What comes to mind when you hear the words estate planning? If you think of older people with many assets, you’re not alone. However, it’s a common misconception that estate planning is only something done by people who are old and/or rich. Estate planning is actually for everyone, and the earlier in life you start planning for your future, the better.
Creating and implementing an effective estate plan will give you peace of mind and assurance that there’s a plan in place in case you are unable to provide for, or make decisions for, yourself or your family.
When you first start the planning process, your plan will likely be fairly basic. As your life progresses, your plan may need to be updated to account for changes in the people and assets in your life, as well as evolving values and beliefs. At The Knee Law Firm, Ltd. we suggest checking in with us about every three years to discuss any major life changes that may impact your plan. Here are some of the main things to consider at each stage of life.
Young & Single
Even though you may be unmarried and have no children, it’s important to have at least a basic estate plan in place. A staple of every plan is a will, which allows you to dictate who will receive your assets when you die. If you die without a will, a probate court will decide what happens to your assets, costing your loved ones additional time and court costs to resolve things on your behalf.
In addition to a will, you might also complete a personal property form, listing your most valuable assets and to whom you wish them to go. A trust is also something you might consider, even at this point, because of the ease with which it allows your trustee(s) to act on your behalf, if needed, and its ability to be easily changed as your life evolves. A trust acts like a bucket for your assets that you can simply pass on to your trustee if needed/when you decide. Unlike the will, the trust is active while you’re alive and provides protections now and into the future.
Other key parts of your estate plan should include:
Newly Married/Young Family
It's a good idea to add your spouse and any children to your estate plan. Each state has different rules for how your estate is handled in the absence of a will or trust. For example, here in Illinois, half of the estate is distributed to your spouse and the other half is distributed equally among your children. This can complicate things if a home needs to be sold, etc. Having an estate plan in place puts you in control of how your estate is to be handled.
If you have minor children, you also have the opportunity to name a person, or persons, to act as a guardian in the event that you and your spouse are no longer able to care for them.
If you don’t already have life insurance or long-term disability insurance, now would be a good time to start these policies. If you are unable to support your family due to injury, illness, or death, you will want them to have some support. Additionally, there are various investment plans to choose from when setting aside funds for your children’s education and for your retirement.
Later in Life
You may be retired or getting close to retiring. If you haven’t already, it’s a good idea to designate/review the person(s) who you would like to make financial and healthcare decisions on your behalf if/when needed.
Your estate plan is likely more robust and complex than when you first started it years ago. Aside from your primary residence, you may have other property, such as a vacation home. Passing on your assets to your descendants is something you are likely thinking about. With an estate plan in place, this process can be a much easier and less expensive one for your loved ones.
You may also have different ideas about your end-of-life care than you did years ago. Now is a good time to review your estate plan to ensure it still reflects your wishes.
No matter your stage of life, it’s never too soon to create your estate plan. Our team at The Knee Law Firm, Ltd. is happy to guide you through the process and create a plan that fits your unique needs. Please feel free to connect with us for more information and an initial consultation.
An Estate Plan is something everyone should have in order to protect your wishes, well-being, and assets at a time when you and your family are at the most vulnerable. The following five documents are essential to your planning and retaining a trusted Estate Planning attorney is the first step in setting these legal guidelines in place.
The will is a legal document that outlines who receives your assets after death. A valid will is critical for adults to possess regardless of age. It is especially true if you have dependent children since your will identifies guardians for them. Without a will, the courts decide who is responsible for raising your children and what happens to your assets. Each state has statutes that prescribe the formalities to observe in making a valid will. In Illinois, two non-family witnesses are required, as well as a notary.
2. Revocable Trust
This type of trust allows you, as the grantor, to amend, add assets to, or terminate the trust for as long as you like or until you can't or no longer wish to manage the trust. You also name a trustee (if married, this is generally your spouse) who will eventually make daily decisions regarding certain assets on behalf of the trust and transfers these assets to beneficiaries upon the your death. Assets in the trust pass outside of a will and outside of probate, thus reducing court fees, delays in asset distribution, and protecting assets from becoming a matter of public record.
Your estate planning lawyer can also design your revocable trust to reduce federal estate taxes. Please know ... you don't need to have significant assets to benefit from this trust. A revocable living trust is one of the most important documents for nearly anyone to have in their estate plan.
3. Medical Directives or Advanced Directives
This document, also known as a Living Will Declaration is a backup to your Healthcare Power of Attorney and is specific document outlining your wishes for healthcare choices in anticipation of incapacitation, illness, or end-of-life care. For example, some individuals want medically heroic measures to remain alive, while others might opt for a peaceful passing and less invasive care. A medical directive provides clarity and guidance in decision-making for medical teams and family members regarding these choices.
4. Healthcare Power of Attorney
This document permits the legal transfer of authority to make medical decisions on your behalf. In the event you are not able to make decisions for yourself, the designee, known as the agent, can determine what medical procedures are allowable on the your behalf. In Illinois, the Healthcare Power of Attorney also contains a section allowing you to choose from healthcare options based on quality of life versus quantity of life. The combination of a medical directive and healthcare power of attorney assures you will receive the care you desire. The medical directive serves as the blueprint for your health care decision preferences. The healthcare power of attorney gives the legal authority to effect decisions based on this blueprint.
5. Power of Attorney for Property
Depending on how the document is written, this designated agent can make many financial decisions for the principal. They may include overall financial affairs, bill pay, property sale, bank safe deposit boxes, contract for services, property rental, tax audits, and more. There are four basic types of power of attorney:
Our team at The Knee Law Firm, Ltd, in Mount Prospect, Illinois, serves clients throughout the Chicagoland area. We would be happy to discuss implementing these critical documents for you in an estate plan customized to your specific circumstances.