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What are some of the reasons that an estate plan is needed?
There are a variety of important reasons to have an estate plan. Estate planners should understand why an estate plan is needed and how they can develop an estate plan that protects the estate planner and expresses their wishes.
Avoid the probate process
One reason to have an estate plan is so that the estate planner can avoid the probate process. The probate process includes validating the estate planner's will, valuing their assets, paying outstanding debts and taxes of the estate and distributing what is left over to beneficiaries.
Protect assets and reduce estate taxes
Estate planning can help protect both the estate planner's beneficiaries and can also help protect the estate planner's assets. For that reason, trained estate planning guidance can be helpful to help with estate planning complexities.
A variety of different taxes typically need to be paid by the estate. By utilizing estate planning tools such as trusts, it may be possible to curtail or even eliminate the amount of taxes that are due.
How living trusts protect you and your assets
Sitting down with one's family to discuss the future of one's assets can seem like a daunting experience. Planning one's estate may seem final and cumbersome to those who have growing assets with many moving parts.
A living, or revocable trust is meant to solve these problems. Flexible, very powerful and highly adaptable instruments, living trusts are a great asset that can be included when planning your estate.
What a living trust does
Living trusts are established during the owner's life and can be maintained by the owner or other named trustees. The purpose of the living trust is to create an easy path for one's assets to be more seamlessly passed down to the estate's beneficiaries.
It also allows for the trust to be funded when the owner chooses to make the transfer. In this way, the assets do not need to be set aside in advance; however, they do need to be transferred at some point in order for the living trust to take effect.
What do I have to disclose when selling a home?
You may be ready to move somewhere new right now, but you have a fair amount of work ahead of you if you intend to sell your home. Of course, you will probably have to do a lot of cleaning and a fair amount of repair work to make your lived-in home look appealing to buyers. You may even have to stage the home with temporary furnishings so it seems welcoming to a wide variety of potential buyers. You will probably want an agent to help you secure buyers and arrange showings.
And after you have got through all these steps, once you get into the actual transaction of selling you home, you have more paperwork to do. One of the most important tasks you have is to make legally required disclosures of issues with the property.
Federal and state disclosures
Disclosure requirements are designed to protect homebuyers from dishonest sellers who would try to sell them hazardous properties. The requirements come from both federal and Illinois law. For instance, the Residential Lead-Based Paint Hazard Reduction Act of 1992 is a federal law that requires sellers to inform buyers of any lead-based paint or chipped paint in any home built before 1978.
A power of attorney is a useful planning tool
Many people are aware that estate planning may include completing a will or trust, but sometimes overlook the usefulness of a power of attorney.
A power of attorney for finances and a power of attorney for healthcare allow a person to designate someone to act on their behalf. The person who creates a power of attorney is called the principal and the person he or she appoints to act is called an agent.
Finances
A power of attorney for finances allows the agent to make financial decisions for the principal, which may include managing the principal's money. It can also include acting on behalf of the principal for insurance and tax matters, claims and other transactions.
The principal can choose which powers to grant the agent and the agent must act in accordance with the powers allowed by the principal.
Unless it states otherwise, it will apply throughout the principal's lifetime.
Healthcare
A power of attorney for healthcare allows the agent to make healthcare decisions for the principal. These powers may include deciding to accept or decline medical treatment, admitting the principal to a hospital and accessing and disclosing medical records.
Pro hockey player files for Chapter 7 bankruptcy
In Illinois and across the United States, people are experiencing a range of financial worries because of the ongoing health crisis still engulfing the nation. That has led to major medical expenses, lost income, the inability to pay debts, the need to use credit cards for everyday necessities and more. When the bills reach a level where they cannot be paid, people are frequently unsure of what to do. There may be a reluctance to file for Chapter 7 bankruptcy because of fears about the process, how it could negatively impact the future, and the perceived stigma surrounding it. In truth, Chapter 7 is a perfectly legal and reasonable way to get into a stronger financial situation and move forward.
Even people with significant income may need Chapter 7
For those who are fearful, it might be beneficial to know there are people who have substantial assets and major income whose debts become so onerous that they need to file for Chapter 7 to get into a better position. A National Hockey League player, Evander Kane, has filed for Chapter 7 bankruptcy in California where he is under contract with the San Jose Sharks. Mr. Kane, 29, owes almost $27 million and is facing legal claims for his debts.
Is estate planning too expensive?
The year 2020 made everyone think about their own mortality, which made estate planning a hot topic last year. And, as this year has started off much like last year has ended, estate planning is still a hot topic. However, many worry about the expense.
Who needs an estate plan?
In a word, everyone. Remember, estate plans include living wills (advance directive), powers of attorney, traditional wills, etc. It is not just about property division; it is about how one wants to be treated when they cannot make their own medical decision and even what one wants to happen to their body once they pass. This is why everyone needs an estate plan.
However, even though it is so important and has been such a hot topic last year and this year, less than a third of us have even drafted one such document, according to a survey by Caring.com and YouGov at least. Unfortunately, cost may be a factor in this.
Property that creditors can take in bankruptcy
Filing for bankruptcy helps protect assets if debt becomes overwhelming. While Chapter 7 may provide a fresh financial start, bankruptcy law does not protect all debtor property from creditors.
Chapter 7
A Chapter 7 bankruptcy allows the discharge, or remove liability, of most debt owed on the date the bankruptcy is filed. It is typically a three-month process.
Some property may be lost in this bankruptcy. Property transferred before the bankruptcy filing may be reversed to the debtor.
Bankruptcy does not protect certain debts. These include spousal or child support and criminal fines or restitution. It is also difficult to exempt personal income taxes, student loan debt, and liability for passing bad checks or using fraudulent credit cards.
Bankruptcy estate
A bankruptcy estate is comprised of the debtor's property and income that is accessible to creditors. It includes all property owned by the debtor when the bankruptcy is filed and any income that was earned even if it was not received.
Estate planning and trusts in Illinois
Everyone should have an estate plan, no matter how healthy, young, or old they are. Planning what will happen to assets after death can help people ensure that their property is distributed according to their wishes. There are many options in the state of Illinois to legally bind what happens to property after death.
Types of trusts
There are two types of trusts in Illinois: revocable and irrevocable. A revocable living trust is a trust account that is set up by a person while he or she is still alive that can be changed or completely revoked (cancelled) at any time. An irrevocable living trust cannot be modified or revoked after its creation.
Creating a trust
Creating a trust is done by drafting a trust document that states the property to be put into the trust, who the trustee is (the person put in charge of day to day management of property in a trust – can be an individual or a bank, or both) and who the beneficiaries are. The trust document also spells out how to distribute the property that has been placed in the trust.
Trusts are an effective estate-planning tool
Estate planning is typically focused on passing assets after you die. But planning may include both wills and trusts to help preserve your income when you are still alive. There are some general features you should know about trusts.
General description
A trust is a legal agreement with at least three people who can serve different roles. More than one person can serve in these roles at the same time.
A trust agreement contains terms governing the trust. A trust cannot fully operate until it is funded through the transfer of property.
The person who created the trust is the trustor, grantor, settlor, or creator. The second person, the trustee, has legal title to the property and manages it according to the trust agreement and Colorado law. The trustee has the fiduciary duty of managing the trust property only in the beneficiaries' interests and in accordance with the trust agreement and state law.
Will I lose everything if I file for Chapter 7 bankruptcy?
People in Geneva facing financial difficulties in these uncertain times may wonder if filing for bankruptcy is right for them. One fear they may have regarding bankruptcy, though is that they will lose everything in the process and be destitute. However, this fear is unfounded as there are a variety of exemptions that allow people filing for Chapter 7 bankruptcy to keep certain assets so they can move forward on solid financial footing.
What are some unlimited Chapter 7 bankruptcy exemptions?
In a Chapter 7 bankruptcy, your assets will be sold, and the proceeds used to pay you're your creditors. This is why it is referred to as “liquidation bankruptcy.” However, when you file for Chapter 7 bankruptcy, you are allowed to keep any property that is “exempt” under state or federal law. Some examples of exempt assets in which a person can keep no matter what the value of the asset include:
- Family photographs
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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