Little Things Can Cause the Biggest Headaches in Estate Planning

safe deposit box, headaches in estate planning, Illinois estate planning attorneyCouples who have been married for a long time often fall into a routine regarding how the marital responsibilities are divided. This routine may also apply to financial responsibilities. One spouse may handle all of the investment responsibilities and the other may handle the household financial responsibilities such as monthly bill paying and checkbook balancing. Quite often, however, when one spouse dies unexpectedly and there is no written documentation and record-keeping, it can turn into a nightmare for the surviving spouse.

When a spouse passes, and he or she handled all investments, the surviving spouse may suddenly find him or herself unsure of what or where those investments, as well as other bank accounts, are located. He or she may also have issues gaining access to those accounts.

If a spouse passes, and he or she handled the day-to-day household bills, the surviving spouse may not have any idea what those bills are or even how to access their checking account information. In fact, with more people utilizing online account and bill-paying options, many surviving spouses cannot gain access to those accounts because they do not know the the required passwords.

There are steps, however, that couples can take to ensure that if something should happen to one of them, the other will not be faced with the stress of uncovering the financial unknowns. Gathering the information and putting it in one place is a step couples should take throughout their estate planning process.

To begin, couples should make a list of all accounts and passwords, including bank accounts and investment accounts. Additionally, the names of all stocks and bonds should be included with each investment account. Moreover, it is important to add all bills to this list and include those account numbers and passwords. Couples should update this list at least once each year.

It is also essential for couples to share all financial information with each other so they are both aware of their financial standing. This is especially true for any debts a couple may have. For example, if there is a credit card balance that one spouse does not know about when his or her spouse dies, it may throw the surviving spouse for an emotional loop, even if the balance is not that much.

Finally, it is important to not overlook a safe deposit key. Many couples use safe deposit boxes as a way to protect their valuables. If you choose to utilize a safe deposit box, make sure that the box is in both names. If not, legal ramifications may occur over who has access to that box. Also, both spouses should also know where the key is kept.

As simple as these steps may seem, the process of estate planning may feel daunting and it is easy to overlook the simple issues. Hence, it is important to contact an experienced DuPage County estate planning attorney to ensure that all of the estate planning issues that you and your family need to address are discussed and planned.

Trusts, Estate Tax, and Exemptions: The Basics

The term “estate planning” throws some people off because of its association with the very wealthy. Yet estate planning is just as important for families without large financial reserves. According to CNN Money, “such a plan ensures that your family and financial goals are met after you die”—and that’s something every family can get behind. CNN Money cites that an estate plan is made up of three major elements: a will, the choosing of a power of attorney, and a living will (sometimes called a medical power of attorney). Every person’s estate plan will be different, depending on individual needs, and this is why it’s important to work with a qualified attorney to find out what’s best for you and your family. 

Sometimes a trust, “legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death,” is an important addition to estate planning because they allow the reduction of your estate and gift taxes. Trustees will exact the trust. According to the Illinois Trusts and Trustees Act, a trustee can be “appointed by or pursuant to the instrument creating the trust, by order of court or otherwise, and includes an individual and a corporation qualified to administer trusts in this State.” The trustee will have access to all processes regarding the estate and estate plan, upon death or incapacitation of the trust’s owner.

In the beginning of 2013, the federal estate tax exemption—“the amount you may leave to heirs free of federal tax,” reports CNN Money—was changed to $5.25 million. Inheritances over $5.25 million are taxed heavily, at 40 percent. To avoid this heavy tax, the wealthy can reduce an estate while they are still living by gifting small chunks of it to their beneficiaries. The tax-free gift amount one is allowed to give to an individual annually is $14,000. This means a person and his or her spouse can give up to $28,000 annually to a beneficiary. “You may also pay an unlimited amount of medical and education bills for someone if you pay the expenses directly to the institutions where they were incurred,” according to CNN Money.

If you or someone you know is beginning to plan his or her estate, the most important step is to contact a qualified estate-planning attorney. Contact our offices today.

The Types of Last Will and Testament Documents

A Last Will and Testament is designed to transfer assets upon death according to the wishes of the departed.  This is accomplished by addressing the three concerns of the transfer, namely, beneficiaries of the will, guardians for any minors and an executor to administer the estate.   This is accomplished in one of three separate ways.

The first type is a simple or statutory will which is primarily used in uncomplicated estate planning.  There are state specific forms containing the necessary legal language which is completed by filling in the blanks.  This “one size fits all” option is not recommended as each person’s estate planning needs will be different.

The second type is a will with a testamentary trust.  This is a form of estate planning when the testator, or will-writer, does not desire to create a revocable trust.  This form of will is beneficial because it may avoid a guardianship estate if children are beneficiaries.   Yet this form does not always allow the estate to miss probate and is just as complex as setting up a revocable trust.

The third type is called a pour-over will.  It is drafted in tandem with a living or revocable trust as the beneficiary.  The will can provide a guideline for the executor to transfer all unallocated assets to the trust upon the death of the testator.  The benefit of such a will is that, if it is properly funded, then the costly hassle of probate court may be avoided.

Those people with children or those who own property should consider planning their estates, otherwise their assets could be fought over in court by relatives.  If you are thinking of creating a will or, better yet, a revocable living trust, it is important to have a guide.  Contact a skilled estate planning attorney in DuPage County to review your planning options.

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