Estate Planning FAQs
Law Offices of Jeanine Friedman PC provides guidance and support in estate planning matters to families and individuals located on the Northshore, Hyde Park and throughout the greater Chicago area.
Please click on the links below to see the answers to these important estate planning questions:
- What is Estate Planning?
- Why do I Need an Estate Plan?
- What is Probate?
- What is a Revocable Living Trust?
- What is a Durable Power of Attorney?
- What is an Advance Care Directive?
What is Estate Planning?
Estate Planning is a process that addresses how one’s property is to be disbursed at death and how one wants to be cared for if incapacitated. It takes into account issues like: the type and value of one’s assets, which individuals should be appointed to act for the deceased/incapacitated, tax consequences of disbursements, the timing and amount of distributions to beneficiaries, out of state property and guardians of minor children.
For example, without an estate plan, a young adult child could receive their inheritance in a lump sum cash distribution. It may be more prudent for young adult children to receive their inheritance at certain ages or upon completion of specific education or vocational goals with a trustee monitoring their progress.
Why do I Need an Estate Plan?
Regardless of the amount of one’s assets or whether family relationships are presently harmonious, creating an estate plan is a wise and responsible action to take. Without an estate plan, the courts and the State of Illinois will make decisions regarding one’s assets. Many times, the courts base their decisions on laws and rules that are antiquated and not in line with how families function today.
For example, in the absence of a Will, the court will name the guardians of minor children. Parents may agree a non-family friend would be the best guardian for their minor children if they are both deceased. This decision could be based on a combination of characteristics a friend embodies that they want to instill in their children. The Court will have no knowledge of the existence of the friend. The court will decide what’s in the best interest of the child. Only a Will (or pour over will) allows one to recommend to the court those people who the parents feel are best suited to be legally named guardians of their minor children.
What is Probate?
Probate is a process where the court oversees the administration of a deceased person’s estate. Individuals who die with a Will and those who die without a will, intestate, are subject to the probate process. The purpose of the probate process is to validate the legality of the Will, pay any final bills and taxes out of the estate, confirm there are no legitimate claims against the estate, and to distribute the remaining assets to heirs in accordance with the Will or distribute assets by statutory intestate succession if the deceased died without a Will. Despite the time and expense involved with going through the probate process there are circumstances a family may decide the probate process is the best alternative for their family situation.
For example, if an estate has multiple creditor claims, probate may be a good choice because the court oversees the entire process and brings finality to the claims.
What is a Revocable Living Trust?
A revocable living trust is a legal entity that allows one to maintain total control of their assets while they are living and to set forth the distribution of their assets upon their death.
The creator of the trust is both the trustee (manager of the assets) and the beneficiary of the trust assets during their life time. Upon their death or if they become incapacitated, the successor trustee, they’ve named in their trust, is responsible for managing trust assets until they recover or distributing the trust assets to their beneficiaries upon their death.
A trust is a favored estate planning option for many families because in the long run it can save time and money.
For example, administering an estate can be expedited because a trust avoids the probate process. Probate can take 3-12 months because validating the Will, identifying beneficiaries and paying all valid of claims takes time. Expenses are incurred because the cost to maintain the assets, lawyers’ fees, court filing fees and time off of work accrue until the estate is closed.
While some families, choose a trust for privacy reasons (it is not a public document like a Will) others, who own property outside of Illinois, appreciate the fact, out of state property is not subject to probate if funded into the trust.
What is a Durable Power of Attorney?
A durable power of attorney for property is an important document that allows one to designate a person to manage their financial affairs if they can’t. Even if one has a Will or trust, designating a power of attorney, or “attorney-in-fact,” is necessary for making important financial decisions on their behalf for assets outside of their trust. One designates whether the power of attorney is to take effect immediately or only once their doctor certifies they are incapacitated. Finally, guardianship proceedings can be avoided by naming a guardian in a power of attorney.
What is an Advance Care Directive?
An advance healthcare directive allows one to preserve family harmony and express one’s health related wishes, including who will make decisions relating to organ donations and life support. One may think they do not need a healthcare directive because their family knows what their wishes are, but this is often not the case. It is important to imagine one’s family faced with one’s sudden illness or disability. An advance healthcare directive allows one to preserve family harmony by listing all of their medical wishes, including who will make medical decisions for them in the event that they cannot and what to do with issues of life support, organ donation, and other important end-of-life decisions.