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QUESTION: HOW DO I KNOW IF I NEED A LEGAL ESTATE PLAN?
Estate Planning can be confusing and emotional - it doesn't have to be! For many families, having an estate plan is critical. It can save thousands of dollars, prevent hurt feelings among family members, and avoid years of headaches. Like many things, estate planning becomes more manageable when you understand the basic concepts and terms. Then you will be able to decide if estate planning will benefit you and your family.
ANSWER: When a person dies (he is now called a "decedent") and he has no will or trust, Illinois law determines what happens to his assets and his minor children. These results may be acceptable to you, depending on your personal situation. If so, then you may not need a legal estate plan. But if you do not like the results, an estate plan can change them according to your instructions.
When a decedent is "intestate" (meaning he has no will) the following results will occur:
1. A probate court will decide who will be guardian of his minor children (if his spouse also has died.) Since most parents want to nominate their choice of guardian, they need to execute Wills.
2. If a decedent is married and has children of any age, his "probate assets" will be distributed one-half to his surviving spouse and one-half to his children. Most spouses want the survivor to receive all of the assets, which they will then use to care for the family, and they name the children to inherit only if the spouse has already died. A Will or a Trust can accomplish this planning.
NOTE: If an asset transfers automatically at your death, like life insurance or a joint tenancy home, then it is not a "probate asset."
3. An executor of a probate estate must purchase a surety bond to assure his faithful performance of the management of the decedent's assets. A Will or a Trust can waive the requirement of surety on the bond, thus saving hundreds or thousands of dollars on the cost of the probate proceeding.
4. Children receive their inheritance at age 18. Many parents choose to delay distribution of all or part of a child's inheritance. A living trust or a trust created in your will (a "testamentary trust") can delay mandatory distributions until the age you choose, and can designate a trustee to oversee earlier distributions. It also can give priority to paying for costs of education and healthcare.
5. A probate court proceeding will be necessary to legally transfer title of probate assets to the beneficiaries. A living trust allows title to pass after death without probate. There are other documents and techniques to avoid probate on certain assets.
These are some of the most common reasons families choose to set up a legal estate plan. The plan could include a will, a trust, or other documents to make sure your wishes are followed with regard to providing for your children and making the estate administration process as easy as possible.
Note: This column provides general information related to the law designed to help readers understand their own legal needs. This column does not provide legal advice. Please consult a lawyer if you want legal advice. No attorney-client or confidential relationship exists or will be formed between the reader and the author of this column.
QUESTION: HOW DO I KNOW IF I NEED A LEGAL ESTATE PLAN?
Estate Planning can be confusing and emotional - it doesn't have to be! For many families, having an estate plan is critical. It can save thousands of dollars, prevent hurt feelings among family members, and avoid years of headaches. Like many things, estate planning becomes more manageable when you understand the basic concepts and terms. Then you will be able to decide if estate planning will benefit you and your family.
ANSWER: When a person dies (he is now called a "decedent") and he has no will or trust, Illinois law determines what happens to his assets and his minor children. These results may be acceptable to you, depending on your personal situation. If so, then you may not need a legal estate plan. But if you do not like the results, an estate plan can change them according to your instructions.
When a decedent is "intestate" (meaning he has no will) the following results will occur:
1. A probate court will decide who will be guardian of his minor children (if his spouse also has died.) Since most parents want to nominate their choice of guardian, they need to execute Wills.
2. If a decedent is married and has children of any age, his "probate assets" will be distributed one-half to his surviving spouse and one-half to his children. Most spouses want the survivor to receive all of the assets, which they will then use to care for the family, and they name the children to inherit only if the spouse has already died. A Will or a Trust can accomplish this planning.
NOTE: If an asset transfers automatically at your death, like life insurance or a joint tenancy home, then it is not a "probate asset."
3. An executor of a probate estate must purchase a surety bond to assure his faithful performance of the management of the decedent's assets. A Will or a Trust can waive the requirement of surety on the bond, thus saving hundreds or thousands of dollars on the cost of the probate proceeding.
4. Children receive their inheritance at age 18. Many parents choose to delay distribution of all or part of a child's inheritance. A living trust or a trust created in your will (a "testamentary trust") can delay mandatory distributions until the age you choose, and can designate a trustee to oversee earlier distributions. It also can give priority to paying for costs of education and healthcare.
5. A probate court proceeding will be necessary to legally transfer title of probate assets to the beneficiaries. A living trust allows title to pass after death without probate. There are other documents and techniques to avoid probate on certain assets.
These are some of the most common reasons families choose to set up a legal estate plan. The plan could include a will, a trust, or other documents to make sure your wishes are followed with regard to providing for your children and making the estate administration process as easy as possible.
Note: This column provides general information related to the law designed to help readers understand their own legal needs. This column does not provide legal advice. Please consult a lawyer if you want legal advice. No attorney-client or confidential relationship exists or will be formed between the reader and the author of this column.
