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Recent Blog Posts
Special Needs Trusts
Many people do not think about planning for their estate until they reach middle-age, but life is different for people with disabilities. Many people create trusts in their older age to clearly state what will be done with their money, assets and other belongings, along with funeral and death arrangements.
Special needs trusts provide for the needs of disabled people without creating a situation in which the disabled person loses government benefits such as Social Security and Medicaid. Special needs trusts appoint a trustee, just like any other trust, to be in charge of making sure everything goes correctly as stated in the trust.
The World institute on Disability has also helped to clarify a concern of many people who have a disabled family member. The government says that disabled people who receive government benefits cannot have trusts, however, a special needs trust does not belong to the special needs person.
The special needs person is only nominated as a beneficiary of the trust by the trustee, who establishes and administers the trust.
Conservation Easements as an Estate Planning Option
A conservation easement is a legal agreement between a property owner and a conservation land trust or a government agency that specifies certain restrictions about the use or development of that land. Landowners are still permitted to use the land and are also allowed to sell or bequeath to their heirs. In addition to protecting wildlife, conservation easements can be a valuable estate planning option as well.
Conservation easements are flexible documents and can be drafted to satisfy both the property owner's needs and the wildlife protection. And the easements are permanent, meaning they stay in place even when/if the land is sold.
According to the Land Trust Alliance, there are many tax benefits, including real estate taxes and income tax deductions, associated with conservation easements.
- Property taxes - The value of the easement is calculated by taking the difference between the present value of the property and what the value of the land would be if developed. This can reduce the value of the property by 30 to 90 percent, depending on the location. This reduction in the value of the property can mean a significant savings in property taxes.
Should I Create My Will On My Own?
If you're looking to save money and have been persuaded by commercials and internet ads that a will you write yourself or using an online service is just as good as one written by a lawyer, don't be fooled by the advertising. Although purchasing an online service is a step up from writing the will on your own, it's a small step that could have serious ramifications if anything regarding your estate planning extends beyond the simplest form. A study from Consumer Reports involved individuals obtaining three different types of DIY documents from legal drafting services and found that unintended consequences are perhaps the biggest downfall of skipping the visit to your DuPage County estate planning attorney's office.
One of the biggest appeals of these online services is that they appear to steer you through questions or interviews that seem to be "personalizing" the will to your needs. If you are not familiar with legal terminology or the tax consequences of structuring something a particular way, however, you can end up doing a disservice to your beneficiaries or articulating estate planning wishes that you did not actually want. According to the experts who reviewed these planning services, making mistakes is all too simple to do. Some individuals who seek out these services might learn before it's too late that their will does not actually say what they think it says, leading them to an attorney's office anyway.
4 Mistakes to Avoid when Planning your Estate
You work your entire life to build up worth and prepare for planning your estate. There are four very important mistakes you should avoid making when preparing your will for your loved ones.
- Not turning to an expert for help. It's very common for people to create their own documents for estate planning by utilizing templates they have found online. However, even if you choose to do things on your own, it's always best to double-check with an expert to make sure there are not any silly mistakes.
- Forgetting to connect your business to your estate plan. Some parents who double as business owners don't necessarily want to talk with their children about what will happen with their business in the future and ultimately just leave it to the kids in their wills. This can often lead to issues with children who don't work for the business but still want to receive income from it, or those who have been working for the business and will continue to try to run it.
DIY Estate Planning: Dangerous Territory
Although a recent survey indicates that as many as 1/3 of Americans are using online estate planning tools or generic forms they have purchased, creating your own estate planning documents is tricky. Working with a lawyer is the only way to make sure that you have articulated your desires properly.
Not Doing Enough
One of the dangers in using a standard online approach to estate planning is that you simply won't create the kind of comprehensive plan you'll need if something happens to you. If you have any kind of unique aspect to your situation, like children with special needs, you're unlikely to find that the "one size fits all" approach to estate planning works for you. These online services tend to present the "bare bones" for your needs, which could mean missing out on critical documents or needs that you are not aware of until it's too late.
Doing Too Much
Go on Your Own Terms
When planning for the future, establishing a will is an important part of that. By setting a will in place, you can be sure to provide for your loved ones after you are gone in a way that you see fit. But, a will is not just for the distribution of your possessions after you are gone; it can also be used to outline your wishes for yourself. A "living will" may be put in place regarding your wishes for your own medical treatment at a time when you are unable to speak for yourself.
The living will was first proposed by an Illinois attorney, Luis Kutner, in a law journal in 1969. Kutner drew from existing estate law, by which an individual can control property affairs after death (i.e., when no longer available to speak for themselves) and devised a way for an individual to express his health care desires when he is no longer able to express current health care wishes. Because this form of "will" was to be used while an individual was still alive (but no longer able to make decisions) it was dubbed the "living will."
New Portability Rules Affect Estate Planning
President Obama signed the American Tax Relief Act (ATRA) of 2012 into law at the beginning of this year, causing many revisions to estate planning code that will affect retiring Boomers in large numbers. According to Forbes, "one of the key provisions of ATRA is to make permanent to so-called portability of the applicable exclusions amount between spouses." The rules of portability greatly affect estate planning, according to Forbes, and should be considered with an estate-planning attorney. So what is portability? What does it do?
According to Forbes, the new laws regarding portability allow for the transfer of one spouse's unused estate tax application exclusion to the other upon the death of the first spouse. This means that the surviving spouse can use this tax application exclusion for gift or estate tax purposes, rather than it going to waste if it hadn't been used before the death of his or her spouse. "Any applicable exclusion amount of the first spouse to die that is used to reduce the estate tax liability of that spouse's estate tax reduced the amount of the excess applicable exclusions amount that carries over to the surviving spouse in the form of ‘deceased spousal unused exclusion amount,' or DSUE amount," reports Forbes.
Estate Planning: Do You Want To Leave a Digital Fingerprint?
Most everyone is familiar with the benefits of traditional estate planning, from articulating your desires in a living will to generating trusts or wills that explain what happens to your assets after you pass away. As people are increasingly active online, it's necessary to think about what might happen to your digital assets after you pass away. Everything from the photos on your Facebook account to the contents of your email inbox is worth considering. Failing to think about what should happen to your digital accounts and data after you pass away can lead to additional emotional trauma for family members in the wake of your death. Companies involved with digital data are increasingly cognizant of the role that stored information can play in family disputes or dissemination of information, which is why Google has created Inactive Account Manager. With Google's new tool, which just came out this spring, users can determine what happens to their data on their own terms. Using this program allows individuals to designate what will happen to any information or data connected with Google accounts- including everything from email to videos posted on YouTube. Users can name other individuals who will be notified about account deactivation, which you can set to occur anywhere from 3-12 months after the company identifies you as "inactive". Google will reach out one month before they official terminate your accounts, in the event that you're traveling or otherwise around. Beneficiaries, if you name them, will receive digital links to download any information that you have previously chosen to share. This way, digital memories can be kept alive if you wish, or you can have all of the information deleted. Other companies also offer what's known as online safe deposit boxes, where you can store information about account sign-ins and passwords, allowing beneficiaries to get information if they want or need it. Estate planning now reaches right into your computer screen. If you have questions about developing estate plans, contact our office today for a consultation.Image courtesy of Jomphong at freedigitalphotos.net
Wills in Illinois
Wills are often not thought of until people reach a very old age, but it is very important for even young people to have them. Not only are they used to distribute property and to name a legal guardian for children, they can also be used as directions for what to do if you are no longer able to speak for yourself in the hospital or after death.
Although states vary, in Illinois, if someone dies without creating a will, his or her property will be distributed according to state "intestacy" laws. These laws state that the property of the deceased will go to the closest relatives, beginning with a spouse and children, then moving to grandchildren or parents if you have no spouse or children.
If there is no relative of the deceased to claim the property, it will go to the state. This is only after all relative have been exhausted, however, beginning with siblings, grandparents, uncles, cousins and even to spouse's relatives.
Whole Life vs. Term Life Insurance
Life insurance policies come in several different types. The two main types of policies are term life and whole life. Within each are their own individual subcategories that are designed to suit differing individuals.
There are no definitive rules when deciding which type of policy is going to be the best for you. Although term life policies can appear cheaper and a more financially viable option to begin with this is not always the case. In the long run, researching and understanding the main differences between the two types of insurance can help you to make the most informed decision.
The length of the policy coverage is the main differentiating factor; whole life insurance covers you for your entire life whereas the duration of the coverage of term life depends on the particular terms of the policy. Term life will provide coverage for as long as you pay your premiums, there are term policies that have a fixed term such as 10 years, 20 years etc... Some insurance companies will also allow you to convert some or your entire insured sum into a whole life policy after a period of time or at the end of your term policy.
