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Estate Planning

What is estate planning?

Why is it important to establish an estate plan?

What does my estate include?

How do I name a guardian for my children?

What estate planning documents should I have?





Q: What is estate planning?

An estate plan is simply the plan you put into effect for the protection of your assets during your lifetime and the transfer of assets to your family and loved ones upon your death in an efficient and economical manner. The plan is set forth in several documents, including your Will, perhaps a living trust and/or an insurance trust and a Statutory Power of Attorney for Health Care. A properly drafted plan will also be structured to reduce or, in some cases, totally eliminate estate taxes.


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Q: Why is it important to establish an estate plan?

If you do not have a Will, the State of Illinois has written one for you. Sadly, many families don't seek legal advice to establish an estate plan because they believe estate planning is only for extremely wealthy families. Nothing could be further from the truth. We work all our lives to build a "nest egg" and it a big mistake not to make sure that your family and loved ones receive the full benefit of your life's work. If you don't make proper legal arrangements for the management of your assets and affairs after your passing, Illinois' intestacy laws will dictate who gets your assets. This often results in the wrong people getting your assets as well as higher estate taxes.


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Q: What does my estate include?

Your estate is simply everything that you own, anywhere in the world, including:

  • Your home or any other real estate that you own
  • Any interests you may have in any business
  • Your share of any joint accounts
  • The full value of your retirement accounts
  • Any life insurance policies that you own
  • Any property owned by a trust over which you have significant control


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Q: How do I name a guardian for my children?

If you have children under the age of 18, you should designate a person or persons to be appointed guardian(s) over their person and property.  Of course, if a surviving parent lives with the minor children (and has custody over them) he or she automatically continues to remain their sole guardian.  This is true despite the fact that others may be named as the guardian in your estate planning documents.  You should name at least one alternate guardian in case the primary guardian cannot serve or is not appointed by the court.
 


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Q: What estate planning documents should I have?

A comprehensive estate plan should include the following documents, prepared by an attorney based on in-depth counseling which takes into account your particular family and financial situation:

A Living Trust can be used to hold legal title to and provide a mechanism to manage your property. You (and your spouse) are the Trustee(s) and beneficiaries of your trust during your lifetime.  You also designate successor Trustees to carry out your instructions as you have provided in case of death or incapacity. Unlike a Will, a Trust usually becomes effective immediately after incapacity or death. Your Living Trust is "revocable" which allows you to make changes and even to terminate it.  One of the great benefits of a properly funded Living Trust is the fact that it will avoid or minimize the expense, delays and publicity associated with probate.  Read the FAQ section on Living Trust for more information.

If you have a Living Trust-based estate plan, you also need a Pour-Over Will.  For those with minor children, the nomination of a guardian must be set forth in a Will.  The other major function of a Pour-Over Will is that it allows the executor to transfer any assets owned by the decedent into the decedent's trust so that they are distributed according to its terms.

A Will, also referred to as a "Last Will and Testament", is primarily designed to transfer your assets according to your wishes. A Will also typically names someone you select to be your Executor, who is the person you designate to carry out your instructions. If you have minor children, you should also name a Guardian as well as alternate Guardians in case your first choice is unable or unwilling to serve. A Will only becomes effective upon your death and after it is admitted by a probate court.

A “Durable Power of Attorney for Property” allows you to carry on your financial affairs in the event that you become disabled. Unless you have a properly drafted power of attorney, it may be necessary to apply to a court to have a guardian or conservator appointed to make decisions for you when you are disabled.  This guardianship process is time-consuming, expensive, emotionally draining and often costs thousands of dollars.

There are generally two types of durable powers of attorney: a "present" durable power of attorney in which the power is immediately transferred to your attorney in fact; and a "springing" or future durable power of attorney that only comes into effect upon your subsequent disability as determined by your doctor.  When you appoint another individual to make financial decisions on your behalf, that individual is called an "attorney in fact". Anyone can be designated, most commonly your spouse or domestic partner, a trusted family member or friend.  Appointing a power of attorney assures that your wishes are carried out exactly as you want them, allows you to decide who will make decisions for you and is effective immediately upon subsequent disability.

The law allows you to appoint someone you trust, for example, a family member or close friend to decide about medical treatment options if you lose the ability to decide for yourself.  You can do this by using a "Durable Power of Attorney for Health Care" or Health Care Proxy where you designate the person or persons to make such decisions on your behalf. You can allow your health care agent to decide about all health care or only about certain treatments. You may also give your agent instructions that he or she has to follow. Your agent can then ensure that health care professionals follow your wishes.  Hospitals, doctors and other health care providers must follow your agent's decisions as if they were your own.

Some medical providers have refused to release information, even to spouses and adult children authorized by durable medical powers of attorney, on the grounds that the 1996 Health Insurance Portability and Accountability Act, or HIPAA, prohibits such releases.  In addition to the above documents, you should also sign a HIPAA Authorization Form that allows the release of medical information to your Agents, your Successor Trustees, your family and other people whom you designate.


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Frank M. Greenfield & Associates, P.C., has offices in Chicago and Northbrook and assists clients with Business Law, Estate Planning and Real Estate throughout Chicago and the Greater Metropolitan Chicago Area including Skokie, Buffalo Grove, Lake Forest, Palos Heights, Arlington Heights, Wheaton and Elmhurst.



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