Picture this: we’re sitting down, you and me, ready to dive into the nitty-gritty of your estate plan. There’s often a bit of surprise when I clarify that I can’t make all the decisions for you. After all, I’m not familiar with your family dynamics or your unique preferences.

1. You Need to Think About Who You Want to Receive Your Assets When You Pass Away

In jest, I might suggest my own kids as potential heirs, but rest assured, I’m not advocating for that. It’s just a playful nudge to get you thinking about who you want to entrust with your assets. Of course, if you really want to leave everything to my kids, I won’t stand in your way – though that might not align with your true wishes.

Some folks believe there’s a strict rulebook dictating asset distribution, expecting me to lay out all the specific rules. But here’s the scoop – there isn’t a rigid structure or an overly specific set of rules. You’re in the driver’s seat, with the power to choose who receives your assets and how they’ll inherit them after you’re gone. Before our chat, it’s essential to mull over who you want as your asset’s lucky recipient – your designated beneficiaries. This could be your spouse, kids, other relatives, a charity, or even that friend who’s always had your back. So, before we meet, give some thought to whom you want to bless with your assets.

2. You Need to Think About (and probably list out) What Assets You Have and How Much They Are Worth

Next on the checklist: your assets. While we don’t need a detailed list for your will or trust – updating it for every new purchase or sale would be a hassle – having a general list with approximate values is a smart move. It’s like the roadmap guiding us to decide whether a will alone is sufficient or if we should consider bringing a trust into the estate plan. Factors like holding real estate in multiple states or having significant assets can steer us in the right direction. So, jot down those assets and their ballpark values – it’s like a treasure map leading us to the right plan.

3. You Need to Think About Who You Want to Leave In Charge

Now, let’s talk about who’s going to be the maestro orchestrating the distribution of your assets – your personal representative. This person plays a vital role in bringing your estate plan to life, dealing with beneficiaries, family members, financial institutions, and, if needed, the probate court. It’s a big job, and you want someone up to the task. Many go for a family member, but when that’s not an option, a professional fiduciary might step in. I don’t handle this personally, but fear not, I have some excellent professional fiduciary groups in Texas that I can recommend. Banks and investment companies also offer such services. The key is to choose someone trustworthy and capable, whether it’s a family member or a professional.

The same thoughtfulness applies when picking someone for financial or medical decisions under a Power of Attorney. It’s your choice, and your estate planning attorney just needs to know who that person is, along with their contact info. So, before our meeting, consider who you trust for these crucial roles.

You Can Find The Type of Information You Need to Provide From the Estate Planning Attorney

If you prefer diving straight into a conversation, you can schedule a meeting here or give me a call to discuss your needs. Remember, a bit of pre-planning will make our conversation smoother and more productive!

It’s truly remarkable how many folks want to draft a will to ensure their assets end up where they want them to go after they’re gone, without considering the other methods available for transferring assets. They often inquire about the hierarchy between a will and other documents. As much as I’d love to see legal documents duke it out in some paper-and-ink arena, it’s not quite that simple. Since my documents don’t come to life like characters in an animation, a document battle remains a far-fetched idea. So, let’s explore more practical ways.

This brings us to the topic at hand: the four primary methods of asset transfer, which I’m about to dive into in this blog post.

A Will – Your Initial Line of Defense (and Sometimes, the Final One)

A will has control over property that goes through probate, meaning it doesn’t have a beneficiary designation, transfer-on-death, or pay-on-death designation, and isn’t titled within a trust. Typically, a trust is complemented by a will to transfer assets into the trust, but that’s not always the case. While a will is a fundamental document in estate planning, it only governs what happens to specific types of assets.

Trusts – They Rule Over What They Inherit

If you opt for a trust, the trust agreement will dictate who receives assets, but only if those assets are titled in the trust’s name. I’ve come across many trust documents where I asked what was placed inside the trust, only to be met with blank stares. Many people mistakenly assume that just creating a trust document and listing the desired assets is sufficient. But to truly place assets in the trust’s name, you need to transfer the title. Real estate requires a deed, investment accounts need change-of-ownership forms, the DMV must be informed about vehicle transfers, and banks should be made aware of new accounts under the trust’s name. This process is known as “funding the trust” and is crucial. Without proper funding, the trust agreement can’t determine property distribution because it only controls assets it owns. Many individuals who think they have it all sorted are caught off guard when an asset isn’t titled in the trust’s name. A well-thought-out estate plan should include a strategy for funding the trust, whether it’s the creator, the attorney, or another party who handles it.

Lady Bird Deed, Transfer on Death and Pay on Death

Without a trust to facilitate asset transfer, you can use transfer-on-death or pay-on-death designations to bypass probate and directly allocate assets to a designated beneficiary. Transfer-on-death is typically linked to investment accounts like stocks or bonds, while pay-on-death is associated with bank accounts. Both methods allow assets to transfer to the chosen person without the need for probate and can’t be overridden solely by a will. It’s vital to review each beneficiary designation and ensure they are up-to-date and correctly arranged. Otherwise, an outdated beneficiary could end up receiving the assets.

Beneficiary Designations

A beneficiary designation is a means to transfer investment assets upon the owner’s death. These designations are set up for popular accounts like IRAs, 401(k)s, 403(b)s, Roth IRAs, Thrift Savings Plans, life insurance policies, annuities, and similar investments or policies. These designations are part of the insurance contract, ensuring assets avoid probate and specify where the money goes upon the owner’s passing. Many mistakenly assume that a will controls all assets, but that’s not the case with beneficiary designations, transfer-on-death designations, or pay-on-death designations. These determine who inherits these specific types of assets, regardless of what the will states. It’s crucial to align your beneficiary designations with your wishes as outlined in your will.

A Real-Life Example

Let me share a real-life story: I had a client whose husband recently passed away. He set up his IRA 43 years ago when he was married to his first wife. When he passed, his second wife discovered that the first wife was still listed as the IRA beneficiary. Despite being the current wife when her husband passed away, she likely won’t receive the full IRA. This oversight in updating beneficiary designations could cost her a significant sum. This unfortunate situation brought her to me, and I had to deliver the tough news that she’d likely get much less than she had planned for.

Illinois Residents: Secure Your Legacy Properly

Crafting an estate plan that ensures seamless coordination among all your documents requires thoughtful planning. It’s more than just having the right documents; it’s about having a comprehensive plan. If you’re a Illinois resident, we’re here to assist you in getting your estate plan in perfect order. Let’s get started by scheduling an appointment today.

A few weeks back, I had a heart-to-heart with a financial planner who’s been sending clients my way for quite some time. In our recent chat, he mentioned the need for asset protections within a trust for a potential client he was planning to refer to me. He brought up the idea of using a revocable trust. These discussions are quite common between us because we have a solid understanding of how to collaborate effectively. However, this particular conversation delved into the depths of estate planning, much like how this blog post goes beyond the basics to explore a more specialized topic. As we talked, I turned to my friend and asked, “What do you mean by asset protection in a revocable trust?”

His response was, “I thought when you place assets in a trust, they’re shielded from creditors and anyone attempting to collect a judgment because the trust has a different name than the individual.” We briefly discussed how merely having a different name wouldn’t offer substantial protection and that creditors could easily discover assets in a revocable trust. I explained that under Texas law, a revocable trust didn’t provide that kind of asset protection. It turns out, the notion that all types of trusts create asset protection is a common misunderstanding.

Throughout all our conversations over the years, my financial planner friend and I had never delved into the specifics of asset protection offered by a revocable trust. I informed him that a revocable trust doesn’t grant immediate asset protection for the person creating the trust. Curious, he inquired, “What’s the point of asset protection in a revocable trust, then?” I clarified that a revocable trust could offer asset protection for the heirs’ future interest in the trust assets, but for current asset protection for the trust creator, an irrevocable trust would be the way to go. It seemed like a vital concept to share with more people, so I decided to put together this blog post.

Everyone’s goals and objectives are unique. The structure of a trust is tailored to what you want to achieve. Asset protection essentially involves creating a legal separation between a person and their assets, thus providing a layer of protection. Irrevocable trusts are ideal for those with a current need, while revocable trusts can offer future beneficiaries this protection. Each approach has its pros and cons, just like any other decision, and we’ll delve into those options in this blog post.

Irrevocable Trusts: Current Asset Protection with Trade-offs

If your aim is to safeguard assets from potential future creditors, you’ll need to establish an irrevocable trust. These trusts can’t be altered or amended without court permission and create a legal barrier between you and your assets. As the trust becomes a separate legal entity, you no longer own the assets, making them inaccessible to your creditors. However, the downside is that you lose control and the ability to enjoy those assets.

This loss of control can be a significant drawback. Most people want to maintain control over their assets and use them as they please. Typically, my clients who opt for this arrangement are older individuals seeking to protect assets from Medicaid, nursing home costs, or other long-term care expenses. There are specific time frames and waiting periods to consider when applying for these programs, as discussed in another blog post about advance Medicaid planning. This scenario may not apply to most younger individuals, so it’s wise to explore other alternatives.

Additionally, if you’re currently facing creditors or foresee potential creditors on the horizon, such as being in the midst of a lawsuit, transferring assets to an irrevocable trust won’t help. Such transfers are considered fraudulent and can easily be undone by someone seeking to collect on a judgment.

Revocable Trusts: What You Can (and Can’t) Achieve

Transferring assets into a revocable trust isn’t considered “fraud”, but it also doesn’t provide immediate asset protection for the trust creator.  If you create the trust, serve as its trustee, and are the primary beneficiary, the assets within the trust are essentially still yours. Although the assets may bear the trust’s name, everything flows back to you, leaving your assets vulnerable to current and future creditors. For debt collection purposes, you’re still regarded as the owner of trust assets.

Nonetheless, a revocable trust can provide asset protection for future heirs and beneficiaries. This is often done to safeguard assets for minor children, beneficiaries with special needs, or in cases where a lump-sum payment may not be advisable. The trust can hold onto assets and disburse them for a beneficiary’s well-being under specific circumstances. For instance, if a person has special needs and can’t manage their finances, the trust can retain assets and allocate them for the person’s care. These assets may not count against them if they’re receiving government assistance subject to asset limits.

A revocable trust eventually turns irrevocable when it’s protecting assets for final beneficiaries in the future. This transition occurs after the trust creator has passed away, turning the trust into a separate legal entity and securing the assets.

In simpler terms: a revocable trust becomes irrevocable when the trust creator passes away, thus providing asset protection.

Illinois Residents: Which Trust Suits You Best?

The question now is, which trust aligns with your specific needs?

Your requirements for a trust may differ from those of others. If you want to discuss your trust and determine what’s best for you, feel free to schedule an appointment with us. We’re here to help you navigate this important decision.

When it comes to estate planning, there are many options available, including online templates that promise a quick, easy, and cost-effective way to create your will, trust, or power of attorney. While these online tools might seem convenient, they often come with hidden risks that could leave you and your loved ones unprotected when it matters most. Let’s explore the key differences between using an online estate planning template and working with an attorney.

Online Templates: The Cookie-Cutter Approach

The internet is full of estate planning templates, and while they may seem like a good solution, they are far from comprehensive. These documents are boilerplate and one-size-fits-all, meaning they lack the personalized touch needed for true protection.

No Review Process: When using an online form, there is no professional oversight to catch mistakes or ensure everything is completed correctly. If errors occur, you may not realize it until it’s too late. This can lead to legal issues, financial burdens, and unnecessary stress for your family. Working with an attorney helps avoid these pitfalls.

Limited Customization: Online templates are designed to be broad enough to fit many situations, but estate planning is unique to each individual. A template might leave out important provisions that are crucial to protecting your specific assets, family dynamics, and long-term goals.

Why Working with an Attorney is the Better Choice

When you work with an attorney to complete your estate plan, the process is far more thorough and tailored to your needs. Here’s what you can expect:

Personalized Service: An attorney will provide you with onboarding documents to gather detailed information about your assets, family, and goals. This allows them to create a custom plan that fits your specific situation. Estate planning is not a one-size-fits-all solution, and a tailored approach provides you with more protection and peace of mind.

Ongoing Support: Life is constantly changing. Whether you experience a marriage, divorce, birth, death, or significant financial change, your estate plan should reflect these milestones. Working with an attorney means you have a long-term partner who can easily amend your plan as needed, without requiring you to re-enter all your information from scratch, as you would with an online service.

Confidence and Security: For those with significant assets—whether it’s a home, investment accounts, or a business—it’s critical to ensure your estate plan is airtight. With potentially millions of dollars on the line, you want the confidence that comes from working with an experienced attorney. They will ensure that your estate is handled exactly as you intend, avoiding any unforeseen complications or liabilities.

The Bottom Line

While online estate planning templates might appear to save time and money, the risks associated with using a cookie-cutter document far outweigh the initial convenience. Working with an experienced attorney offers not only personalized estate planning but also ongoing support, flexibility, and the peace of mind that comes with knowing your assets and loved ones are truly protected.

Don’t leave your estate plan to chance. Contact us today to start working with an attorney who will guide you through the process, ensuring that every detail is covered.

When planning your estate, choosing between a will and a living trust can be confusing. While both serve to distribute your assets after death, they have important differences.

What is a Will?

A will is a legal document that outlines how your assets should be distributed after you pass away. It also allows you to:

•   Appoint an executor to handle your estate after you pass.
•   Name guardians for your minor children.
•   Specify personal gifts, such as family heirlooms or keepsakes.

However, a will still must go through probate, which is a court-supervised process that can be time-consuming and costly.

What is a Living Trust?

A living trust allows you to transfer assets into a trust during your lifetime, which will be managed and distributed by someone known as a trustee after your death. Unlike a will, a living trust:

•   Avoids probate, allowing for quicker and private distribution of assets.
•   Manages your assets if you become incapacitated, since a successor trustee can step in.
•   Offers privacy, as it doesn’t become a public document like a will during probate.

Setting up a trust is more complex and expensive upfront, but it can save time and money in the long run by bypassing probate.

What is the takehome message on Differences between a Will and Living Trust?

1.   Probate: Wills go through probate, while living trusts avoid it.
2.   Incapacity: A will only takes effect after death, but a trust can manage your assets if you’re incapacitated.
3.   Cost: Wills are cheaper to set up, but probate fees can add up. Trusts cost more to establish but avoid probate expenses. Trusts are usually less costly in the long run.

When to Choose a Will

•   You have minor children and need to name a guardian.
•   Your estate is simple and the probate process isn’t a concern.
•   You want a straightforward, lower-cost option for estate planning.

When to Choose a Living Trust

•   You want to avoid probate and distribute assets quickly.
•   You’re concerned about incapacity and need a plan for managing your assets.
•   Efficiency is important, especially for larger estates or businesses.

Do You Need Both Types Of Documents In Your Estate Plan?

In my many years of experience representing clients on estate planning, I find that many people benefit from having both a will and a living trust. A “pour-over will” can catch any assets not included in your trust and ensure they’re distributed according to your wishes.

Click the link below to see what we can do for you and your loved ones!

There are many different ways to prepare for your future with your estate planning attorney. There are many different types of documents, plans, and decisions that you have to make when deciding how you want to distribute your estate. When looking at the options and deciding what estate plan is best for your situation, you may find yourself wondering: what is the difference between a will and a trust? How do I decide which is best for me?

There isn’t just one type of will or one type of trust. It depends upon your personal situation, so it could look different for everyone. However, there are a few key differences that you want to make sure you take note of when you are making your decision.

Wills, And Avoiding Probate

One of the biggest differences between a will and a trust is that a will in Illinois does not avoid probate. A will can settle a dispute as to how an estate will be distributed, but it will still have to go through the lengthy and often expensive probate process.

A trust, on the other hand, avoids the probate process, which can be especially beneficial if you choose to title your home, vehicles, or other assets into a trust.

Although a will itself cannot avoid probate, a will can help you avoid probate if a title company makes a mistake. For example, if you intended to title your house into your trust but the title company does not follow through renaming the house, a will can protect your assets and intentions and prevent you from having to go through probate because of the mistake.

Trusts, And Nomination of a Guardian

Another huge difference is how a person can nominate a guardian for any minor children they have. A trust cannot nominate a guardian in any way. If you have children of minor age, it is important that you use a will to name their guardian in the case of unexpected events.

A trust can rename your assets with a designation to your children, but your trust cannot establish a guardian for your children.

Wills And Trusts Working in Tandem

A person will almost always need both a will and a trust. These two documents work hand in hand in distributing your estate, nominating a guardian, and establishing control of your assets. Anyone who owns a home in Illinois will need to have a trust to title their home in. Very rarely will a person only need a will: unless they own a very modest estate, or do not own a house, you will almost always need both a trust and a will.

Wrapping Up

Everyone’s estate plan will be different, depending on their personal needs and circumstances. Although decision making regarding your estate plan can be confusing and daunting, remember that your estate planning attorney is there to help you remember the differences between each document, and help you decide the best solution for your situation. Schedule a callback by clicking the link below to talk more with me about what plan might be best for you!