Illinois Estate Planning and Elder Law Blog

Spring has arrived, and many people feel a new sense of initiative and renewal during this season.

Although the resolutions you set with the New Year may no longer be in the forefront of your mind, the spring season is an excellent time to channel renewed focus and energy into improvements for yourself and your family. So many things are now on our minds but outside of our control, including current economic uncertainty, international conflict, political divides, and continued public health challenges. One thing we can do is focus our time on important matters that are within our control. Many people have taken this time to begin or update estate plans in order to best prepare for the inevitabilities of incapacity and death.

Here are several questions to consider while planning for or updating your legal estate planning documentation:

As part of an estate plan, sports fans who have season tickets might wish to pass these tickets on to family members or loved ones to enjoy. Unfortunately, passing on these tickets might be less simple than you would expect.

Acquiring season tickets to your favorite sport can be challenging to begin with. These tickets might be very expensive and may have a waitlist. It’s understandable to want family members or friends to be able to use these tickets after you have passed away, but most teams have limits for how you can transfer tickets while still alive or after death.

As a season ticket is a contract between the purchaser and the team, the team is able to put restrictions in this contract. Limits can be set on when and how the tickets can be transferred to another person. A team may state that the tickets cannot be transferred by will or trust, may only allow transfers to one’s spouse or close family members, or may require ticket holders to follow certain procedures to transfer the tickets.

One of the lessons the last few years have taught us is that we may miss out on the chance to do something if we put it off for too long. A number of people are making big life decisions such as switching jobs, moving into new homes, or making relationship changes.

Many people have also taken this time to begin estate planning. However, some people have been unable to stay focused and trail off instead of finalizing their estate plan. People may do this for a variety of reasons. They may feel too overwhelmed by the decisions they need to make, or they may not have someone in their life that they are comfortable naming to make important decisions for them. It’s also unnerving for most people to think about their own mortality. For all of us, it’s a matter of “when” and not “if” we will die, and it’s better to be prepared for it.

An estate planner helps to simplify this process and break down complex issues to make them much easier to understand. Although an estate planner can listen to clients’ concerns and offer guidance, it’s still up to the individual to decide to execute their own estate planning documents.

It’s often heartbreaking when an individual’s spouse dies and, on top of trying to arrange their spouse’s funeral while grieving, they also have to struggle through accessing the family’s financial records and accounts without knowing where to begin.

It’s difficult to have conversations about estate planning and death. However, having conversations to plan for each person’s death will make the life of the surviving spouse far easier when the time comes.

Since there is no way to know which spouse will die first, it’s important that both partners are involved in or are at least provided with information for the family’s finances.

You may choose to include a living trust as part of your estate plan for a number of reasons – such as avoiding probate, passing assets to beneficiaries in a more hassle-free way, etc. There are some common myths about living trusts that you may want to know so that you can be sure you aren’t trying to use a living trust to do something it cannot do. Here are a few of those misconceptions:

Misconception #1: A living trust will help you avoid estate taxes.

If you have a large enough estate to need to worry about estate taxes, there are a number of strategies you can use to reduce the size of your estate. However, a living trust is not one of them.

Not only can gifting assets to your grandchildren help them get a better start in life financially, but it can also help you by reducing the size of your estate and the tax due after you pass away.

An outright gift to each grandchild may be the simplest way to do this, and you can give them up to $16,000 a year (in 2022) before having to report your gifts. Also, if you are married, you and your spouse can both give gifts of up to this amount (bringing it up to $32,000 that could be given to each grandchild) without gift tax implications. These gifts also do not count as taxable income, although earnings will be taxed if these gifts are invested. However, keep in mind that gifts can have an effect on Medicaid eligibility.

You may be hesitant to give outright gifts to your grandchildren, especially if you wish for this money to be used in certain ways. If that’s the case, here are some options to consider:

If you are one of an increasing number of people with cryptocurrencies or noncurrency blockchain tokens, you’ll want to make sure to include these assets in your estate plan so that your heirs know about them and are able to access them. Crypto assets have unique qualities that need to be taken into consideration for estate planning.

First, you’ll need to make sure your heirs know that these assets exist and where they are kept, whether in a cold storage device (such as a USB drive) or in hot storage (such as in an online digital wallet). They typically have no account statements, and your heirs may not be aware that you have crypto assets unless you include them in your estate planning documents.

Next is the challenge of how these assets are transferred. Crypto assets are accessed using a private key which may be 64 digits long and is used to sign transactions by one’s digital wallet. This private key is all your heirs need to access your crypto assets, and these heirs may not need to be appointed executor of your estate to take control of these accounts. If your heirs or fiduciary aren’t left with the private key, though, it’s likely those funds would be forever lost.

Although people typically want the inheritance a loved one leaves behind for them, there are some situations where an inheritance may be unwanted. In these cases, you need to disclaim the inheritance.

Instead of feeling honored by an inheritance, some people may feel burdened by it for reasons such as:

·        Taxes. If the inheritance brings your estate above the estate tax exemption amount, under current federal rules, your estate would be taxed at 40 percent after you pass away.

There may be specific items that you leave for certain family members and loved ones in your will, including some of your most prized items and collectibles. Those possessions that are left over can be covered by a standard “residuary clause” in your will.

A residuary clause is a provision in a will to pass the residue of your estate to designated beneficiaries. This covers all of your stuff that you don’t list as specific gifts. You may decide to leave the residue of your estate to your spouse, or you may divide it evenly among your children if your spouse predeceases you. Often, a residuary clause included in one’s will determines how a large part of their estate is distributed.

A residuary clause ensures that all of your possessions that aren’t specifically addressed in your estate, including both known and unknown assets, will pass according to your wishes. Without a residuary clause, you may forget a valuable asset, or the designated recipient of a gift may die before you, and these items would pass under intestacy laws of the applicable jurisdiction.