As you are probably aware, there are many different ways to distribute your assets at death.  As estate planners, our goal is to present the different options currently available, and then allow you to make an informed decision as to the best possible plan for your individual needs.

With the enactment of the ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 on June 8, 2001, the need for estate planning and more specifically estate tax planning has become more, rather than less, complicated for Americans.

 

Below, we  have outlined some of the basic characteristics of a few estate plans.

   

INTESTACY

If you should die without a will, do not worry, the State of Illinois has written one for you. All of your assets that are held in joint tenancy pass directly to the surviving joint tenant.  This transfer is by operation of law and occurs without court supervision.  The remainder of your assets are distributed according to the intestacy statutes of the State of Illinois.  The intestacy statutes provide for all of your debts to be paid, and then, all of the remaining assets to be distributed according to your current family make-up, with the surviving spouse getting no less than half of the assets.  However, there are some additional considerations.  The court typically requires the appointed administrator of an intestate estate to post a surety and performance bond for the value of the estate.  The cost of such a bond often times exceeds the cost of preparing a will.  Also, the attorneys' fees to probate an intestate estate can be very high.

 

LAST WILL AND TESTAMENT

The most basic type of estate plan one can have prepared is a Last Will and Testament.  This document will allow you to give away your assets in any manner that you see fit.  Remember, your assets held in joint tenancy pass to the surviving joint tenant outside of the will.  There are, however, some concerns associated with a will.

First, a will must be filed in the county where the decedent lived.  Next, once the will is filed it is public information, and anyone can go to the courthouse to look at the size of the estate and the plan for distribution.  Often, the family does not want the public to know such private information.  Notice is required to be given to all interested parties of the commencement of probate case.  Publication in the newspaper of this case is also required.  With notice to various parties and the access of court files by the public, the will may be subject to challenge from outside parties who can claim that the will is invalid for a variety of reasons.  Finally, the probate process can be very expensive, and the attorneys' fees are often a major expense of the administration of the estate.  

 

TRUST PLANNING

The Revocable, Inter Vivos Trust, or the “Living Trust”, allows for a flexible way to plan your estate as well as keep your assets outside of the probate court.  The living trust can be a very simple document that provides for the distribution of your assets without the added expense of a probate proceeding.  If your estate is large  you can use different provisions in the Living Trust which  can reduce the size of the taxable estate and can minimize estate taxes.  

A Living Trust does not limit your control over the assets while you are alive.  You have all the same rights to sell, dispose, give away, or manage any of the assets in the trust as you would if the trust did not exist. Trusts offer four major advantages:

 

Reduction of estate and income taxes -- depending upon the type of trust you establish.  

Avoidance of probate -- the time-consuming and expensive process of having your estate settled by probate courts.  

Privacy -- in many states, if an estate goes through probate, anyone who is interested can find out what you owned and to whom you owed money.  

Protection -- living trusts permit you to avoid placing large sums of money in the hands of your heirs (children, nieces, nephews, etc.).  They also allow you to establish guardianship, staggered distributions so children receive assets in increments as they get older, and flexibility in providing for the needs of your children.

 

Click here to review some Frequently Asked Questions associated with Living Trusts.

To being this process of planning your estate, complete the attached Questionnaire and contact us at 630-990-0535.