AREAS OF PRACTICE

What Do You Need to Do After a Loved One Dies?

Estate Planning

Real Estate Ownership

What Happens If You Die Without Leaving a Valid Will?

What you need to do after a loved one dies

Most people are not aware that when a person dies, his or her will must be immediately filed with the probate court in the county where he or she resided at the time of death. This is required by Illinois law. It is then the responsibility of the person nominated as executor to ask the court to probate the Will. If a person dies without a will, the court will appoint an administrator who is nominated by the decedent's family.

A Will need not be probated in every instance. In Illinois, if the value of the estate is less than $100,000.00, a Small Estate Affidavit may be sufficient to transfer property. If the value of the estate is more than $100,000.00 the estate must be probated.

The Executor of the Will should make an appointment with an attorney as soon as possible. The Executor should have the following information: the social security number of the deceased, a death certificate, the original Will, and a list of the assets and liabilities of the deceased, which includes real estate, bank accounts, stocks and bonds, etc. If the estate must be probated, a claim notice is published in the newspaper to allow any creditors time to file a claim. The executor of the estate must collect and inventory all assets of the estate, consider claims filed by creditors, keep records of all transactions, assist in filing decedent's final income tax return and any other tax returns that may be necessary, prepare a final accounting, and distribute the estate in accordance with the Will, or if none, to the heirs, as determined by law.

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Estate Planning

Estate Planning involves the process of assisting individuals with decisions regarding their lifetime needs, distribution of assets at the time of death, and tax considerations. Estate planning documents normally include a will, power of attorney for property and power of attorney for health care. Sometimes a trust is also used. In the estate planning process we strive to help individuals reduce the cost of administering their estates as well as to reduce estate taxes.

Your estate planning documents are some of the most important documents that you will ever prepare. They require careful thought and analysis to be certain your needs and desires are fulfilled. All of these documents should be tailored to a specific person's situation. It is your method of transferring lifetime accumulation of valuables, mementos, and wealth to loved ones.

In addition to having these documents prepared, you should have a list of the names and addresses of your heirs and beneficiaries. You should also prepare a list of your assets which include real estate, bank accounts, stocks, bonds, retirement assets, personal property, life insurance and other miscellaneous assets. The names of the owners of the assets, the names of the co-owners and named beneficiaries of life insurance and retirement accounts and the approximate value of each should be included.

Please note that each of the estate planning documents are unique and are written to meet the needs of each individual, and therefore, a separate document is prepared for each person. Following is a brief description of the most common estate planning tools prepared by attorneys -- wills, powers of attorney for health care, power of attorney for property and trusts.

Wills

A Will is a document that controls the disposition of a person's property at death. A Will does not avoid probate, but there are advantages to having one. A Will names an executor to handle your affairs and provides him or her with a set of instructions for distributing your assets. Also, a Will is the best way to name a guardian for minor children.

Each state has formal requirements for a Will. In Illinois:

• The maker of a Will must be 18 years old and be of sound mind and memory
• The Will must be in writing.
• The Will must be signed by the maker and must be witnessed in the special manner provided by law.
• Two witnesses are required in Illinois. (Persons who are beneficiaries under the Will should not serve as witnesses.)
• After death, the Will is presented in court and, after being proven valid, is put into effect and its provisions are carried out.

A Will may be revoked or changed at any time before the death of the maker. To be effective, changes must be made strictly in accordance with legal requirements. A change in a Will is often made by an addition called a "codicil."

What Are Some Important Considerations In Making Or Reviewing A Will?

• Who should receive your property, and, if children, at what age?
• Who should be named as guardians of minor children, and what are their duties?
• Should a trust be created for your spouse, children or others? If a trust is created you must name a competent individual or trust company to manage the trust.
• Should charitable gifts be made?
• Should life insurance proceeds be payable to a trustee or executor named in your Will or to individuals directly?
• Who should be named executor (the person who will administer the estate as you have directed in your will)?
• Can taxes be saved?
• Has your marital status changed since you made your last Will?
• Have any beneficiaries of your estate died or have you had important changes in circumstances or assets?

Generally, a person may give away his or her money in any way in a Will. However, Illinois law does not allow one spouse to disinherit the other without the consent of the one who is disinherited. A surviving spouse, whether or not named in the Will, may renounce the Will and receive a third of the deceased spouse's estate if there are surviving descendants of the deceased or one half if there are no surviving descendants. A spouse may renounce a Will for any reason.

Information Needed to Prepare Wills

You will need to name an Executor in your Will. This is the person who will administer the estate by paying the bills and making distribution to the beneficiaries as you have directed in your will. Usually the spouse will serve as Executor. Normally we ask for a second choice to cover the possibility that the first person who is named cannot serve in such capacity. Normally we do not recommend that a large number of persons serve as co-executors. Some individuals prefer a corporate executor such as a bank or trust company.

If you have children under age 18, you should name a guardian for the children. This is the person with whom the children will live should both parents be deceased. You should have a second choice to cover the possibility that your first choice for guardian is unable to serve. Normally, we name married couples as guardians, but this is not required. We should know their relationship to you and their address.

We will be discussing the possibility of establishing a trust for you, your children, your grandchildren, a disabled spouse or any other person. We will also discuss whether or not there is an opportunity for special tax planning. If a trust is desired, we will ask you to name a trustee. Often the trustee is a corporate trustee such as a bank or trust company. However, individuals may also serve as trustees.

You should decide if you wish to make a special bequest to a child, a grandchild, a niece, a nephew, or a friend. A special bequest often consists of a bequest of jewelry, antiques, automobiles, a family heirloom or even a bequest of real estate or money to a specific person.

If you desire to make gifts to a charity, then the amount of the bequest and the legal name and address of the charity should be provided.

If you wish to donate your eyes or some part of your body to science, this provision can be in your Will. Usually funeral arrangements are not included in a Will. However, we can include such provisions in the Will if you so desire.

If the persons to whom you wish to leave your estate are not living at the time of your death, you should have alternative beneficiaries. For example, parents will normally leave their estate to children or grandchildren if a child is deceased. Unmarried persons or persons without children often leave property to nieces or nephews or to children of deceased nieces and nephews. Sometimes money is left to friends.

Powers of Attorney

Illinois has adopted a Durable Power of Attorney Law. This Act allows the appointment of an agent and successor agent who can act for you. The power can be conditioned upon the principal's incapacity. These powers survive the disability of the principal. There are two types of statutory powers: PROPERTY and HEALTH CARE. Both must be executed by the principal.

The property power must be witnessed by a notary public and the health care power by one witness. A property power allows a principal to appoint an agent who can act for him or her in whatever matters are delegated. It can be as broad or narrow as the principal requires. Also matters such as successor agents, guardianship, and compensation can be specified.

A health care power allows the appointment of an agent to make health care decisions on your behalf. Illinois law allows adults the right to accept or refuse medical treatment as they see fit. A health care power allows the delegation of this right to an agent. The health care power allows specification of medical treatment desired, appointment of successor agents, nomination of guardians of your person. The powers survive disability of the principal. The health care power of attorney can provide legal and moral guidance to both the doctor and the family. More importantly, it lets you express your wishes when you are physically unable to speak for yourself. Many people confuse a health care power of attorney with a living will. The main differences are as follows: In a living will, a physician has to determine that death is imminent. At that time, you are permitted to die naturally. In a health care power of attorney, you name the person who will make the decision for you. You also state the extent of life-sustaining treatment, which may include withholding food and water.

A WORD OF CAUTION. A power of attorney allows the agent to do anything that a principal could do. You should not provide anyone with a power of attorney unless you place the utmost trust and confidence in that person.

Trusts

Living Trusts:

A trust, is an agreement where one person (the trustee) holds and manages property for another (the beneficiary). If you create a trust under your Will, it's called a testamentary trust. If you create a trust while you're alive, it's called a living trust, sometimes called an inter vivos trust. The living trust is a vehicle for managing your property during your lifetime and passing it on to your beneficiaries at death without probate.

The first step in creating a trust is to have your lawyer prepare a trust agreement that names the trustee and the beneficiaries, and defines everyone's rights and duties. The agreement usually says that you retain power to amend or revoke it whenever you want. (Because of this feature, these trusts are sometimes called "revocable trusts," or "revocable living trusts.") The trustee (or trustees) may be one or more responsible individuals or a bank or trust company. The second step is to transfer property (real estate, securities, cash, etc.) into the trust by placing it in the trustee's name. (You can begin by putting in a small amount, and then add to the trust later.) The trustee has management responsibility for the trust property.

The trust agreement usually provides that you are to receive all of the income of the trust and as much of the principal as you request, but if you are disabled, the trustee may use the income and principal to pay your bills. Upon your death the trust property is transferred to your beneficiaries without probate. A trustee might also continue to manage the trust property for the beneficiaries if they are minors, disabled, or have other special needs.

Self-Declaration Trusts:

The self-declaration trust is a variation of the living trust discussed above. Its unique feature is that the creator of the trust is also the trustee. The trust document usually includes a procedure for removing the creator of the trust as trustee without going to court -- typically, one or more physicians or family members or a combination have removal power; and then a successor trustee named in the agreement takes over.

Many people of retirement age are concerned about the possibility of a disabling illness, even if they are currently in good health. They do not want to set up a living trust because they want to handle their own business as long as they are able to do so.

The self-declaration trust provides for this contingency -- the creator of the trust has full control until a disability or death occurs, and then the trust becomes fully active.

Life Insurance Trusts

A word about life insurance trusts is in order. A life insurance trust is technically a living trust (sometimes revocable and sometimes irrevocable) but its function is quite different from the living trust vehicle discussed above. When a life insurance trust is created, the maker doesn't transfer any property to the trustee -- he merely names the trustee as beneficiary of his life insurance policies. The trust is dormant until the maker dies. At that time, the trustee collects insurance proceeds, and thereafter the administration of the trust is like that of a testamentary trust, indeed, the life insurance trust is something like a Will of your insurance proceeds -- it's a way to unify the disposition of your life insurance and the rest of your property without subjecting the insurance to probate or to claims of creditors.

Conclusion

This web-site is designed to give a basic guide of estate planning. There are many other estate planning tools. Every person's situation is unique, and therefore you should contact your attorney to discuss your needs and desires. Finally, you are urged to review your estate plan periodically so that it is kept current. You should contact your attorney for a complete checkup at least every five years, and more frequently if there are changes in the family (birth, death, marriage, divorce), changes in assets, or changes in tax laws.

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Real Estate Ownership

Ownership of property and how it is titled is very important in protecting your assets from creditors, lawsuits, income and estate taxes. When two or more individuals or entities purchase property there are several choices available. Here are some of the most common ways to title property that can protect your family assets:

JOINT TENANCY -- Title is vested in a unit made up of two or more people. On the death of one joint tenant, the remaining joint tenant receives the interest of the deceased tenant by "right of survivorship."

TENANCY IN COMMON -- This type of ownership results in an undivided interest. Each owner can sell, convey, mortgage, or transfer his or her undivided interest without the consent of the other co-owners. Upon the death of a tenant in common, his or her undivided interest passes to his or her hers or devisee according to this or his or her will.

TENANCY BY THE ENTIRETY -- This is a special joint tenancy between husband and wife on homestead property only. Similar to joint tenancy, each party has the right of survivorship. The main difference for this joint tenancy is that during the marriage, title can be conveyed only by a deed signed by both partners. Tenancy by the entirety provides extra protection against creditors. For example, should the husband incur a debt for which only he is liable, the creditor cannot take homestead property because the wife is a tenant by the entirety.

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What happpens if you die without leaving a will?

Illinois law establishes the right to make a Will, but it is not mandatory. However, if there is no Will, the court distributes the property to the legal heirs of the deceased according to law. Just how the property will be distributed depends on the circumstances of each situation. For example, if there is a widow and one or more children, the widow gets half and the children get half. In all cases the law is rigid and makes no exception for those in unusual need or to other circumstances.

An individual without a Will has no voice in the selection of who will handle his estate nor who will act as guardian of his children. A Will gives you the choice of distributing your estate to take care of your particular needs and goals.