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Recent Blog Posts
Understand how bankruptcy might impact you
Life's circumstances sometimes aren't the best. When your money is impacted by things out of your control, you might feel helpless. You know that your bills need to be paid, but you don't have a way to make that happen. Your focus then becomes making sure that you're doing your best to take care of necessities. Other bills, such as credit cards and medical accounts, might go untouched.
For some people, the situation becomes too much to handle, and they know they need to do something. Filing for bankruptcy is one option that they have in these cases. Consumers will typically either file a Chapter 7 or Chapter 13. The primary difference between these two is that the Chapter 7 bankruptcy liquidates nonexempt assets and doesn't require the person to make any payments. A Chapter 13 liquidates some assets, but the person has to make payments to the bankruptcy trustee on a set schedule.
One benefit that both bankruptcy types offer is the automatic stay. Once you file, creditors can't contact you to demand payment. This puts a stop to phone calls and collection letters, so you can have peace of mind while you're getting your finances back in order.
Don't forget to update your beneficiaries
When it's time to update your will and your estate plan, take a moment to update your beneficiary designations, as well. This is something that people often forget, and it can prove very costly.
For instance, your life insurance company asked you to pick a beneficiary when you bought the policy. You probably picked a child or your spouse. That's what most people do.
Say that you chose your spouse, wanting to support them even if you passed away. However, you and your spouse have since gotten a divorce. You updated your estate plan to leave items to your children and cut out your ex. However, if you don't update that beneficiary designation, the life insurance payment could still go to your ex — and not your kids.
One potential issue here is that your beneficiary designations carry precedence over your will. People sometimes write in the will that they want to move the life insurance money to someone else, but they'd don't contact the insurance company to change their paperwork. The insurance company only cares about what they have on file. If it is in conflict with your will, they're going to ignore your will and follow the directions that you gave them specifically.
Questions to answer when choosing a guardian
You're a young Illinois couple, in perfect health and having a baby. You're focused on fixing up the nursery, buying the safest car seat on the market and picking a name. But there's one more thing all expectant or new parents must add to their to-do list: Choose a guardian in case the unthinkable ever happens.
Many young people probably haven't thought about creating an estate plan but having a baby makes it an essential. If the parents unexpectedly pass away without naming a guardian, courts will decide who should raise your child.
That should be a parent's choice.
When considering who to name as a guardian for your child, think about the following:
- Who will raise your child the way you would have? Who shares your personal values – the ones you'd like your children to learn? Who would mimic your parenting style?
- Is the chosen guardian financially stable? You likely will leave behind insurance or other resources to help raise the child, but raising a child to adulthood is expensive. You don't want to economically burden someone who doesn't have the means to raise a child.
Can you pass the Illinois means test for Chapter 7 bankruptcy?
Chapter 7 bankruptcy is the most aggressive and fastest kind of bankruptcy available to individuals and married couples. It also gets called liquidation bankruptcy, as the courts can order the liquidation of assets as a means of repaying creditors during Chapter 7 proceedings.
Typically, those who successfully file for Chapter 7 bankruptcy can receive a discharge after the courts review their request, all without any requirement to repay their creditors. As a result, there are very strict limitations on who can file for Chapter 7 protection. In order to prevent abuse of this form of bankruptcy, it is necessary for individuals to pass a state-based means test prior to filing.
How does Illinois' means test work?
The basic premise of a means test involves comparing the individual's adjusted income to the state median income for their household size. The individual filing can make certain adjustments or reductions to their overall income for certain expenses, meaning that those who are quite close to or just over the income limit may still be able to pass the means test.
Types of trusts and their uses
A will is an important part of any estate plan — but it doesn't have to be the focal point. Trusts have become increasingly popular vehicles for preserving wealth and passing it on to the next generation as people increasingly try to avoid the complicated (and expensive) process of probate.
There are a lot of different kinds of trusts out there, each suitable for different goals. If you're just starting to consider the usefulness of a trust as part of your estate plans, it may help to have a passing familiarity with the following kinds.
Revocable trusts
Revocable trusts are pretty much exactly what they sound like: You retain control over them during your lifetime and can end them at any point. Their chief advantage is their flexibility — and the fact that the assets inside them are distributed according to the trust's terms without going through probate.
Irrevocable trusts
Irrevocable trusts can't be dissolved after they're established — but that makes them hardy vehicles that can protect your assets against dissipation or misuse. They're also particularly useful at reducing estate and gift taxes.
3 compelling reasons to start estate planning instead of waiting
The creation of an estate plan or last will is an important protection for both you and the people you love. Far too many people make the preventable mistake of delaying the creation of their estate plan indefinitely, which may mean that they died intestate or without a last will.
There are many different reasons why creating a last will sooner rather than later will benefit you, but there are three benefits that are nearly universal reasons to start estate planning now.
Your legacy may be how people remember you
You want to make a profound and lasting impression on people while still alive. Your legacy could include your professional, artistic or academic works, your family, or local community contributions, such as volunteerism or donating to charity.
While you can't control how people perceive you, you can control the legacy you leave behind when you die. The creation of an estate plan that considers the needs of the people you love and the change you like to make in the world can leave a lasting positive impression. From funding a trust to pay for your children's college to leaving money for a charity about which you are passionate, the options for your legacy are nearly endless.
Who handles the responsibilities for your estate?
Estate planning is never on anybody's list of "favorite things to do," but it's really important to have those plans in place — just in case something happens. However, choosing the right people to manage those responsibilities can be complicated, especially if you don't know what each person is supposed to do.
Here's what each person involved in your estate will need to do:
The executor
Your executor is the person who acts as your personal representative. Their job is to secure your assets, pay your debts and follow the distribution guidelines of your will. While that sounds fairly simple, it can sometimes put them into conflict with family members (especially if they aren't happy about the will). A good executor is someone who lives close enough to be practical and well-trusted.
A guardian
If you have minor children or a parent over which you have guardianship, someone will need to take charge of them after you are gone. While the final decision regarding guardianship is up to the court, your opinion does matter. Spelling out exactly who you trust to care for the people you love is essential.
Is medical debt making you broke? (You aren't alone.)
Medical debt is a serious problem for many people — even those who have insurance and are relatively stable, financially. A 2016 survey found that more than one-quarter of people in the United States have experienced problems paying a medical bill.
Here are some of the most jaw-dropping statistics about medical debts in the modern era:
- As far back as 2007, medical problems and medical bills were contributing factors to two-thirds of all consumer bankruptcies — a figure that had increased dramatically since just 2001.
- Three-fourths of debtors who filed bankruptcy over medical debt have insurance. However, gaps in coverage, high deductibles, pricey medications, and uncovered procedures and tests leave them exposed to financial liabilities they can't cover.
- Many of the people who file bankruptcy over medical debt are middle-aged or approaching middle-age (with an average age of almost 45). About three-fifths have college degrees.
From our office in Geneva, Illinois, we serve clients throughout the region, including the communities of St. Charles, Batavia, Aurora, Elgin, Elburn, Sugar Grove, North Aurora, South Elgin, West Chicago, Fox Valley, Winfield, Wayne, Big Rock, Naperville, Wheaton, and Downers Grove, as well as other municipalities in Kane County and DuPage County.
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