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.
- What Exactly Is An Estate Plan?
- Who Are The Necessary Parties Involved In An Estate Plan?
- Do I Need To Have More Than One Trust?
- What Is A Dynasty Trust? Do I Use It To Protect My Estate?
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 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. An experienced Chicago, IL estate planning attorney such as the Law Offices of Alan E. Sohn Chartered can help you understand all the details involved in setting up a living trust, but here are a few of the points you may want to consider.
In the state of Illinois, a living trust must be created while the grantor (the person who creates the trust) is still alive. Once the trust has been created, the grantor then begins to transfer assets into the trust’s control. A trust is managed by a trustee under terms established when the trust is created. In the case of a living trust, the most common scenario is for the grantor to be the trustee, but in some cases, a separate trustee may direct the trust for the grantor’s benefit.
When the grantor dies, the successor trustee steps in and distributes all the assets from the trust to the appropriate beneficiaries. This is similar to the distribution of assets in a will, except that it doesn’t have to go through probate. That’s a big advantage in Illinois, where probate can take much longer than in other states because of the fact that Illinois doesn’t use the Uniform Probate Code with its simplified procedures. If you’re trying to decide between a will and a living trust in Chicago, IL or the surrounding area, an estate planning attorney can help you compare the benefits of each approach.
Like any other revocable trust, a living trust can be altered as long as the original grantor is still alive. The grantor can change beneficiaries, rearrange who is supposed to get what, or even shut the trust down completely. After the grantor’s death, it is no longer possible to alter the terms of the trust. A Chicago, IL estate planning attorney at the Law Offices of Alan E. Sohn Chartered can help explain the differences between a revocable and an irrevocable trust.
Many people choose a living trust to preserve their privacy and avoid any attempts by interested parties to find out their intentions ahead of time. A will is a matter of public record and it may be possible for someone to access it and find out who you intend to name as a beneficiary and what you intend to leave them. With a trust, they simply don’t have this option.
Some people establish a living trust to ensure that they will be taken care of if they are mentally incapacitated for some reason. A properly funded trust contains all or most of your assets, so you can be sure that the resources will be available for any care you may need.
Another advantage of using a living trust instead of a will is that a will cannot be copied. Only the original version of the will is a binding legal document. That doesn’t apply to a trust, so copies of any trust document are perfectly valid and legal. In addition, it is less likely that a trust will be contested successfully so a trust can provide a stronger assurance that your wishes will be respected. To ensure that your assets are distributed as you intend them to be distributed, contact an estate planning attorney in Chicago, IL.
You may be concerned that transferring all your assets to a trust will mean that you no longer own those assets and have effectively lost control over them. In reality, you retain the same control over assets owned by the trust as you would have if you still owned them under your own name. You also have the power to specify not only who will receive which assets but when they will be disbursed – a much more flexible scenario than what is possible with a will.
That doesn’t mean a living trust is the right choice for everyone. For an estate worth less than $100,000, probate may be a less expensive option than a trust because a simplified form of probate is available for these smaller estates. In addition, living trusts are still subject to estate tax, although this is only relevant for estates larger than $4 million (for state taxes) or $11.18 million (for Federal taxes).
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 the Law Offices of Alan E. Sohn Chartered in Chicago, IL to find out whether a living trust would be the right choice for you. Call now for a personalized case evaluation at (312) 236-7005.
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