The most important thing for everyone to know is do it yourself estate planning, wills, powers of attorney and trusts for the most part do not work. The only value such unassisted, fill in the blanks, forms have is to help a person organize thoughts before they consult an attorney. This is not a plug for attorneys – it’s a warning for consumers.
Estate Planning means to take control now of personal legal, financial, and medical events that may, or may not, come in the future.
A good estate plan will consist of an evaluation of the client’s wishes. The final plan may include a combination of a trust (that is funded), a will, a durable power of attorney, a healthcare power of attorney and a candid discussion of assets and liabilities. Not everyone always needs everything. But one thing that everyone does need is to have advice from someone who actually knows what to do, and who signs off on the advice given.
Trusts, Wills Powers of Attorney
A revocable living trust does not necessarily make assets untouchable from creditors or lawsuits. Asset protection is a totally different practice area, beyond the scope of our services. A trust begins, and can be used, on the date created. A will only becomes effective on death. Moving one’s property into a trust makes it easier to manage. Easier to change. Such as beneficiary or adapting to Tax Code changes for example. A trust can state conditions during the life of the trustee, and the trust can condition how assets are managed and distributed on death.
Trust assets, or the trust itself, are not subject to probate. So trust terms, assets, and beneficiaries are kept more private.
Wills
Depending on the specific estate plan there can be a probate case for assets or issues unrelated to the trust. You can have a will and not have a trust but if you have a trust you should also have a will. A will works in conjunction with a trust. For example, a pour over will might provide that everything not already in the trust moves to the trust upon death. What if someone buys a lottery ticket and is struck and killed by a redi-mix truck 30 seconds later? The lottery ticket is valued at $4,000,000. A pour over will would have the lottery winnings move to the trust.
Some estate planning issues can only be dealt with by a will, such as naming a guardian for minor children. Also, a will typically waives the requirement that the estate purchase a bond. It is not at all unusual that the fees a client pays an attorney for a proper estate plan are less than the cost of the estate bond.
Powers of Attorney
Powers of attorney allow one person to legally act on behalf of another. There are two types. One, a power of attorney for health care. The second, a power of attorney for property, called a durable power of attorney. You should have one of each.
Sometimes a client requests a durable power of attorney for a specific reason, for example to allow someone else to sign documents to sell a real estate parcel.
Sometimes a client requests a health care power of attorney for a specific reason, for example an upcoming surgery and the client has two sisters, one of whom would have the hospital pull the plug at the slightest suggestion, while the other sister would never pull the plug. The client would want to make sure the correct sister has the health care power of attorney.
Probate
Probate proceedings tend to leave some conditions and decisions up to the statutes, and sometimes to a judge’s discretion. Not necessarily a bad thing – but nevertheless something that by client choice can many times be avoided.
In Illinois, estates (generally, under certain conditions) having total assets under $100,000 may bypass probate with a small estate affidavit.
Even with a will and a trust some files will need to be probated. But by pairing a will with a trust assets and beneficiaries are not public and are not part of the probate estate.
Estate Litigation
Rare. But it does happen. Sometimes there can be a dispute over multiple wills. Sometimes the estate must sue to enforce its rights. Sometimes a claimant initiates litigation of a claim against the estate. The stakes could be high and that is why we are called in to handle the litigation.
Law Office of Scott Bagnall
5 Revere Drive
Suite 200
Northbrook, Illinois 60062
312/580-3800
sb@scottbagnall.com