Estate Planning With Wills and Trusts
Estate planning is the formal process of creating a legal framework to make sure that a person’s assets are passed to their intended beneficiaries while avoiding detrimental outcomes such as probate, litigation, and estate taxes. Estate planning often involves the creation of a combination of the following documents:
A Will. A Will is the well-known legal document that names legatees to receive a person’s assets upon death. The Will also appoints an Executor to represent the Estate of the deceased person in Probate Court if necessary. A Will can also direct for funeral arrangements and the appointment of Guardians of minor children. A Will can be stand-alone or it can be combined with a Trust, with the Will then being known as a “Pour-Over Will” because it simply directs the Executor to transfer any probate assets to the Trust.
A Trust. A Trust is a legal creation that stands in for a person or people. A Trust can hold assets even after a person passes away. A Trust appoints a Trustee to make decisions over the asset and distribute the Trust assets as outlined in the Trust. Trusts are useful because they allow for greater control over distribution of assets, and they also remove assets from probate with the expectation that if titled properly, a probate court proceeding will not be necessary. Trusts are also helpful in preventing minor children and disabled individuals from getting money outright before they have the skills necessary to manage money on their own.
Power of Attorney for Property. A power of attorney for property is effective during the lifetime of the individual. It grants another person the ability to make financial decisions, including entering into contracts and accessing financial accounts, either immediately or upon a certain event, such as incapacity. A power of attorney that activates upon a future event is known as a “spring power of attorney”. Powers of attorney are helpful because it allows for people to make decisions for incapacitated family members without getting approval from the Court under a Guardianship proceeding. This saves the family great time and expense, and ensures that the incapacitated person’s wishes as to who should represent him/her are fulfilled.
Power of Attorney for Healthcare. A power of attorney for healthcare gives the authority to another person to make healthcare decisions for an individual. This too can be immediate or springing. It is important to have a power of attorney for healthcare in case one becomes incapacitated and family members need to make medical decisions.
Living Will. A Living Will is a declaration for how a person wishes to be treated medically upon incapacity. Many people choose to declare that if they are incapacitated and there is no hope of recovery (as determined by their attending physician) that they do not want to be kept alive artificially. However, this can be tailored to a person’s specific desires.
Transfer on Death Instrument for Real Estate or Trustee Deed. A home is often a family’s largest asset, and it can become a probate asset if no beneficiaries are named. You can name a beneficiary for your home by creating a transfer on death instrument (TODI). This document transfers ownership of your home upon your death. An alternative is to deed the real estate to a Trust if one is available and then the Trust can distribute the home to the intended beneficiaries. Determining which route to take is difficult and is best made in consultation with an estate planning attorney.
Estate planning also involves organizing an individual’s assets such as financial accounts, retirement accounts, life insurance policies, pensions, real estate, business interests, and tangible personal property. To ensure that probate Court is avoided, it is necessary to take an in-depth look at a person’s entire asset structure and make changes to beneficiary designations where necessary.
Contact the Libertyville Estate Planning Attorneys at Johnston Tomei Lenczycki & Goldberg LLC Today to Determine Your Estate Plan Needs
If you have no estate planning in place, or are unsure as to whether your prior planning is still beneficial, it is important to speak with an experienced estate planning attorney who can review your Will and Trust and make recommendations for your estate plan. Contact the Libertyville estate planning and Wills and Trusts attorneys at Johnston Tomei Lenczycki & Goldberg LLC today to put your plan in place and ensure that your family is taken care of upon your passing.