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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
Considering bankruptcy? Get real information about your options.
Americans are facing a lot of hardship right now. The pandemic spurred a recession which may hamper the U.S. economy for years. If you've lost a job, seen a reduction in hours, accrued steep medical bills or suffered any other pandemic-related misfortune, you may be wondering if bankruptcy is something you can even consider, much less take advantage of.
Before you decide, though, why not discuss your case with an experienced bankruptcy attorney? You may be surprised by what you learn when you hear the facts and receive case-specific advice.
Are you making decisions based on facts of fiction?
Unless you've really done your research, chances are good that what you know about bankruptcy was probably pieced together by things you've heard or overheard throughout your lifetime. As such, the assumptions you make about bankruptcy may be partially or completely false. That's not a very effective way to make such an important decision. Here are some of the myths about bankruptcy you may have heard or may assume are true:
Tips on how not to mess up a solid estate plan
We are in a historic time of uncertainty and death. Every day, we are faced with news reports of the national crises and accompanying death toll that seems to never stop increasing. Naturally, as a result, many of us are now looking to create or update our estate plans to ensure that, if the unthinkable happens, our families are protected. This may be one of the only bright sides of 2020, though, we must be mindful of the estate planning process to ensure that we do not cause more harm than good.
Tip 1: retitle trust assets immediately
Estate plans often include revocable living trusts. These are used because they avoid probate and some taxes, which ensures that one's beneficiaries have less burdens after one's death and the estate value is maximized. However, this also means that title to one's assets must be put into the name of trust. If one forgets to do this, and they subsequently die or become incapacitated, all the assets not in the trust (i.e., all the assets not retitled into the trust's name) will likely need to go through probate. This, of course, defeated the entire point of the estate plan.
A reaffirmation agreement can help you keep assets
A lot of people who struggle with debt are worried that personal bankruptcy will leave them in a worse position. They oftentimes believe that a Chapter 7 bankruptcy will strip them of all of their assets, making it nearly impossible for them to get back on their feet again. Fortunately, this simply isn't the case. There are a number of bankruptcy exemptions that allow you to keep some assets, and a limited amount of value in other assets, so that you have the financial stability you need to start your life post-bankruptcy.
What if I want to keep certain assets that aren't fully exempt?
Even in these instances you have options. Let's say that you have an expensive vehicle. When pursuing Chapter 7 bankruptcy you can either liquidate the asset and free yourself of any debt attached to it, or you can reaffirm the debt. Reaffirmation is simply the process where you agree to retain the asset post-bankruptcy along with the debt that is tied to it. This can allow you to have a little more flexibility so that you can keep the assets that are important to you.
What happens if you don't pay your credit card bill?
Almost every Geneva area resident has at least one credit card. In fact, the average American has four credit cards. Credit cards are used for every day purchases as well as any emergency that may crop up such as medical expenses, car repairs, etc. Although most people understand the importance of paying their credit card bill each month, sometimes it is not that easy. A job loss, accident, divorce, or other major life event. There are serious things that can happen if a person does not pay their credit card bill.
When a Geneva area resident is unable to pay their credit card bill there are certain things that happen. The following is the basic process that credit card companies follow when their customer does not pay their credit card bill.
Just how important is a power of attorney for healthcare?
When considering all that is entailed in planning your estate, one of the most important decisions you may make is whether or not to include a power of attorney for healthcare. Choosing a spouse, family member or close friend to be your advocate when it comes to your care, the choice of medications, or end-of-life decisions should you become incapacitated, is arguably one of the most important part of your estate planning.
It is important to note two different estate planning tools that involve healthcare. Where a living will is an advance directive that spells out your preferences for end-of-life treatments and the kind of care you do or do not agree to, a power of attorney entrusts a loved one with responsibilities to ensure that your wishes are honored.
Power of attorney under Illinois law
In Illinois, a statutory short form power of attorney for health care empowers the health care agent with decisions concerning health care of the principal. Should your physician determine that you are incapacitated, your health care agent will talk with your caregivers about your condition or treatment, will have access to your medical records and can grant permission to others to see them.
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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