Articles Posted in Trusts

| by

People with revocable living trusts often name a family member (spouse, oldest child, etc.) as their successor trustee. The successor trustee is who takes over the administrative duties for the trust in the event you become incapacitated or die.

However, naming only one successor is probably not enough. It is better to name a secondary successor trustee in case the first one is unable to serve as trustee when the time actually arrives. There are a number of reasons this may happen, including the following:

You could both be injured or die in a common accident

Continue Reading

| by

It’s rare for an estate plan to be put together and never be changed. Wills and trusts usually need to be changed over time as your circumstances, states of residence, and desired outcomes shift. It is important to know how you can properly change your will or trust so that these revisions will be enforced.

Writing on your will or trust to edit or amend it or attaching a hand-written addendum to this document isn’t a good idea. States have different requirements for how to change a will or trust, so it’s important to learn what is considered legally valid in your state.

For a will, a legally enforceable change can be accomplished by replacing the prior will document with an entirely new one (you’ll also want to explicitly state in the new document that all prior wills are revoked and replaced) or by adding a document called a codicil to the old will document. The codicil should specify exactly what part of the old document is being changed, and it will often reaffirm the other terms of the old will document that remain unchanged.

Continue Reading

| by

As is the case with many questions regarding legal matters, this depends on some different factors. It is more simple to name your spouse directly, and your spouse could then convert your retirement plans to their IRA and take withdrawals on their schedule.

That being said, trusts have a number of advantages. Trusts can provide a lot of protections, including greater creditor protection compared to retirement funds, protection in the event your spouse becomes incapacitated, protection from scams (as seniors are often targeted), and protection of assets from having to be spent paying for long-term care. They can also preserve funds that are not needed by your spouse for your children.

Trusts can also be a useful estate planning tool. As the threshold is just over $12 million, most Americans don’t need to worry about the federal estate tax. However, many states have their own estate taxes, including some with the threshold as low as $1 million. A trust can protect this amount from being taxed following the death of the survivor of yourself and your spouse.

Continue Reading

| by

Do you own real property in multiple states? Perhaps you are a snowbird or own investment properties such as rentals in more than one state. If you do, your estate will likely be required to go through probate in each state where you own real property at the time of your death. Probate isn’t necessarily a bad thing, but it is often very time consuming and can quickly become expensive with court costs and lawyer’s fees. In cases where real property is owned in multiple states, that would mean going through probates in each of those states.

However, there are a number of methods that can be used to try to avoid probate:

One method is to add the intended heirs to the title of the real estate while the primary owners are still alive. However, this is not often advised. If any of the intended heirs (who then become co-owners of the real estate) get into financial trouble – such as bankruptcy, divorce, being sued, creditor issues, etc. – the primary owners of the real estate also become involved in their financial trouble. Parents shouldn’t lose their home or other properties because their child was sued by another person.

Continue Reading

| by

Having a pet brings many people joy and provides them with a living creature to take care of and to provide companionship. Unfortunately, pets are often overlooked in people’s plans for incapacity or death.

The types of animals that one has as well of the needs of those animals should be considered carefully when preparing a last will and testament or trust. The responsibility of caring for a small indoor pet is very different from that of a large barnyard animal.

When considering a potential caregiver for your animals, you’ll want to make sure this person has the desire, ability, and available space to take good care of your pets. Also consider the other people who live in their home, taking into account their like or dislike of animals and if anyone in the house may be allergic to the types of pets you have. Also, does this person already have other animals? Someone who already has pets may have a better idea of the time and money needed to take care of your animals, but it may be more difficult for everyone to adjust in this case.

Continue Reading

| by

When it comes to estate planning, families with special needs children need to take extra care to prepare for when you will no longer be around to care for your child. As part of an estate plan designed to help enhance and enrich your child’s life both in the present and into the future, you may want to consider a Special Needs Trust.

A Special Needs Trust allows individuals with disabilities to receive funds needed to supplement their benefits, have a greater quality of life, and cover unexpected expenses without losing their benefits. This can be created for someone with physical and mental disabilities and/or with mental illness. There are three different types of Special Needs Trusts that can be created, and they differ in who creates the trust, who is trustee, and what happens to the remaining assets in the trust after the death of the beneficiary.

Unfortunately, people often lose their SSI, Medicaid, or other benefits after inheriting life insurance, real estate, or other assets. Special needs planning works to prevent this from happening and to preserve these benefits. It also can be used to provide lifetime money management for benefit of the disabled child, protect eligibility for public benefits, and ensure a pool of funds if public funding ever ceases or is restricted.

Continue Reading

| by

Many people think of a Last Will and Testament as the main tool for “normal” estates, with trusts only being for large estates. However, revocable living trusts are one of the most underutilized estate planning tools.

Living trusts are documents that give a set of instructions for the use of one’s assets during their lifetime and for the distribution of those assets after their death. Although they aren’t necessary for everyone, living trusts can be useful even for small estates, depending on the type of property and the needs of everyone involved.

Living trusts are a user-friendly trust option and provide these four major benefits:

Continue Reading

| by

Do you need a professional trustee?

There has been more of a spotlight on legacy planning and the need to get our estate plans in order during the last year. Along with the prospect of a lower estate tax exemption and an aging baby boomer population, 2021 is the perfect time to focus on estate planning and on making sure important documents are up-to-date.

Since the current elevated estate credit is set to expire in 2025, many people were already anticipating the need for a trust before the pandemic began. This year brought an urgency to people’s focus on making sure their financial and legal affairs are in order in case of an illness or death.

Continue Reading

| by

When it comes to trusts and their potential benefits, a lot of people assume trusts are for “others” and don’t realize they may be ideal candidates for a trust that could help to protect their assets and avoid probate. Here are some of the most common misconceptions regarding trusts:

“I don’t want to lose control of my assets. Doesn’t someone else control the Trust?”

– Answer: Not necessarily. When setting up a Revocable or Irrevocable Trust, you can be the Trustee (the person who manages the trust). You can also choose other Co-Trustees, such as your spouse, child, or someone else you trust. You also choose who your successor trustees will be, and these people will take over the trust if you become incapacitated and after you pass away.

Continue Reading

| by

During the COVID-19 pandemic, many of us in Illinois are complying with the governor’s stay-at-home order. We are hunkered down in our homes – making only necessary trips for essential matters such as medical treatment, supplies, or perhaps taking a walk to breathe in in some fresh air and soak in some sunshine while maintaining social distancing. We thank and applaud everyone who is doing their part in curbing the spread of this virus.

At this time, some of you may reflect on the “what ifs” of the future. What will happen if you become incapacitated, or worse, if you pass? What if your child has special needs and you wish to preserve assets for the benefit of your child? What if you have minor children? How or who will take care of them and assets for their benefit should you be unable to care for them, or worse, die? Are you able to make or coordinate health care and financial decisions for your spouse, parent or other elder loved one?

Illinois law provides defaults for distributions through probate court proceedings if you were to pass away and a legal process (namely, guardianship) should you become incapacitated. Depending on Illinois law could involve what could be costly court proceedings. Ultimately, the result of the Illinois laws may not reflect your wishes as to the disposition of your assets and/or who will be in charge. A properly executed estate plan sets out your wishes and names the trusted persons you want in charge of your affairs during life and afterward. Estate plan documents can and often include wills, powers of attorney, living wills, and trust documents – such as living trusts, special needs trusts, or asset protection trusts.

Continue Reading