What is estate planning?
What estate planning documents do I need?
When do I need estate planning?
Do I need estate planning if I have no heirs?
What kind of Trust should I use?
What is the difference between estate planning and estate administration?
Are estate planning legal fees tax-deductible?
What is the difference between a Will and a Trust?
What is probate?
How do I avoid probate?
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What is estate planning?
Estate planning is the process of preparing legal documents while you are competent in the event of incapacity or death. During this process, you name the guardian of any minor children, decide who will make personal, medical and financial decisions for you if you are unable, direct distribution of your assets, give directions regarding the disposition of your remains and more. Estate planning turns your wishes into an eventual reality with binding legal documents.
What estate planning documents do I need?
At least five essential documents make up a typical estate plan: A Will or Revocable Living Trust, Power of Attorney for Health Care, Power of Attorney for Property (financial matters) and HIPAA authorization.
Estate plan documents cover the fundamental decisions you’ll need to make regarding your health care and guardianship over minor dependents, along with preservation and distribution of assets.
When do I need estate planning?
Every legal adult can benefit from estate planning. When you reach legal adult age (18 or 21), you become responsible for deciding what you want to happen upon incapacity or death. If you don’t have legal documents selecting the person who controls financial and healthcare for you or determining where your assets go, a court of law will make these decisions for you. The results may be contrary to your wishes.
Estate planning allows you to gradually and incrementally accommodate growing assets, children, elderly parents over your entire adult life.
Do I need estate planning if I have no heirs?
Yes. Everyone has heirs, depending on your state intestacy laws. If you truly have no legal family connections, the state becomes your heir. Upon your death, without an estate plan, your assets will be distributed to someone, according to the law in given state. The result may be an outcome that is unintended.
Even if you’re single and don’t have any children, you should have a Will or Revocable Living Trust, Living Will, Healthcare Power of Attorney, HIPAA Authorization, Living Will and Power of Attorney for Property.
What kind of Trust should I use?
A Revocable Living Trust is typically the main document of many estate plans, encompassing distribution of your assets as you wish. Since trusts do not die, assets owned in trust are not subject to probate. Revocable Living Trusts can be changed or revoked at any time throughout your lifetime to accommodate your needs.
Sometimes an Irrevocable Living Trust is advisable for people with estate tax “problems,” including those with large life insurance policies. It may also be recommended to people who divest their estates for other reasons, including creditor protection arising from employment in a profession that puts assets at risk from lawsuits. In many instances, when you place assets into an Irrevocable Living Trust, they are no longer yours and therefore cannot be taken by your creditors
What is the difference between estate planning and estate administration?
Estate planning is a process of preparing legal documents before your incapacitation or death in which you select your fiduciaries (executor of the will, trustee and successor trustees of trust, agents for power of attorney) and determines how your assets will be distributed. Estate administration includes trust administration, which is done without court involvement and occurs during incapacity or after death.
Are estate planning legal fees tax-deductible?
If your estate plan includes documents that have to do with the collection of income, management of income-producing property or tax advice and planning, the fees related to the preparation of these particular documents may be tax- deductible. Generally, fees related to the preparation of a Will, Power of Attorney and HIPAA authorization are not tax-deductible.
What is the difference between a Will and a Trust?
A Will only goes into effect after you die. A Trust may benefit you both during your lifetime and after your death. A Will directs distribution of your individually owned assets after you die, names an executor to administer your estate and a guardian for any minor children. A Revocable Living Trust can be used to manage and distribute your property before and after your death.
What is probate?
Probate is done under supervision of the appropriate state court. It is a lengthy and expensive legal process of distributing a deceased person’s estate. A judge determines the validity of a will, if one exists, grants authority to a legal representative of the estate (an executor if a valid will exists) and presides over the process of liquidation and distribution of assets. Probate is a public process and the beneficiaries can wait years before they receive their share.
Living probate, also known as guardianship or conservatorship, involves persons who are, or who are alleged to be, incapable of handling their assets. Durable powers of attorney for property, along with revocable trusts, can often minimize or completely avoid the legal stress of transition from full capacity to incapacity.
How do I avoid probate?
The best way for many people to avoid probate upon death is to have a fully funded revocable living trust. When you place your assets in a revocable living trust, you can use them any time during your life — and the way you want. Once you die, the assets in your revocable living trust are passed to your beneficiaries with limited attorney assistance. Revocable Trusts can have perpetual duration and may cease to exist upon full outright distribution, or when they no longer own any assets.
You may also avoid probate over a financial account, retirement plan or insurance policy by naming beneficiaries using a form provided by the financial institution with whom you work. Also, owning assets in joint tenancy with rights of survivorship may also avoid probate. For a variety of reasons, joint tenancies work best in limited situations.
@ 2019 The Law Office of Margaret Szymansky
444 N. Northwest Highway, Suite 210
Park Ridge, IL 60068
Phone: 847.696.9110
Fax: 847.696.9120
Email: law@margaretszymansky.com
