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The ability to make a will involves the issue of mental capacity.

In Illinois, there is a presumption that every adult is sane until the contrary is proven and the burden is upon him who asserts the lack of testamentary capacity. In other words, everyone is presumed to have the mental capacity to make a valid will. It is up to the person challenging the validity of the will to prove otherwise.

Illinois courts also recognize that someone who suffers from some mental impairment can still have testamentary capacity. There is a case where a 74 year old woman executed a will after she was diagnosed with senile dementia and had the intelligence level of a 12 year old child. Despite these short comings, she read newspapers, was aware of and interested in current events, knew her relatives and asked about their well-being and could transact business. The court ruled that she had the capacity to execute a valid will.

In summary, Illinois law requires three things for someone to have the mental capacity to make a valid will:

He must know who his spouse, children, grandchildren and other relatives are;

he must generally understand what assets he owns; and

he must be able to form a plan in his head regarding how he wants his property distributed.

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A personal representative is the individual who handles the matters of an estate as it makes its way through the probate process. If there is a will, the personal representative is the executor. If there is no will, the personal representative is the administrator.

The personal representative has specific powers even before the Probate Court issues his Letters of Office. He can carry out any gift the decedent has made of his body, arrange the burial of the decedent, make payment of funeral charges and take acts necessary to preserve the estate’s assets.

After his Letters of Office are issued, the representative can exercise all powers given to him in the will. In addition, the representative can lease, sell or mortgage the estate’s property, borrow money with or without security, continue the decedent’s unincorporated business, perform any contract of the decedent and take possession, administer and grant possession of the decedent’s real estate.

For a complete list of powers of a representative, check out 775 ILCS 5/, which is the Illinois Probate Act.

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Like all other unique forms of real estate ownership, Co-Op Housing presents some interesting difficulties for those in the real estate market.

The end of World War II marked the beginning of an acute housing shortage in the United States. Returning servicemen and woman, many of whom had lived with their parents before the war, returned home looking to live independently and to begin raising families. Unfortunately, major cities like Chicago, had little to offer.

The Federal Government recognized the need and opportunity to provide service members with affordable housing while stimulating the building trades. As part of the Serviceman’s Readjustment Act, federally approved builders were given the green light to construct 4-unit apartment style buildings to house veterans and their families. The veterans would obtain a mortgage subsidized by the Veteran’s Administration and enter into an agreement to manage the property.

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One of the most important, but most often overlooked estate planning documents, are the Powers of Attorney. Powers of Attorney fall into one of two categories: (1) Powers of Attorney for Property and (2) Powers of Attorney for Health Care. Essentially a Power of Attorney legally authorizes a trusted family member or friend to make decisions on your behalf in the event that you become incapacitated or are unable to make decisions on your own. Powers of Attorney are powerful documents that can protect you and your family from the need for expensive guardianship proceedings.

Although Powers of Attorney for Health Care are regularly accepted by hospitals and doctors, many banks and financial institutions are making it harder and harder to use a legally valid Power of Attorney Document. If a manager at your financial institution believes, in good faith, that your Power of Attorney is no longer valid you may be left with no choice but to petition a court for guardianship.

To avoid this from happening we advise that you review your Powers of Attorney to ensure (1) the your Power of Attorney documents are up to date and include the most recent statutory language; (2) that your Powers of Attorney are no more than 5 years old; and (3) that your Power of Attorney allow sufficient authority for your agent to amend trust documents, make gifts, and designate or change beneficiaries.

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In a time when advances in medicine are providing longer, more fulfilling lives for our family members with special needs, it is more important than ever to take advantage of all the financial planning tools available for their specific needs.

The Illinois ABLE Act provides for a new tax-advantaged investment program that allows a blind or disabled person (or their family) to save for disability related expenses without jeopardizing the disabled individuals means tested federal benefits. Unlike the assets of a traditional Special Needs Trust, ABLE account assets can and should be spent on expenses related to the family member’s disability. These expenses include education, housing, transportation, employment training, assistive technology, personal support services, health, prevention and wellness, financial management, legal fees, and funeral/burial expenses.

A properly established ABLE account will allow a disabled individual to save up to $100,000 in their own name. The disabled person or their family may contribute up to $14,000 per year into the ABLE account without effecting eligibility for SSI or other federal means tested programs. Although the Illinois State Treasurer’s Office is responsible for administering the ABLE program, the funds are privately held assets that are totally controlled by the account holder.

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The Reverse Mortgage has gotten a bad reputation in the time since it was first created by the Federal Housing Administration in 1988. The mere mention of the Reverse Mortgage usually brings to mind foreclosed homes and declining financial health. In fact a Reverse Mortgage is simply an equity loan secured by someone’s home with a deferred payment plan. Unlike a traditional home equity line of credit, no reverse mortgage interest or principal is due until the loan reaches maturity. As long as the homeowner resides in the property and stays current on property tax and insurance payments, they can reside in the home without making any payments on the money they have borrowed.

In order to qualify for a reverse mortgage, a homeowner must be age 62 or older with substantial equity in their home. There are no income or credit score requirements. Typically, the older the homeowner, the more they can borrow. A homeowner has the option of taking out a lump sum amount or establishing a line of credit that grows over time if money is not withdrawn.

A homeowner does have the option to pay down the balance of a reverse mortgage over time. Interest paid on the loan can be taken as a tax deduction. If no payments are made, the reverse mortgage is still not due until the last surviving borrower passes away or fails to occupy the home as their primary residence. Reverse mortgage lenders will give the heirs of an estate up to 12 months to complete the sale of the home or refinance the balance of the reverse mortgage. It is VERY important that the heirs of a deceased home owner contact the mortgage lender as soon as possible to inform them of the passing and the heirs’ plans for the property.

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In the past, creditor protection was afforded to your IRA and to the beneficiaries that would inherit your IRA, such as your children.  However, in June of 2014, the United States Supreme Court ruled that an “Inherited IRA” is not protected from creditors of the beneficiaries.

This major change in the exempt status of the Inherited IRA, motivated estate planners  to examine new ways to protect these retirement assets from creditors.

The need to restore creditor protection while maintaining the favorable tax treatment of IRAs has led many clients to consider adding a stand alone Retirement Trust to their estate plan.  If drafted properly, this type of trust can protect Inherited IRA accounts from creditors, including a beneficiary’s divorcing spouse.

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A Special Needs Trust (“SNT”) or Supplemental Needs Trust is a certain type of trust which can be used for goods and services that governmental programs will not cover.  The SNT must have special language within the trust such as: “This trust shall be used to supplement and not supplant governmental programs”.  Having such necessary language, the assets in the trust are not counted against the special needs beneficiary as an asset in determining eligibility for governmental programs such as Medicaid and Supplemental Security Income (SSI).

There are two types of SNTs.  The First Party SNT is funded with the special needs person’s own funds.  For instance, if a person with a disability is awarded monies from a settlement from an auto -mobile accident, those funds can be placed in a First Party SNT to preserve the eligibility for SSI and/or Medicaid.  The same process can be used for when a special needs person inherits a sum of money outright.

There is one disadvantage with the First Party SNT.  When the beneficiary dies, Medicaid will send a bill to the Trust for the monies spent by that program during her life.  The trust must pay back Medicaid the amount of the bill. However, if the trust assets are less than the Medicaid charge, Medicaid will absorb the balance of its bill.  If there is a balance after paying the Medicaid bill, the proceeds may be distributed to family or anyone who is a distributee of the Trust.

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George Boxill, Prince’s sound engineer, was set to release on April 28, 2017 the “Deliverance” album that included  a total of 6 songs from the late performer.  However, a U. S. District Judge in Minneapolis agreed with Prince’s estate and issued  a temporary restraining order barring Boxhill from distributing any unreleased recordings, including the “Deliverance” EP.

Last week the estate sued Boxill , alleging that he violated his confidentiality agreement with Prince’s corporation and tried to financially gain from the release of the EP on the 1 year anniversary of the pop star’s death.  The suit went on to state that Boxhill had received no authorization to procure or release the songs and that the estate on March 21. 2017  demanded return of all recordings of Prince’s in his possession, including masters, copies or reproductions, but Boxhill refused.  Finally, the estate argued that the representative of the estate, Comerica Bank & Trust had the duty to maximize the estate, not Boxhill.

A Temporary Restraining Order (“TRO”) is a pre-trial petition usually filed along with a law suit which seeks to prohibit a person or entity from doing something that would cause “immediate irreparable harm” if it were allowed to happen.  If a judge is convinced that “immediate irreparable harm” would happen, she can issue a TRO without notice to the other party and without a hearing.  A TRO cannot be appealed.

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When clients think about Asset Protection Off-shore trusts or some elaborate scheme of trusts and other entities usually come to mind.  However, there are several vehicles that are less complicated that a client can use that will probably suffice for her protection.

Here are some strategies that are not complicated and relatively easy to implement:

  1.  Purchase an Umbrella policy in addition to a Homeowners policy for your home.  An Umbrella policy is very inexpensive and will protect you for claims that exceed other policies for your home and auto.
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