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.

Living Wills become More Popular in Estate Planning Choices

Many people are under the misconception that estate planning is only for the rich and the elderly. In estate planning, an estate is not a large mansion, but it is actually everything a person owns when they die. Personal property, bank accounts, their home or other property, digital information, stocks, retirement plans, and business ownership all fall under the domain of a person’s estate.

Whether wealthy or not, everyone should have a will or living trust to clearly spell out your wishes in the event of your death. A living trust, also referred to as a living will, is becoming a more and more popular choice in estate planning, especially as it avoids the probate process a will is required to go through to determine its validity.

In a living will, you determine who the trustee or the trustees are and who the beneficiaries will be. Check with your attorney to see if you and your spouse should also be on the list of trustees, as this will enable you to maintain complete control of your assets while you are still alive.

Like a will, a living will allows you to clearly spell out which of your assets goes to whom and how those assets should be handed out. For example, you may not want a young adult to suddenly inherit a large sum of money so your instructions could include the assets be portioned out over a period of time.

An attorney can help you decide if a will or a living will is the right choice for you based on your assets and the size of your estate. Whether a large or not so large estate, the basic questions for estate planning are the same.

  • Who are the loved ones you want to provide for?
  • What assets will you have to gift to your beneficiaries when you die?
  • What will your liabilities (i.e. debts) be?
  • When do you want your beneficiaries to receive your gifts (i.e. minor children)?

If you have questions on whether or not a will or living will is right for you, contact a qualified DuPage County estate planning attorney today to help decide which are offer the best options.

Potential Tax Hit of Philip Seymour Hoffman’s Estate

Philip Seymour Hoffman's will, will, estate plan, update your estate plan, Illinois estate planning lawyer, DuPage County attorneyThe recent death of 46 year-old Philip Seymour Hoffman was a loss felt by the entertainment industry and the talented actor’s large fan base. What might make Hoffman’s death even more tragic is the family he leaves behind, including his three young children and their mother, Mimi O’Donnell.

The actor, who died from a drug overdose, left behind an estate estimated at $35 million. A recent article in Daily Finance reveals that there are several issues with the estate that could prove costly for his heirs – and that could have been easily avoided.

When Hoffman died, he did leave a will. However, that Philip Seymour Hoffman’s will was drawn up in 2004. At the time it was written, he and his partner had one child together, a son. The will left part of the estate to his son, in the form of a trust, and the rest to O’Donnell. In the decade that passed, Hoffman never updated his will. The couple had two more children together but nothing in the will has been changed to reflect that. Neither one of the girls are mentioned in the will.

It’s important to update your estate plan whenever a major life event occurs, such as a birth of a child, a wedding, divorce or a death. Otherwise the legal battles that can ensue between heirs can be very costly, both financially and emotionally.

Another issue could cause the estate to take a heavy hit in taxes. Although Hoffman and O’Donnell had been in a relationship for a long time, they never married. Therefore, the funds left to O’Donnell won’t qualify for the unlimited marital deduction. This deduction allows one spouse to leave the other spouse an unlimited amount of financial assets without the surviving spouse having to pay estate tax on those assets. Because Hoffman and O’Donnell never married, O’Donnell will have to pay an estate tax of 40 percent of what she inherits. Had the two married, approximately $12 million would be going to O’Donnell instead of the IRS.

These oversights in estate planning that Hoffman made are also ones can affect much smaller estates. It’s important to make sure your estate planning is up-to-date and drawn up in the best interest of your heirs, whether your estate is worth $35 million or $3500. Contact a qualified Wheaton estate planning attorney to discuss how you can secure your family’s future.