The passage of time occurs more quickly than anticipated and unexpected events can arise anytime. Regardless of your level of wealth, you should start an estate plan and have these documents prepared.
Power of attorney
A durable power of attorney is one of these essential estate documents. It authorizes an agent to make legal and financial decisions on your behalf if you ever become incapacitated.
A durable power of attorney allows the agent to assume these tasks immediately.
Health care directive
This is also known as medical power of attorney and allows for the appointment of an agent to make healthcare decisions when you cannot. Agents may also communicate on your behalf with health care providers.
A living will is a similar document that authorizes an agent to make end-of-life decisions. This helps assures that a medical professionals comply with a person’s wishes.
Wills are an important estate planning document. It provides for the disposal of probate assets that are individually owned and do not have designated beneficiaries.
The will designates an executor or personal representative to administer the estate. They distribute estate assets, pay bills, collect debts, and file and pay taxes. The executor or administrator may name a guardian for minor children.
Personal property may also be distributed through a letter or memorandum. These typically lack the formalities of a will.
Also known as revocable trust, these can help the distribution of property without undergoing probate. Grantors may amend or revoke the trust and serve as its trustee. A co-trustee or successor trustee may be appointed if you become incapacitated.
These trusts also manage the distribution of assets to children after they become 18. Many parents keep assets in trust for their children until they are 25 and partial distributions are made afterwards.
Trusts can serve the same purposes as a durable power of attorney for managing finances. Many financial institutions do not readily recognize powers of attorney.
A family guidance letter can help surviving family members plan your funeral, distribute mementos, and receive future guidance.
Some assets, such as life insurance benefits and retirement accounts, are passed according to their beneficiary designations regardless of a will’s directives.
Review these designations each year and after major life events such as death or divorce. Otherwise, these benefits may go to an unintentional beneficiary such as a former spouse. Beneficiary designations may have tax consequences under the SECURE Act because some beneficiaries may be unable to distribute retirement assets over their lives.
Attorneys can assist you choose options that meet your needs. They can prepare documents that comply with Illinois law.