Wills and Trusts

What is a Will?

Chicago will and trust attorney

This document directs how property will be distributed after ones death.  The person who creates a will is known as a testator.  A will is very important!  It allows you to:

  • Name the person (executor) who will carry out your wishes
  • Name a guardian to care for your minor children
  • Direct which property goes to whom (beneficiaries)

Don’t put off making a will.  A testator must have the mental capacity to create a will.  Because a will is such an important document, we strongly urge you to seek our guidance.  Most people understand the probate process can be lengthy and we help to reduce its impact.  A “pour overwill minimizes probate by making a private trust that you create the sole beneficiary.  Plus, you disclose nothing to the public about your provisions.

What is a Trust?

A trust is a legal property interest (created by a “grantor”), held by a person (trustee) for the benefit of another (beneficiary). Revocable trusts may be changed or ended by the grantor at any time, for any reason.  An irrevocable trust cannot be changed or terminated.  A testamentary trust goes into effect at the time of death.

Trusts are invaluable tools for estate planning attorneys and we often create living trusts that become irrevocable trusts following death, to avoid probate and its associated costs.

There are too many trusts to describe in full here, but it is important to know some of the primary advantages:

  • Makes transferring wealth very flexible
  • For federal estate and income taxes
  • Asset protection
  • Can provide for a consistent stream of income

Types of Trusts and situations benefiting from Trusts

Irrevocable Life Insurance Trust

If you own life insurance, the proceeds are included in your estate when calculating estate taxes.  An irrevocable life insurance trust allows you to maximize control over the insurance policies while minimizing (or eliminating) estate taxes on the death payout.

Supplemental Special Needs Trust

This type of trust enhances the future lifestyle of a beneficiary with legally recognized special needs.  By not giving money outright, you avoid the risk of disqualifying them from financial aid or important program participation.

Generation Skipping Trust

Allows you to provide for the financial betterment of grandchildren, great-grandchildren and even generations beyond that – but why?   There are tax benefits to these instruments, plus, they help assure that creditors, adverse events or other family issues don’t interfere with such a transfer.   We can also use “spray trust” provisions to allow trust assets to benefit any descendent according to their individual needs.

Shelter Trusts

Helps married people plan ahead.  If assets are properly segregated, upon the death of a surviving spouse, estate taxes will be reduced and it assures we have the “correct” beneficiaries.   Also known as “applicable exclusion amount” trusts, “unified credit” and “AB” trusts.

Small Business Transition

Trusts are sometimes used, often in combination with installment sales, to transition ownership of a family business.   Maintain important income streams while keeping an eye on future capital gains tax considerations.  We can help everyone involved plan ahead and reduce uncertainty.

Is your spouse a non-U.S. Citizen?

If so, Qualified Domestic Trusts assure that assets pass to their control with a minimum of estate tax consequences.   Many people believe that marriage alone is sufficient, or future citizenship will be resolved long before such a transfer takes place.  Don’t fall into this trap!

Qualified Personal Residence Trust

A house is the single biggest asset most people have.  Even those of modest means need to make sure a future sale of their home won’t trigger certain negative tax consequences.  A QPRT allows the grantor to remain living at the property while future beneficiaries (typically children) and the estate benefit in many respects.

Alternative Lifestyles

Currently, life partners are not recognized by the U.S. government.  Nieces or nephews have greater legal standing!  Not just an issue for the LGBT (Lesbian Gay Bisexual and Transgender) community, non-married straight couples who are life partners lack legal status in most states.     The primary issues include determining beneficiaries if one dies without a will, selection of fiduciaries, IRA rollovers and estate or gift taxes – providing all life partners with abundant reason to plan ahead.  This is an evolving area of law.  For example:  Beginning in 2010 all IRA inheritors, regardless of their relationship, are allowed to rollover and defer any MRD (minimum required distribution) until 70 and one-half years.

Charitable Trusts

There are many types.  We can discuss ways these instruments can not only help you assist charities, but provide benefits to other beneficiaries and your overall estate tax exposure.

Conclusion on Trusts

The trusts above are not discussed in detail here and there are also other types.   Our goal is to stimulate your thinking about situations where estate planning can be helpful.  The expression “an ounce of prevention is worth a pound of cure” is the simplest way we can communicate the importance of sitting down with an attorney who cares about your goals.  We hope you give us the opportunity to prove how useful we can be on your behalf.