This post was contributed by a community member. The views expressed here are the author's own.

Health & Fitness

Estate Planning 101 - Gil Will Help You!

            Many people make the mistake by not planning for the inevitable.  Benjamin Franklin once said "The only things certain in life are death and taxes.”  Estate planning is a process whereby a person can make legal arrangements while he is alive to manage and transfer his assets during his lifetime and after his death with goals to minimizing taxes and for providing for the future of his descendants and other loved ones.  Estate planning also allows one to provide for the personal care and management of property during one’s lifetime should that person become incapacitated while he is alive.  The basics of every good estate plan consist of a Will, Living Trust, and Powers of Attorney for both Health Care and Property.  These basic tools will allow one to efficiently and effectively manage and transfer his property both during his lifetime and after his death to minimize taxes while providing for the future of his descendants and loved ones and to provide for the personal care and management of property during one’s lifetime should that person become incapacitated while he is alive.

Wills

            Passing away without a Will is known as dying “intestate.”  Should this happen, the division of one’s assets will be decided under the Illinois probate laws.  If one passes away with a valid Will, the division of assets will be controlled by the specific provisions of the Will and makes the appointed Executor responsible for making sure those wishes are carried out.  Generally, a Will’s purpose is threefold.  First it provides for one’s beneficiaries - those who will get property of the estate.  Second, it appoints an Executor - one who will administer the estate.  And third, if applicable, it may appoint a Guardian who will provide and care for one’s minor children.

            There are three types of Wills.  First, an Outright Will provides for gifts to be made outright to the beneficiaries at death in the absence of any type of Trust.  Second, a Will With a Testamentary Trust is used when one wants to leave gifts in Trust for his beneficiaries in the absence of a Revocable Living Trust.  And third, a Pour Over Will is used along with the creation of a Revocable Living Trust.  Assets not titled in one’s Trust is transferred to the Trust to be disposed of within the Trust.  The most commonly used are the first and third and the second is highly not recommended.

Find out what's happening in Genevawith free, real-time updates from Patch.

            With the creation of a Will, there are limitations.  A Will cannot dispose property titled in Joint Tenancy or property with a valid beneficiary designation such as a life insurance policy.  It cannot help your estate avoid probate thereby making the affairs of your estate public.  It cannot effectively disinherit a surviving spouse.  And, it cannot provide for management of your assets during disability or incapacity while you are alive.  However, when used in conjunction with Trusts and Powers of Attorney for both Health Care and Property, some of these limitations can be dealt with effectively to achieve these goals.

Revocable Living Trusts

            A Revocable Living Trust is a flexible and efficient estate planning tool for managing property during one’s lifetime and for disposing and managing assets after one’s death.  It is a written property agreement where the Grantor transfers property to a Trustee for the benefit of the named Beneficiaries.  Note that the initial Grantor, initial Trustee and the initial Beneficiary is the individual creating the trust.  This is known as a Self Declaration of Trust.  Once created, the Trust must be funded by transferring the individual’s personal assets such as real estate, bank accounts, stocks, bonds, etc. into the Trust.  Once created and funded it becomes effective immediately.  And during one’s lifetime, the Grantor remains in control of the assets and may change his beneficiaries, successor trustees and other terms of the trust.  A named Successor Trustee will take over on behalf of the initial Trustee if the initial Trustee resigns, becomes incapacitated or passes away.

Find out what's happening in Genevawith free, real-time updates from Patch.

            There are various advantages of having a Revocable Living Trust as opposed to just having an Outright Will or a Will With a Testamentary Trust, the main being that probate can be avoided allowing for a more efficient and private distribution and management of the estate's property.  Other advantages include its flexibility, ease of making modifications, and the difficulty of being challenged by others. And since the Trust is effective while the Grantor is alive, should the Grantor become incapacitated, the Successor Trustee immediately steps in to take over and manage the assets of the Trust without having to go to court to have the Grantor declared disabled or incapacitated.  Finally, Trusts are extremely flexible to address special circumstances such as subsequent marriages, special needs beneficiaries, estate tax issues, spendthrift and creditor risk beneficiaries, minor children or young adults incapable of handling their financial affairs and business assets.

            The old proverb “Don’t be penny wise and pound foolish” is especially important to remember when planning your estate.  Estate planning is a very complex area of law which no lay person should do on their own.

            Gilbert R. Dizon, Attorney at Law is a Senior Partner with the Geneva law firm of Dizon Johnson Buh.  He has over 17 years experience in Estate Planning, Business Law, Real Estate and Consumer Bankruptcy.  His law firm is located at 524 W. State Street, Geneva, Illinois and the firm’s other areas of practice include Municipal Law, Personal Injury, Traffic, DUI and Criminal Defense.  For more information, please visit www.gdizon.com or call (630) 465-0713 for a free consultation.

 


We’ve removed the ability to reply as we work to make improvements. Learn more here

The views expressed in this post are the author's own. Want to post on Patch?