| Why Plan Your Estate? | | | | your behalf, so that you can keep track of all |
| The knowledge that we will eventually die is one | | | | expenditures. |
| of the things that seem to distinguish humans | | | | 3. Paying bills and taxes. If an estate tax return is |
| from other living beings. At the same time, no | | | | needed--generally if the estate exceeds $675,000 |
| one likes to dwell on the prospect of his or her | | | | in value--it must be filed within nine months of the |
| own death. But if you postpone planning for your | | | | date of death. If you miss this deadline and the |
| passing until it is too late, you run the risk that | | | | estate is taxable, severe penalties and interest |
| your intended beneficiaries - those you love the | | | | may apply. If you do not have all of the |
| most - may not receive what you would want | | | | information available in time, you can file for an |
| them to receive either because of extra | | | | extension and pay your best estimate of the tax |
| administration costs, unnecessary taxes or | | | | due. |
| squabbling among your heirs. | | | | 4. Filing tax returns. You must also file a final |
| This is why estate planning is so important, no | | | | income tax return for the decedent and, if the |
| matter how small your estate may be. It allows | | | | estate holds any assets and earns interest or |
| you, to ensure that your assets and other | | | | dividends, an income tax return for the estate. If |
| possessions will go to the people you want, in the | | | | the estate does earn income during the |
| way you want, and when you want. It permits | | | | administration process, it will have to obtain its |
| you to save as much as possible on taxes, court | | | | own tax identification number in order to keep |
| costs and attorneys' fees; and it affords the | | | | track of such earnings and file an estate income |
| comfort that your loved ones can mourn your | | | | taxnotion in addition to the decedent's final income |
| loss without being simultaneously burdened with | | | | tax return. |
| unnecessary red tape and financial confusion. | | | | 5. Distributing property to the heirs and legatees. |
| All estate plans should include, at minimum, two | | | | Generally, executors do not pay out all of the |
| important estate-planning instruments: a durable | | | | estate assets until the period runs out for |
| power of attorney and a will. The first is for | | | | creditors to make claims, which in Illinois is 6 |
| managing your property during your life, in case | | | | months from the date the estate, notice of death |
| you are ever unable to do so yourself. The | | | | in the newspaper. But once the executor |
| second is for the management and distribution of | | | | understands the estate and the likely claims, he or |
| your property after death. In addition, more and | | | | she can distribute most of the assets, retaining a |
| more, Americans also are using revocable (or | | | | reserve for unanticipated claims and costs of |
| "living") trusts to avoid probate and to manage | | | | closing out the estate. |
| their estates both during their lives and after | | | | 6. Filing a final account. The executor must file an |
| they're gone. | | | | account with the probate court listing any income |
| Your Will | | | | to the estate since the date of death and all |
| Your will is a legally binding statement directing | | | | expenses and estate distributions. Once the court |
| who will receive your property at your death. It | | | | approves this final account, the executor can |
| also appoints a legal representative to carry out | | | | distribute whatever is left in the closing reserve, |
| your wishes. However, the will covers only | | | | and finish his or her work |
| probate property. Many types of property or | | | | Avoiding probate through joint ownership or |
| forms of ownership pass outside of probate. | | | | trusts can eliminate some of these steps. But |
| Jointly owned property, property in trust, life | | | | whoever is left in charge still has to pay all debts, |
| insurance proceeds and property with a named | | | | file tax returns, and distribute the property to the |
| beneficiary, such as IRAs, insurance policies or | | | | rightful heirs. You can make it easier for your |
| 401(k) plans, can all pass outside of probate. | | | | heirs by keeping good records of your assets and |
| Why should you have a will? | | | | liabilities. This will shorten the process and reduce |
| Here are some reasons. | | | | the legal bill. |
| First, with a will you can direct where and to | | | | Guardianship and Conservatorship |
| whom your assets (what you own) will go after | | | | Every adult is assumed to be capable of making |
| your death. If you died instate (without a will), | | | | his or her own decisions unless a court determines |
| your estate would be distributed according to | | | | otherwise. If an adult becomes incapable of |
| state law. Such distribution may or may not | | | | making responsible decisions due to a mental |
| accord with your wishes. | | | | disability, the court will appoint a substitute decision |
| Many people try to avoid probate and the need | | | | maker, called a "guardian". Guardianship is a legal |
| for a will by holding all of their assets jointly with | | | | relationship between a competent adult (the |
| their children. This can work, but often people | | | | "guardian") and a person who because of |
| spend unnecessary effort trying to make sure all | | | | incapacity is no longer able to take care of his or |
| the joint accounts remain equally distributed | | | | her own affairs (the "ward"). The guardian is |
| among their children. These efforts canbe | | | | authorized to make legal, financial, and health care |
| defeated by a long-term illness of the parent or | | | | decisions for the ward. Depending on the terms |
| the death of a child. A will can be a much simpler | | | | of the guardianship, the guardian may or may not |
| means of affecting one's wishes about how | | | | have to seek court approval for various decisions, |
| assets should be distributed. | | | | but generally the guardian acts without being |
| The second reason to have a will is to make the | | | | required to incur the expense of court approval. |
| administration of your estate run smoothly. Often | | | | Some incapacitated individuals can make |
| the probate process can be completed more | | | | responsible decisions in some areas of their lives |
| quickly and at less expense to your estate if | | | | but not others. In such cases, the court may give |
| there is a will. With a clear expression of your | | | | the guardian decision-making power over only |
| wishes, there are unlikely to be any costly, | | | | those areas in which the incapacitated person is |
| time-consuming disputes over who gets what. | | | | unable to make responsible decisions (a so-called |
| Third, only with a will can you choose the person | | | | "limited guardianship"). In other words, the guardian |
| to administer your estate and distribute it | | | | may exercise only those rights that have been |
| according to your instructions. In Illinois this person | | | | removed from the ward and delegated to the |
| is called your "personal representative". If you do | | | | guardian. Guardianships are consuming and |
| not have a will naming him or her, the court will | | | | expensive. Prefer planning with Power of |
| make the choice for you. Usually the court | | | | Attorneys for health care and financial matters will |
| appoints the first person to ask for the post, | | | | significantly reduce cost and time in the event you |
| which is most closely related to you at the time | | | | became incapacitated. (See Page for detailed |
| of death. | | | | discussion of Power of Attorney). |
| Fourth, for larger estates, a well planned will can | | | | Incapacity |
| help reduce estate taxes. | | | | Generally a person is judged to be in need of |
| Fifth, and most important, through a will you can | | | | guardianship when he or she shows a lack of |
| appoint who will take your place, as guardian of | | | | capacity to make responsible decisions. A person |
| your minor children should both you and their | | | | cannot be declared incompetent simply because |
| other parent both pass away. | | | | he or she makes irresponsible or foolish decisions, |
| Filling out the worksheet that our office provides | | | | but only if the person is shown to lack the |
| will help you make decisions about what to put in | | | | capacity to make sound decisions. For example, a |
| your will. Bring it and any additional notes to our | | | | person may not be declared incompetent simply |
| office and our estate planning professionals will be | | | | because he or she spends money in ways that |
| able to efficiently prepare a will that meets your | | | | seem odd to someone else. Also, a developmental |
| needs and desires. | | | | disability or mental illness is not, by itself, enough |
| Estate Administration- Probate Procedure | | | | to declare a person incompetent. |
| Probate is the process by which a deceased | | | | Process |
| person's property, known as the "estate", is | | | | Anyone interested in the proposed ward's well |
| passed to his or her heirs and legatees (people | | | | being can request a guardianship. An attorney is |
| named in the will), the entire process, supervised | | | | usually retained to file a petition for a hearing in |
| by the probate court, usually takes about one | | | | the probate court in the proposed ward's county |
| year. However, substantial distributions from the | | | | of residence. The proposed ward is entitled to |
| estate can be made in the interim. | | | | legal representation at the hearing, and the court |
| The emotional trauma brought on by the death of | | | | will appoint an attorney if the allegedly |
| a close family member is often accompanied by | | | | incapacitated person cannot afford lawyer. |
| bewilderment about the financial and legal steps | | | | At the hearing, the court with the help of the |
| the survivors must take. The spouse who passed | | | | Guardian ad Litem attempts to determine if the |
| away may have handled all of the couple's | | | | proposed ward is incapacitated and, if so, to what |
| finances. Or perhaps a child must begin taking | | | | extent the individual requires assistance. If the |
| care of probating an estate about which he or | | | | court determines that the proposed ward is |
| she knows little about. And this task may come | | | | indeed incapacitated, the court then decides if the |
| on top of commitments to family and work that | | | | person seeking the role of guardian will be |
| can't be set aside. Finally, the estate itself may be | | | | responsible. |
| in disarray or scattered amount many accounts, | | | | Guardian |
| which is not unusual with a generation that saw | | | | A guardian can be any competent adult-the |
| banks collapse during the Depression. | | | | ward's spouse, another family member, a friend, a |
| Here we set out the steps the surviving family | | | | neighbor, or a professional guardian (an unrelated |
| members should take. These responsibilities | | | | person who has receivedspecial training). A |
| ultimately fall on whoever was appointed executor | | | | competent individual may nominate a proposed |
| or personal representative in the deceasedfamily | | | | guardian through a durable power of attorney in |
| member's will. Matters can be a bit more | | | | case she ever needs a guardian. |
| complicated in the absence of a will, because it | | | | The guardian need not be a person at all--it can |
| may not be clear who has the responsibility of | | | | be a non-profit agency or a public or private |
| carrying out these steps. | | | | corporation. If a person is found to be |
| First, secure the tangible property. This means | | | | incapacitated and a suitable guardian cannot be |
| anything you can touch, such as silverware, | | | | found, courts in many states can appoint a public |
| dishes, furniture, or artwork. You will need to | | | | guardian, a publicly financed agency that serves |
| determine accurate values of each piece of | | | | this purpose. In naming someone to serve as a |
| property, which may require appraisals, and then | | | | guardian, courts give first consideration to those |
| distribute the property as the deceased directed. | | | | who play a significant role in the ward's life - |
| If property is passed around to family members | | | | people who are both aware of and sensitive to |
| before you have the opportunity totake an | | | | the ward's needs and preferences. If two |
| inventory; this will become a difficult, if not | | | | individuals wish to share guardianship duties, courts |
| impossible, task. Of course, this does not apply to | | | | can name co-guardians. |
| gifts the deceased may have made during life, | | | | Reporting Requirements |
| which will not be part of his or her estate. | | | | Court often give guardians broad authority to |
| Second, take your time. You do not need to take | | | | manage the ward's affairs. In addition to lacking |
| any other steps immediately. When bills do need | | | | the power to decide how money is spent or |
| to be paid, they can wait a month or two without | | | | managed, where to live and what medical care he |
| adverse repercussions. It's more important that | | | | or she should receive, wards also may not have |
| you and your family have time to grieve. Financial | | | | the right to vote, marry or divorce, or carry a |
| matters can wait. When you're ready but not a | | | | driver's license. Guardians are expected to act in |
| day sooner, meet with one of our attorneys to | | | | the best interests of the ward, but give the |
| review the steps necessary to administer the | | | | guardian's often-broad authority; there is the |
| deceased's estate. Bring as much information as | | | | potential for abuse. For this reason, courts hold |
| possible about finances, taxes and debts. Don't | | | | guardians accountable for their actions to ensure |
| worry about putting the papers in order first; our | | | | that they don't take advantage of or neglect the |
| attorney will have experience in organizing and | | | | ward. |
| understanding confusing financial statements. | | | | The guardian of the property inventories the |
| In general rules of estate administration include | | | | ward's property, invests the ward's funds so that |
| the following steps: | | | | they can be used for the ward's support, and files |
| 1. Filing the will and petition at the probate court in | | | | regular, detailed reports with the court. A guardian |
| order to be appointed executor or personal | | | | of the property also must obtain court approval |
| representative. In the absence of a will, heirs | | | | for certain financial transactions. Guardians must |
| must petition the court to be appointed | | | | file an annual account of how they have handled |
| "administrator" of the estate. | | | | the ward's finances. Guardians must offer proof |
| 2. Marshalling, or collecting the assets. This means | | | | that they made adequate residential |
| that you have to find out everything the | | | | arrangements for the ward, that they provided |
| deceased owned. You need to file a list, known as | | | | sufficient health care and treatment services, and |
| an "inventory", with the probate court. It's | | | | that they made available educational and training |
| generally best to consolidate all of the estate | | | | programs, as needed. Guardians who cannot |
| funds to the extent possible. Bills and bequests | | | | prove that they have adequately cared for the |
| should be paid from a single checking account, | | | | ward may be removed and replaced by another |
| either one you establish or one set by our firm on | | | | guardian. |