Answers to Questions about a
Will, Living Will, Living Trust, and Estate Plan
Experienced Lawyers Serving
Morris - Minooka - Channahon - Shorewood - Coal City - Diamond
Please click on the question below
that interests you, or scroll down to read the answers to all questions.
1.
I received a brochure in the mail saying I need a Living Trust. Do I?
2.
I've heard that every estate plan's goal should be to avoid probate. What is probate, and why should I want to avoid it?
3.
I've heard that if I just register all my accounts in joint tenancy or as payable-on-death (POD) accounts, I won't need an estate plan. Is that true?
4.
I've heard estate planning is mainly about avoiding taxes and I don't have a large enough estate to worry about that. Why do I need an estate plan?
5.
When I die, isn't there a law that will automatically transfer my assets to my family?
6.
I've seen a computer program where I can do my own will. Why do I need a lawyer?
7.
How much does an estate plan cost?
8.
What might add to the cost of an estate plan?
1. I received a brochure in the mail saying I need a Living Trust. Do I?
Maybe, but maybe not. Be on the lookout for "trust mills" that try to force a one-size-fits-all solution on every individual. At HRYB, you'll meet one-on-one with an experienced estate planning attorney who will analyze your individual needs and recommend the estate plan that fits your unique situation.
That being said, a revocable trust (sometimes called a Living Trust) can be useful in streamlining the administration of an estate, planning for bequests to minor children, holding title to out-of-state real estate, and avoiding probate for many estates. However, the cost of setting up a trust and transferring assets into it may exceed its benefits in some estate planning situations.
2. I've heard that every estate plan's goal should be to avoid probate. What is probate, and why should I want to avoid it?
Put simply, probate is the process through which the court validates a will, empowers the executor to collect and transfer property, and sets a deadline after which creditors cannot make a claim against the estate's assets.
The "avoid-probate-at-all-costs" mantra is another one-size-fits-all solution that is not appropriate for every individual. Probate used to be an onerous, time consuming and expensive process that required a great deal of court and attorney involvement. Beginning in 1983, Illinois began to allow Independent Administration of estates, whereby executors can administer the estate with almost no court involvement. Many estates are now probated using Independent Administration.
While most of our estate plans utilize trusts, and there are legitimate reasons why some people may want to avoid probate, the cost of setting up and funding a revocable trust may be greater than the cost of probate. This is one of the issues we'll carefully evaluate when we meet with you to prepare your estate plan.
3. I've heard that if I just register all my accounts in joint tenancy or as payable-on-death (POD) accounts, I won't need an estate plan. Is that true?
No. That is a common misconception in the financial services industry that is unfortunately passed along to clients. Accounts and financial documents such as stock certificates that are held in two or more names labeled "joint tenants" pass by law to the co-tenant(s) when one joint tenant dies. POD accounts pass by contract at the death of the owner to the beneficiary named. They are both useful tools in estate planning, but they are not a sufficient substitute. For example, what if your co-tenant or POD beneficiary dies before you? What if the beneficiary is a minor who cannot legally hold title? When we at HRYB prepare an estate plan, we take all of these factors into consideration.
4. I've heard estate planning is mainly about avoiding taxes and I don't have a large enough estate to worry about that. Do I still need an estate plan?
Under the estate tax laws in effect through December 31, 2009, the federal estate tax applied to estates valued at more than $3,500,000.00 (including retirement plans and life insurance). At the same time, the Illinois estate tax applied to estates valued at more than $2,000,000.00. During 2010, the federal and Illinois estate taxes have been temporarily repealed. If Congress does not act to change the current law, then federal and Illinois estate taxes will apply again, effective January 1, 2011, but starting with estates valued in excess of $1,000,000.00, thus rendering significantly more estates subject to death taxes.
While avoiding taxes is certainly a goal for many of our clients with significant assets, there are numerous other goals that a comprehensive estate plan can meet: making sure the people you choose inherit your assets, naming a person to make medical decisions for you if you become disabled, naming an agent to manage your property if you become disabled, deciding who should care for your children if you pass away before they're old enough to care for themselves and their money, and deciding under what conditions in a final illness you would want artificial life-support discontinued.
5. When I die, isn't there a law that will automatically transfer my assets to my family?
The "Intestacy Statute" governs what happens if someone dies without a valid estate plan, however, it does not match what most people want to have happen with their estate given a choice. Look at it this way: who is better suited to decide who inherits your assets, you or the state legislature? Again, this is an example of a one-size-fits-all solution - but the choices were made by the state legislature.
6. I've seen a computer program where I can do my own will. Why do I need a lawyer?
Using a computer program to make your will is probably the worst one-size-fits-all approach you can choose. Each state has its own laws regarding what is a valid will, trust or power of attorney. Many software packages provide a form that relies on a national standard that does not even exist! While some software packages on the market are better than others, there is no substitute for an experienced, knowledgeable estate planner - a live human being who can give you professional, personal attention. What you save on a do-it-yourself estate plan could cost your loved ones dearly after your death.
7. How much does an estate plan cost?
The cost of an estate plan depends on how much legal work is required. It is difficult to quote an exact fee.
Some clients have very well organized records and simple estates. These plans can be generated in two sessions of about an hour each, the first to explain the estate planning process and gather the necessary information, and the second to review and execute the estate plan documents, plus the time it takes to draft basic documents. The fee can be as low as $600.00.
Other clients with large, potentially taxable estates, may require 15-20 hours of consultation, the preparation of complex documents and consultation with other professionals.
The vast majority of our clients' estates can be adequately addressed in five to ten hours of legal work. However, no matter how much work is needed, we always keep our fees as reasonable as possible. We also can set up a payment plan if you'd like. We will be able to tell you how much your estate plan will cost once we have met and determined the legal work needed to provide the best legal protection for you and your family.
8. What might add to the cost of an estate plan?
If your financial situation is more complex, you may need other services. We handle these at an hourly rate, which we will agree on with you in advance. Examples of these services include: estate tax planning, special needs trusts for disabled persons, financial planning, transferring assets to a trust, drafting and analyzing prenuptial and postnuptial agreements, creating limited partnerships, lifetime-giving plans, drafting business buy/sell agreements, changing beneficiaries on retirement or life insurance policies, creating more complex plans for trusts, land trusts, family limited partnerships, and more. Many of our clients do not have complex financial situations, but if you do, we can provide you with very advanced estate-planning assistance.
If you have other questions that we haven't covered here, we'd be glad to answer them for you. Please just contact us for an appointment.
