas, like estate planning, could still be problematic.

Elena Lidrbauch, certified elder law lawyer attorney at Hickman & Lowder Co. in Cleveland, Ohio, and Joy Savren, at Savren Legal in Cleveland, said that there are many ways estate planning could differ for same-sex couples – like how it relates to trusts, wills, healthcare, or power of attorney.

Both attorneys say that the biggest issue that same-sex couples could face is who would get custody of a child after a partner dies. Savren says that same-sex parents should be asking themselves questions when it comes to estate planning, like if they had children while married or before or if they had children from a previous marriage. Lidrbauch says that it comes down to whomever is the custodial parent. She says that before same-sex marriage was legalized, you couldn’t have same-sex parents listed on a birth certificate – it had to be one mother and one father.

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Our firm is always stressing the need for Healthcare Powers of Attorney and Living Wills which are examples of healthcare directives.   Remember, that the Healthcare Power of Attorney is a document that names an agent to make healthcare decisions for you should you lack capacity to make those choices.  It not only pertains to decisions concerning life sustaining treatment if death is imminent, but also pertains to those situations where death is not imminent.

By contrast, the Living Will is a document which is restricted to those situations when death is imminent.  It is basically a written pronouncement by you that you do not want life sustaining measures taken if those procedures only delay the dying process. Unlike the Power of Attorney for Healthcare, an agent is not appointed and the health provider must continue to administer food and water.

But what if you have neither  a Power of Attorney for Healthcare nor a Living Will, your death is imminent and you lack the capacity to make medical treatment and life sustaining decisions? This is when the Illinois Healthcare Surrogate Act will apply. The Act generally allows for family members, friends, guardians and other named persons to make these type of decisions.

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For years, attorneys, accountants, financial planners, and insurance sale persons have been touting the benefits of long-term care insurance. “Buy in your 50s and you will never have to worry about your future long-term care expenses ever again” was the common refrain. It was sound advice. With the right long-term care policy your problems were solved. Daily benefit rates typically covered the lion’s share of the daily private pay rate preserving assets for much-needed extras and, in many cases, a tidy inheritance for the next generation.

Unfortunately, any aging population, the unexpected popularity of assisted living facilities, and a steady increases in the cost of care has made it all but impossible for insurance companies to continue to provide the promised levels of benefits without increasing premiums. It can be argued that insurance companies should have seen the baby-boomers coming but no one anticipated that so many seniors would prefer to transition to an assisted living facility foregoing the in-home care option. Insurance companies also expected a much higher percentage of customers to cancel coverage. A common theme across all types of elective insurance coverage types. The constant refrain from professional advisers to clients recommending that they retain long-term care insurance at all costs had the unintended effect of making LTC insurance untenable for insurers.

All of these unanticipated and unintended consequences has had a real impact on seniors. In some cases, premiums have as much as doubled in the past two years and Mass Mutual, one of the largest LTC insurance underwriters, is about to ask regulators to authorize an average increase in premiums of 77 percent.

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Recently, a lawsuit was filed against the Illinois Department of Human and Family Services over delays in the processing of claims for Medicaid benefits. Although the lawsuit focuses primarily on applications for community Medicaid and health insurance benefits, delays by IDHFS in processing Medicaid claims for long-term care benefits can have a dramatic effect on those seniors requiring assistance to pay for long-term nursing home care.

A quick synopsis of the Medicaid system as it applies to nursing home benefits:

Medicaid (not to be confused with Medicare) is a government program funded by both state and federal resources to help seniors and disabled individuals with limited resources pay for long-term care. Although Medicare will cover short-term stays in a nursing home for rehabilitation and some respite care, Medicare provides no benefit to those seniors that need to move to a nursing home on a permanent basis.

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Older parents are becoming more common, driven in part by changing mores and surrogate motherhood.  Comedian and author Steve Martin had his first child at age 67.  Singer Billy Joel just welcomed his third daughter. Janet Jackson had a child at 50. But later-life parents have some special estate planning and retirement considerations.

The first consideration is to make sure you have an estate plan and that estate plan is up to date.  One of the most important functions of an estate plan is to name a guardian for your children in your will and this goes double for a parent having children late in life.  If you don’t name someone to act as guardian, the court will choose the guardian.  Because the court does not know your kids like you do, the person they choose may not be ideal.

In addition to naming a guardian, you may  also want to set up a trust for your children so that your assets are set aside for them when they get older.  If a child is the product of the second marriage, a trust may be a particularly important.  A trust can give your spouse rights, but allow someone else-the trustee-the power to manage the property and protect it for the next generation.  If you have older children, a trust could, for example, provide for a younger child’s education and then divide the remaining amount among all of the children.

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When a non-lawyer ventures into the world of probate or guardianship, one item that usually causes confusion is the requirement for the representative to post a bond. Under Illinois law, a court-appointed representative is required to post a bond which covers 150% of the value of the personal estate. This requirement is in place for anyone serving as guardian of an estate for a person with a disability. It is also required for the administrator or executor of a decedent’s estate. Although in the case of decedents estates, the requirement for a bond can be waived, but only if the waiver is explicitly stated in the decedent’s will.

So what does a bond do? In essence, it acts like an insurance policy that protects the estate from the actions by the representative. The representative (although it can usually be paid out of the estate’s funds) is required to pay an annual premium which is a fraction of the full amount of coverage. The bond company then insures and protects the assets of the estate from any potential losses.

How does one actually acquire a bond? Most counties have their own standardized forms which the representative would need to sign called a “surety bond” form. This document needs to be signed and notarized and then sent to the bond company for execution. The bond companies also have their own forms and applications which need to be completed by the representative before they will approve the bond. In some counties, the bond companies have representatives who spend a portion of their day in the courthouse, which makes it easier to obtain a bond on short notice.

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One of the most common questions we receive from clients is where to keep original wills and other estate planning documents. Generally, there are two main options as to where these documents should be kept. The first option is to keep them in your home with your personal items and other important documentation. The advantage of this option is that it is usually easier for your family to find the documents should something happen to you. However, storing items in your own home can also carry some risk. The main drawback is the potential danger for fire or flood. If your original will is destroyed, you would need to re-execute a new document. To combat this risk, some people prefer to use a fire-proof safe to keep their important documents. If this is your choice, I would recommend sharing the code to your safe with your next of kin. Otherwise, it will be difficult to access the documents in an urgent situation.

The second option people choose for storing original estate planning documents is to use a safety deposit box at a bank. The primary advantage here is that the clients know the documents are being kept in a safe and secured location. The downside to this option can be the difficulty in gaining access to the safety deposit box once the client passes away. Some people will choose to list a family member as a co-owner of the safety deposit box, but some banks have restrictions on the number of people who can be listed.

If a family member is not listed on the account, the safety deposit box can still be accessed after the person passes away under the Illinois Safety Deposit Box Opening Act 755 ILCS 15/1. However, the family member, or interested person, must present an affidavit and can only open the safety deposit box for the purpose of checking for a will. In this situation the only items that may be removed are a will, a codicil, or any burial documents.

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Leaving those who survive you an organized estate with accurate records will save time and money.

At a minimum, leave information regarding the following in a place where your family can easily find it:

  • Your personal history including names, addresses and telephone numbers for yourself and all of your current family members and family members from previous marriages;
  • Your military service including your branch and dates of service;
  • Your employment including present employer and employment benefits (life insurance, stock options, pension plans and contact information for each);
  • Real estate you own including copies of deeds;
  • Financial accounts including name of institution and account numbers;
  • Stocks and bonds held in brokerage accounts and the name and phone number for the brokerage firm;
  • Automobile make, model and year and location of title of any loan information;
  • Business interests including type and amount of ownership;
  • Safe-deposit boxes
  • Insurance policies
  • Funeral/Burial instructions
  • Tax returns
  • Wills
  • Trusts
  • Power of Attorney for Property
  • Power of Attorney for Health Care
  • Living Will
  • Name and phone number for your lawyer, accountant and doctor
  • Important friends to notify upon your death

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