Benefits of Trusts

  • Provides control over property during lifetime.
  • Provides legacy after death: what, whom, when, and how.
  • Effective for families with minor children.
  • Provides planning for incapacity.  Can provide creditor, predator, and “spendthrift” protections.
  • Can provide planning for retirement, special needs, and SSI benefits.

Wills vs trusts


Key differences between wills and trust-based estate planning.

Everyone has heard of wills and trusts. Most articles are written on these topics, however, presume that everyone understands the differences between these options.  In reality, many of us don’t – and with good reason – wills and trusts are rooted in complicated, centuries-old laws.

Will. A will is a written document that is signed and witnessed. A will is considered a “death” document as it only goes into effect when you die.

Trust. A trust is a legal document, signed and witnessed, and effective during your lifetime, during any period of disability, and after death. Because the trust is effective during your lifetime and you can change it, so it’s referred to as a “living” document.

One key element in deciding between a wills and a trusts is understanding their effect on the probate process. 

Probate. The term “probate” – which literally means “proving” – and refers to the process wherein a decedent’s will must be authenticated, outstanding legitimate debts paid, and assets transferred to the beneficiaries.

Everyone’s situation is different, so it is important to analyze every aspect of your situation – and what the future may hold –so that you can determine what’s right for you.  So, to help you understand the differences, please watch the following video.

Act now. Without an estate plan in place, you and your family are left completely unprotected. Call our office now and we’ll help you determine whether a will or a trust makes sense for your situation. You don’t have to make these decisions alone.

 

Benefits of Wills

  • Directs assets to beneficiaries.
  • Names guardians for minor children.
  • Names personal representative to settle estate.
  • Effective for small estates without minor children.
  • Can creates trust to accomplish after death planning

Advantages of Trust

do you really need a trust?


Although many people equate an “estate plan” with having a will, there are many advantages to having a trust-based estate plan. While there are other estate planning tools (such as joint tenancy and transfer on death accounts, to name a few) only a trust provides comprehensive management of your property in the event you can’t make financial decisions for yourself (commonly called legal incapacity) or after your death.

Advantages of Trust.

Some of the primary benefits of having a trust is that it provides the ability to transfer your assets privately, saving time, and expense of probate. This process can easily cost thousands of dollars and often takes from several months to more than a year to resolve.

Beyond the cost and time of probate, the probate court proceeding makes your financial life, assets, and last wishes of public record. Such records could be easily discovered by creditors or financial predators looking for opportunities.

A trust, on the other hand, creates privacy for your personal matters as your heirs would not be made aware of the distribution of your assets.

Financial Support.

A common reason to create a trust is to provide ongoing financial support for a child or another loved one who may not be able to manage these assets on their own. Through a trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide. Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction, or encouraging irresponsible behavior that you don’t find desirable. A trust can also come with conditions that must be met for the person to receive the benefit of the gift. Furthermore, if you ever become incapacitated, your successor trustee – the person you name in the document to take over after you pass away – can step in and manage the trust’s assets, helping you avoid a guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a serious, chronic illness. Unlike a will, a trust can protect against court interference or control while you are alive and after your death.

Trusts are not simply just about avoiding probate. Creating a trust can give you privacy, provide ongoing financial support for loved ones, and protect you and your property if you are unable to manage your own assets. Simply put, the creation of a trust puts you in the driver’s seat when it comes to your assets and your wishes as opposed to leaving this critical life decision to others, like a judge.

Disclaimer: This article is intended to serve as a general summary of the issues outlined therein.  While this article may include general guidance, it is not intended as, nor is it a substitute for, a qualified legal advice.  Your receipt of this article from  Lexern Law Group, Ltd.  (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG.  The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.

probate administration


Out of all the areas of law, probate probably ranks near the top of those that ordinary people would likely to experience during their lifetimes. Though the probate process is commonly encountered by families that have not taken their time to invest in the trust-based estate planning, it is often misunderstood, leading to fear, delay, and sometimes avoidance of filing the probate case.

What is probate?

Probate Requirements

Probate is the formal court-supervised process of collecting a decedent’s (person who has died) assets, notifying legitimate creditors of the death, settling claims, and distributing the remaining assets to heirs or to those designated in a will. Probate is a public process and typically initiated by a close family member or executor named in a will. It should be initiated shortly after death. In small estates (discussed later) a less formal process may be available.

While there is no requirement to use a lawyer for probate administration, a typical probate is a rather formal and complicated process. One minor omission, one failure to send a notice, or a missed deadline, can cause everything to come to a grinding halt or extend the probate administration process for months if not years.

Psychological Aspects of the Probate Administration.

The psychological aspects of the probate administration are just as important as the procedural. The death of a family member or friend sometimes tends to bring out the very worst in some people. Experience shows that even in close families there is a tendency to get overly emotional about relatively trivial matters at the time of a loved one’s death. Siblings often fight over who gets the iron frying pan and who gets the kettle. Such minor matters and any delays or inconveniences can be upsetting, undermine the perception of fairness, and create unfounded suspicion among family members. Thus, it is generally a good idea to “let a lawyer do it” and help the parties to reach a fair and amicable solution.

Yet, probate rarely benefits the estate or heirs. It always costs them money and time, making the entire process available to the public. Moreover, if you own property in another state or country, the probate process will be even more complicated because your family may face multiple probate cases after your death, one in each state where you owned property – even if you have a will. And, if probate is contested, there will be significant legal and administrative costs charged against the estate – money that could have been distributed to the heirs. So, unless you have a small estate (less than $100,000), you should consider investing in a trust-based estate plan.


Disclaimer: This article is intended to serve as a general summary of the issues outlined therein.  While this article may include general guidance, it is not intended as, nor is it a substitute for, a qualified legal advice.  Your receipt of this article from Lexern Law Group, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG.  The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.

Spark Better Business


Finally, good news! On December 20, 2017, the Illinois Governor Bruce Rauner signed into law a new bill substantially reducing the filing, maintenance, and reporting fees for Illinois Limited Liability Companies ( the “LLCs”).

Although Illinois has a long way to go to make it an attractive state for the small businesses and investments, it’s clearly a step in the right direction.  Illinois used to have some of the highest LLC formation and maintenance fees in the nation.  Now, it will be one of the states with the lowest LLC filing and maintenance fees.  This law should reduce the costs of the basic asset protection strategies, allowing the greater number of small business owners to implement the necessary estate planning and asset protection strategies.

See the summary of the new LLC filing and maintenance fees.

Summary of LLC Fees

 

When was the last time you thought about your legacy or estate plan?  When was the last time you asked yourself – “what would happen if I die or become incapacitated”?  Have you asked yourself – “will my children be protected or will my family be able to easily take over my financial affairs?”  “Will my ex-husband or wife be awarded the sole custody of my children and receive access to their entire inheritance?”  These are fears that attorneys hear from their clients all the time.

Unfortunately, when it comes to taking an action to plan for an undesired event, we are often paralyzed by our fears of the unknown.  Our fears often trump our intentions of protecting our assets and caring for the loved ones (we like to call this, “our legacy”).

Obviously, thinking about our own death or incapacity is not the type of “happy thought” we often like to have.  But, for the sake of your family, it’s crucial to develop and implement a practical estate plan that will help your children and loved ones learn about your desires and navigate your financial affairs after you pass away (or, in the event you become incapacitated).  Understandably, your loved ones will be in the midst of an emotional nightmare if something happens to you.  And, you don’t want to make things even worse with added frustration and confusion if they are left to figure out your financial affairs without any guidance.

Below are four easy steps that will help your family deal with these challenges:

  1. Create an estate plan, including your will, trust, and power of attorney, and keep it up-to-date.

You should have a will, trust (in most cases), living will, HIPAA release, and durable power of attorney for your financial assets.  These must-have documents will help you and your family to take care of you if you ever become ill.  Importantly, the proper estate planning may allow you to preserve your assets from creditors and maintain your eligibility for Medicare benefits in the events of catastrophic illness.  Moreover, once you pass away, your will and trust will ensure that your assets are passed along and preserved in accordance with your wishes.

  1. Grant permission to your family members to access to your bank account to pay for the immediate expenses.

When an awful incident happens, your immediate family members (likely your spouse) will have to make sure that your on-going bills, such as your mortgage, car payments, and other bills are paid continuously.  The easiest way to give your family members a quick access to the necessary resources (your bank accounts) is to make sure that each of your bank accounts has a payable-on-death provision that transfers the account after your passing.  Alternatively, your power of attorney allows your designated family members to access your bank accounts and write checks on your behalf.  If you become incapacitated or die, your designated person would have to produce the power of attorney and your death certificate to the bank, and he or she will be able to access your account and pay the ongoing bills on your behalf.  It is the necessary step that any estate planning attorney should advise you upon.

  1. Create a list of every financial asset, obligation, and banking/brokerage relationship you have.

It’s not enough to have an estate plan in place, you need to organize the information in a transparent way and keep it in an easily accessible place.  Your family members should have access to a cheat sheet that summarizes all your investments, brokerage accounts, insurance policies, and debt/loans you have.  Without it, your family members will be forced to conduct an endless search of your family files, accounts, and records in an attempt to compile your financial information.  Some information and assets might even get lost.  Your loved ones will always wonder if they were able to find all your assets.

The easiest way to compile your financial information is to create an encrypted file (or print a hard copy of this information tucked into a filing cabinet or a water and fireproof safe).  Don’t include any account information, passwords, social security numbers, or other sensitive personal information.  Instead, instruct your trustee or executor of the will that all account numbers and online passwords are written down and stored in your bank’s safe deposit box.  For security purposes, you want to segregate the description of all your assets from the sensitive account information and passwords.

Moreover, you should describe the safe deposit account’s location and who has or knows where the second key from the safe deposit box is located for a quick reference.

  1. Make sure that you communicate your plans and locations of key documents.

Inform your family members that you have created the estate plan and the master list of relevant information for their references.  If you don’t’ want to share this information with your family yet, you need to tell them where the master list is and provide them instructions and summary of your wishes.  Make sure that you actually keep the master list and other estate planning documents exactly where you have told your family members they would be.

Importantly, you want to review your estate planning documents and a master list of assets at least once a year to incorporate all changes in your financial situations and family composition.  Typically,  your estate planning firm, like ours, will have an annual maintenance program that will update all your estate documents for a low annual fee.

Disclaimer: This article is intended to serve as a general summary of the issues outlined therein.  While this article may include general guidance, it is not intended as, nor is it a substitute for, a qualified legal advice.  Your receipt of this article from Lexern Law Group, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG.  The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.

estate planning

The holidays are quickly approaching and many of you will have a chance to see your parents and, for some of you, your grandparents.  This would be an excellent opportunity to discuss your parents’ future and estate planning needs among the loved ones.  Yet, discussing the retirement plans and estate planning needs with your elderly parents can be very tenuous and uncomfortable.

This is often a touchy topic because older parents may interpret your questions as your attempt to take control over their assets or to determine what you would get when they pass away.  Either conclusion could lead to a very tense and uncomfortable conversation.  Older generations, especially those that survived wars and The Great Depression, often do not like to talk about their assets or finances.  They deem these topics very personal.

If you are dreading about bringing up these topics because they make you very uncomfortable, you are not alone.  So, you need to think strategically.  Knowing your parents’ health condition and retirement plans can help you to gain some clarity about their assets and financial situation.  To gain that knowledge, without raising tensions, consider focusing your discussion on your parents’ estate planning objectives, health condition, and retirement plans.  It would help you to identify obvious gaps in their estate planning and financial situation for the future.

How to approach the topic of your parents’ financial planning?

You can approach your parents’ financial planning indirectly, through a discussion about their retirement plans.  Focus on your parents’ goals to preserve their legacy for the future generations.

First, ask them whether they have a will.  You should tell them that you (and your brothers and or sisters, if you have them) want to make sure that your parents’ wishes are honored. Ask your parents whether their will is up-to-date and who has the original document.  This question would also help you to bring the topic of their retirement plans and finances.

Second, ask them whether their will has been updated and reviewed by an estate-planning attorney.  The process of reviewing (or creating) your parents’ will require the knowledge of your parents’ financing and retirement plans.  You should focus your discussion in terms of their retirement plans and the direction of their assets to support those plans.

Third, you need to confirm that your parents’ will (or trust) beneficiaries, guardians, and trustees (if your parents have a trust-based retirement plan) are current and reflect your parents’ latest wishes.

What happens to their assets in the event of disability or incapacity?

You should also ask your parents about their disability or incapacity planning  .  Although people live much longer these days and their retirement, accounts have increased in value, so do the costs of living ahttp://lexern.com/practice-areas/estate-planning-and-probate/nd medical costs.  Your parents should be aware of the risks of being hospitalized or in need of long-term care.   Such events can wipe out all their hard-earned savings.  So, incapacity planning is crucial for the people nearing their retirement age. Without proper estate and financial planning, an unfortunate event may wipeout all of your parents’ retirement savings.

What are their plans for the retirement?

Some people dream about visiting other countries in their retirement; others want to open their own business about which they dreamed for many years; while others simply want to spend more time with their family and friends.

Therefore, talking about your parents’ retirement plans can help to bring a candid discussion about your parents’ financial situation and whether it could realistically support them in their retirement.

Disclaimer: This article is intended to serve as a general summary of the issues outlined therein.  While this article may include general guidance, it is not intended as, nor is it a substitute for, a qualified legal advice.  Your receipt of this article from Lexern Law Group, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG.  The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.