There are three main courses for planning an estate that are typically used: (1) a Simple Will that nevertheless clearly names executor and beneficiaries and waives the bond if there is the need for Probate at a later time, among other provisions; (2) a more developed Last Will & Testament with Testamentary Trusts protecting beneficiaries from possible difficulties, such as bankruptcy, litigation or divorce; and (3) Living Trusts, with an accompanying Will that shields the estate from the necessity of Probate and may help to shield the estate from a sudden health care event, such as a debilitating stroke, that may affect the grantor/trustee, among other benefits. All of the following have Durable Powers of Attorney for Property; Power of Attorney for Health care; and HIPAA Authorizations. The Living Trust Package and more developed Last Will & Testament have more documents included.
Simple Will Package
Some clients prefer a Simple Will because they have few assets and mainly want to make sure their designated beneficiaries receive their personal items of value. This can work well when any and all assets and bank accounts have clearly designated beneficiaries named for them; their real estate, if any, is held in Joint Tenancy or better, in a Transfer On Death Instrument (TODI), and there is little likelihood of their estate suddenly receiving a large sum of money over $100,000.00. The Probate Bond can also be waived as a precaution, if a trustworthy Executor and Successor Executor are named.
This Will can help the estate even if the elder receives a personal injury settlement towards the end of life and a large amount of money needs to be handled. The benefit is that the beneficiaries will be receiving the money and this may matter very much to the testator. There is the possibility that the estate may be settled without the necessity of Probate, but even if it is required, it will eventually be sorted out in the manner desired with the help of the court, provided there is relative family harmony at the time of the testator’s death.
Last Will & Testament with Testamentary Trust Package
This is a Will that contains sub-trusts to protect beneficiaries from risk and it is elaborate enough to handle some tax planning and more advanced estate planning that is usually found in Living Trusts. This Will can go farther in protecting an estate than a Simple Will. It is intended to help people who prefer a Will to a Living Trust and accompanying Will and still want some added protection for their spouse and beneficiaries in place.
Living Trust Package
If your estate has assets exceeding $100,000.00 and real estate, this may be a good option for you. It is very helpful for estates with multiple parcels of real estate located in various parts of the country or perhaps, investment properties, such as rental or commercial properties. It can help a small business owner to transfer the authority to a successor trustee, upon their death, to handle shutting down the business without probate. It may be better to have a real Succession Plan in place to preserve the value of the business and provide for the proceeds of the business to pass to the trust estate quickly.
Probate avoidance is one of the chief advantages of the Living Trust, as well as protecting the privacy of the deceased person’s estate. It may well also protect the assets of the Grantor/Trustee, in the event of incapacity, where a Successor Trustee could be appointed to handle the assets quickly and relatively inexpensively. Capital gains tax avoidance is possible and litigation from disgruntled family members is less likely, due to the extra cost and difficulty suing a trust.
A Community Spouse of a Medicaid recipient may also shield assets with a Living Trust after the first year of benefits and receive an inheritance from a relative without harming the Institutional Spouse’s ability to receive benefits. There are Generation Skipping provisions that can help grandchildren, where it is desired. Overall, a Living Trust may relatively easily save money and anguish settling an estate of a loved one without extensive need of legal counsel or court intervention.
Irrevocable Legacy Trust
This trust is irrevocable, and it is a strategic devised for protecting assets from predators as well as removing any assets placed in the trust from being deemed as countable for Medicaid Planning purposes. There is an epidemic of Financial Exploitation of Elders and many people opine as to the tragedy of the situation, however an ounce of prevention is worth a pound of cure.
With this trust, an elder can remain living in the home that they have previously deeded into their irrevocable trust’s name, using a lease agreement with this trust. In this way, their trust owns the home and they are maintaining it and paying taxes at the senior exemption rate. Deeper assets can be placed in this trust’s name, as well. If ever there is a need for the funds, there is a way where the funds could be legally taken out and spent on the elder’s behalf. It requires absolutely trustworthy agents to work properly, but it is a secure protection of the assets for these purposes.
An elder would be well advised to leave enough assets out to enjoy their life in the meantime, but if a health care crisis should ensue at a later time, it will be much easier to do Medicaid Planning without having to liquify the deeper assets in the process. If a predator from within or without the family tries to obtain money, the elder can truthfully say, ‘I do not manage my trust’s assets’ and avoid the undue influence and manipulation that an exploiter typically uses. A Will may also be drafted to go with this trust, at the Grantor’s option.
Transfer On Death Instrument (TODI)
The Illinois Legislature enacted this statutory provision to allow people whose chief asset is their home to be able to pass the real estate to beneficiaries, avoiding Probate and the need of establishing a Living Trust. It is better than naming a beneficiary in Joint Tenancy, unless it is a spouse, because this way the beneficiary has no ownership interest in the property until the second spouse dies. The homeowner may also take out mortgages or sell the property the day before his or her death and the beneficiaries have no say in the matter. If these beneficiaries do object badly enough, the homeowner may revoke the same beneficiaries interest in the property through this instrument. It is a great companion to a Last Will & Testament, particularly for a single person or a couple who wants to remove any threat their possible simultaneous deaths could impose on their estates.
Durable Power of Attorney for Property
This is an essential document for protecting anyone over 18 from the necessity of Guardianship in a majority of incidences. Additionally, if the agent and successor agent are carefully chosen there are valuable asset protection powers that can be added to save an estate from loss. It is vital to have an agent you trust with your life and a successor named for a backup. Additionally, a decision-making agent can be appointed by the initial agent to assist the initial agent, under paragraph four to the Illinois Short Form Power of Attorney document.
Power of Attorney for Health Care
I use both an Illinois Statutory Power of Attorney for Health Care and a Power of Attorney for Health Care that was developed by the Illinois NAELA Chapter that goes more in depth on Advance Care Planning. These documents both allow you to nominate your Power of Attorney for a Health Care agent to serve as your Guardian, should one be necessary; to state when you would like the Power of Attorney documents to go into effect; and the question of Advance Care when there is little chance of regaining any quality of life.
HIPAA Authorization
This document permits your POA for Health Care to request a transfer of medical records from one facility to another, as well as authorizing the agent to request an autopsy up to two years after you have died. There are times when a tissue sample could be useful for helping a Personal Injury attorney obtain necessary evidence for litigation purposes.
This is a federal medical information privacy law document required under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). It requires the express authorization to disclose information to persons other than yourself. Preparing this in advance allows the Agent for the Durable Power of Attorney for Healthcare or a Guardian the authority to communicate with your health care provider in order to carry out your estate plan. If you plan on contributing bodily organs or tissue, certain documents are necessary to assemble. Some people want their “final words” recorded along with remembrances; funeral and burial or cremation arrangements specified in writing; memorial service; and location of documents are other recorded documents some people choose to include in their estate planning documents.
