Estate Planning and Wealth Transfer
Estate planning that is carefully thought-out and well-drafted is critical in order to ensure the distribution of your hard-earned assets according to your wishes. The transfer of assets upon death is governed by complex state property and probate laws with significant tax implications, making it essential to enlist the advice and guidance of an experienced Illinois estate planning attorney. The Law Offices of Alan E. Sohn Chartered, in Chicago, has considerable experience counseling clients on various estate planning options and drafting the documents necessary to effectuate the client’s wishes and intentions.
A will is an essential piece of every estate plan. An individual’s will can address any number of issues upon an individual’s death, including the choice of a personal representative/executor, the distribution of assets, the payment of debts, the designation of guardians for the estate and person of any minor children, and any final wishes regarding funeral arrangements or otherwise.
The administration of a will is governed by state law and Illinois law requires that an individual be at least 18 years of age and of sound mind and memory to create a valid will. An Illinois will must be signed in the presence of at least two adult witnesses that are not beneficiaries under the will. If a decedent does not leave a valid will, his or her estate administration and distribution will be determined by the Illinois law of intestacy (all of your heirs), rather than your estate being distributed to the individuals you select in the percentages or amounts you choose.
Revocable vs. Irrevocable Trusts
Individuals frequently choose to hold assets in a trust as part of an estate plan because they allow a person to continue to hold, manage and invest property for themselves during their lifetime, while naming a successor trustee to take over upon their incapacity or upon their death, while avoiding probate.
A revocable trust can be changed during the life of the person creating the trust, but the assets held in the trust may then be subject to estate tax at death, provided that their value exceeds the then current exemption. On the other hand, an irrevocable trust generally cannot be changed once it has been created, but the assets may not be subject to the estate tax if the trust is drafted properly and certain other conditions have been met.
A living trust is essentially a kind of revocable trust that can be altered by the grantor during his or her life and, as such, is part of the grantor’s taxable estate. The grantor is typically also the trustee and receives income and may withdraw principal from the trust during his/her lifetime. Upon death, the trust’s assets may either remain in the trust for the benefit of the grantor’s named beneficiaries or be distributed according to the grantor’s directions as stated in the trust, or a combination of either.
A dynasty trust is a trust in which property remains in trust for the benefit of successive generations. A trustee holds the assets and pays income and/or principal to the grantor’s designated beneficiaries, such as his/her spouse, children, grandchildren and great-grandchildren. If properly drafted, the beneficiaries, after the grantor’s death, may control the trust’s investments and their use and enjoyment during their lifetimes, designate or direct lifetime distributions or distributions at death, or allow the assets to remain in trust while avoiding the imposition of estate and inheritance taxes for successive generations. In most cases, assets held in a dynasty trust may not be reached by the creditors of a trust beneficiary. A dynasty trust protects assets from creditors.
Contact Alan Sohn in Chicago at (312) 236-7005 to schedule a free consultation to discuss your estate planning needs.