In general, Americans are very uncomfortable talking about end-of-life issues. It can be hard for people to think about (and plan for) their own death, let alone the death of their loved ones. I get it.
Yet by not discussing these issues, you are leaving your future caregivers (most often your adult children) in an impossible position. Many people are taken completely off-guard when their elderly parents start to decline.
Because we don’t discuss these issues ahead of time, caregivers are often left unprepared for the life changes they are about to experience. Depending on the speed and amount of decline, a caregiver might have to dedicate a significant portion of their life to the growing needs of their parents.
Simple legal planning can help to avoid these issues. You can pave the way now, so that life is easier when incapacity, disability, or ultimately death occurs. Here are a few key ways to prepare:
- Have “the talk.” It doesn’t matter if you are the impending caregiver or the person who will need care, you should make time to sit down and talk. This should happen way before the elderly person starts experiencing memory loss, so the sooner the better! You’ll need to discuss the senior’s wants, needs, health issues, financial resources, and preferences for the amount of medical intervention you/they want at the end.
- Have legal documents prepared. Work with an estate planning attorney in Schaumburg to prepare important legal, financial, and healthcare documents – and keep them updated! Do this immediately if the senior is showing signs of increasing health issues. If you wait until the senior is showing signs of mental decline, they could be declared incompetent to make their own decisions and it will be too late for them to sign any new documents.
- Review financial information. Be sure you review the senior’s financial statements and understand their income and expenses. Knowing how to access this information will be critical to handling their affairs if they are unable.
- Research elder care options. Review the options and determine what living situations the elder person is comfortable with in advance. Determine their preferences for hospital, rehabilitation, nursing home, assisted living, and/or independent living communities as well as options for memory care, home care, and even hospice.
Having these discussions in advance are uncomfortable, but knowing this information will save more stress and heartache than you can imagine. For additional information on how to prepare for end-of-life transitions, contact our Schaumburg estate and elder law attorneys at 630-908-2752.
With so much information to share on the types of business entities to consider, this post will appear in two parts. The first will look at some of the more commonly recognized entities that business planning lawyers in Cook County help set up, and the second will delve a bit deeper.
Without the help of a Cook County business planning lawyer’s input, would you be able to list all of the business entity options available for entrepreneurs? Once you’ve considered that question, ask yourself if you really know which one is right for your business. Chances are pretty good that you answered “no” to one or both of these questions. Choosing the best entity may not be the most glamorous aspect of going into business, but it’s one that can have a significant impact on your success, as well as your stress level. By working with a business planning lawyer, you can affect the taxes you pay, the amount of personal liability you take on, and even the way your business is operated on a daily basis.
Cook County business planning lawyers will be well-versed on all of the different business entities, and by learning more about your business, they can assist in understanding the advantages and drawbacks of each.
- Sole Proprietorship: The simplest business entity, there is little documentation needed, and the individual can easily transfer business and personal assets back and forth. However, this also means that the individual can be liable for the business’ obligations and debts. Taxes are filed on the individual’s tax 1040 tax form.
- General Partnership: Also very simple to form, this is when two or more individuals conduct business together for profit. Even if specific documentation isn’t needed to form a partnership, any good business planning lawyer will urge partners to create legal agreements among one another. General partners share liability for business debts and obligations. Taxes are completed on a separate form, but profits and losses are reported by each individual according to the partnership agreement.
- Limited Partnerships and Limited Liability Partnership: Unlike a general partnership, a LP or LLP must register with the state. This provides legal documentation that limits each partners’ liability for the behavior of the others. Taxes are completed in a manner similar to that of a general partnership.
- Limited Liability Company: One of the most common forms of business entity, the LLC is a company that is made of members rather than shareholders. The members are protected from liability, although there are specific laws and regulations that must be followed that are more cumbersome than for a partnership. On the other hand, the regulations are fewer and simpler than for corporations. When it comes to taxes, the LLC offers a variety of options that allow members to file in the same manner as a partnership, as a corporation, or as an S corporation.
- C Corporation: This entity is used when the business is owned by shareholders and guided by a Board of Directors whom they elect. Shareholders can vote on policy issues while the Directors have the final say. Individual shareholders generally have no liability, and the actual business operations are directed by the corporation’s CEO and other officers. The corporation files its own taxes, although shareholders are also taxed on their dividends and distributions.
- S Corporation: Cook County business planning lawyers will tell you that this is a fairly simple business entity to choose. While an S corporation is a corporation at the Illinois state level (like a C corporation), it is taxed differently than a C corporation for Federal tax purposes. Taxes are completed on a separate form, but profits and losses “flow through” to each individual’s personal return through the issuance of a K-1.
For more information on legal entities and how to choose the right structure for your business, we invite you to call our Cook County law firm at 630-908-2752 to schedule a consultation.
Estate planning lawyers in DuPage County are most often considered by folks who want to put their end-of-life affairs in order. The lawyer helps them to draw up important documents such as powers of attorney and medical directives, as well as to develop a plan for how an individual’s property will be distributed upon his or her death. Wills, trusts, executors…these are all typical topics that a DuPage County estate planning lawyer will discuss with clients.
There is also a need to protect one’s assets during his or her lifetime. Not only is this important to the quality of life, but it also helps ensure that there is property that can be left behind! Asset protection is about choosing the best strategies to minimize the potential negative consequences of liability. That includes protection from claims made against an individual, as well as claims against your assets. The former would include things such as property damage or physical harm to another that was caused by you. The latter would have to do with damage caused by something you own, such as a sole proprietorship business or property.
Commonly, if a claim is made against an individual or their property, just about everything that person owns can be put at risk. For example, a judgment against you in a court of law can give creditors the ability to go after your assets in order to be compensated for damages. It can be an unpleasant eye-opening experience for a small business owner to discover that because someone was injured in their place of business, creditors may be able to take away personal assets that have nothing to do with the business itself. If someone slips and falls in your restaurant, as the owner, you could lose your home.
While estate planning focuses pretty heavily on wills and trusts to distribute assets after death, there are advantages to utilizing these tools during an individual’s lifetime, too. A trust can be especially helpful in keeping a person’s assets out of harm’s way, which is why working with DuPage County estate planning lawyers is such an important part of a solid asset protection strategy.
Using a trust for asset protection doesn’t come without its limitations, though.
- Generally, the trust should be for the benefit of the beneficiaries, rather than the person setting it up. There are, however, exceptions to this.
- While Beneficiaries cannot be involved in the management of the trust and cannot make any changes to its terms with regard to “tax purposed trusts,” different rules apply to our new breed of “asset protection” trusts that do allow for maintaining control.
There are other advantages and limitations to using a trust for asset protection during life, and a good DuPage County estate planning lawyer will be able to work with clients to determine whether it is a useful strategy based on each individual’s needs.
The Supreme Court’s landmark decision regarding same-sex marriage brings with it many issues that are probably best discussed with a good estate lawyer in the Western Suburbs. Because of the previous inability to legally marry, many of those now looking to walk down the aisle are considerably older than typical newlyweds. This leads to additional considerations regarding a number of topics, not the least of which is Social Security.
Before the Supreme Court decision, only couples living in states where same-sex marriage had been legalized could expect Social Security benefits from/for their spouses. Now, however, there are a number of benefits that are potentially available. For example, if one spouse is or becomes disabled, the other may be entitled to a spousal disability benefit. There is also a lump-sum death benefit of $255 that a surviving spouse may claim. The surviving spouse may also be able to draw the deceased’s benefit if it is greater than his or her own. This can be tricky terrain, with the possibility of suspending or delaying retirement benefits for various reasons, so a Western Suburbs estate lawyer can be a good resource.
Of course, Social Security benefits are contingent upon meeting certain criteria. Fortunately for so many couples, one of the more basic—that of a legal marriage—can now be achieved.
Other Legal Implications of Marriage
The right to marry also brings with it a lot of legal responsibilities. It is, after all, a binding contract between two parties. Financial planning. Estate planning. Legal planning. All that in addition to wedding planning! Fortunately, a smart estate lawyer in the Western Suburbs will be able to offer insight into all of these areas. In many cases, that particular attorney can do a lot of the work for you; and if not, there’s a pretty good chance he or she knows someone who can.
One of the hard-won rights for same-sex couples is the ability to be involved in a spouse’s health care. From being able to visit one another in the hospital to having say over medical decisions, these are some of the most important benefits of marriage. While some of these rights are conferred automatically, estate lawyers all over the country will still encourage any married couple—same sex or not—to create health directives, powers of attorney, healthcare proxies, and more. Being legally married is an excellent step in the right direction, but having the proper documents puts everything into order.
Finally, don’t forget to talk to a Western Suburbs estate lawyer about a prenuptial agreement. No, a prenup isn’t generally seen as romantic, but despite waiting so long for the legalization of same-sex marriage, the unfortunate truth is that some of those unions will end in divorce. This is a typical service offered by an estate lawyer in the Western Suburbs and is one that shouldn’t be overlooked during this exciting time.
An unexpectedly common problem Schaumburg estate planning lawyers encounter is how the proceeds of an estate are handled when the beneficiary gets divorced. We don’t want to think of our children dealing with the pain of a divorce, but losing the inheritance you left behind would certainly pour salt in the wound. That’s why more estate planning lawyers are working to help clients ensure that their children get what should rightfully be theirs.
Each state has its own rules regarding what happens to inherited funds in the case of a divorce, so you want to be sure to do your planning with a knowledgeable Schaumburg estate planning lawyer. While the need to build in some safety mechanisms may be more obvious when you don’t like your son- or daughter-in-law, it’s important to remember that the future is uncertain and the only constant is change. Having a contingency plan in place just makes sense.
Why is this a big deal? Take the example of a fictitious Schaumburg couple. The wife inherits $100,000 from her parents. According to estate planning law in many states, the $100,000 will probably be protected in the case of a divorce and will revert to the wife. On the other hand, if that money had been invested in some way that caused it to grow, anything over the initial $100,000 could be considered marital property and be subject to divorce procedures.
One of the ways that an estate planning lawyer in Schaumburg will likely suggest avoiding this outcome would be to create a well thought-out trust. In order to do this, the trust would be structured in a way that allows the child ongoing access to the funds but also limits his or her “ownership” of them, therefore keeping them from becoming marital property. There are different means an estate planning lawyer can use to reach this goal, such as naming the child as a trustee or co-trustee. Trustees generally have control of the funds but not out-and-out ownership.
Additionally, a good Schaumburg estate planning lawyer may advise you to specify how the funds in the trust may be used, for example for educational purposes, although there are several reasonable ways to structure these requirements. One thing to avoid is a situation where the child receives regularly scheduled distributions, as that money could be considered marital property. Instead, the child should need to request funds from a trustee who is predisposed to provide them.
As with any area of Schaumburg estate planning law, the topic can be pretty complex, but knowing the right questions to ask of your lawyer can make a big difference in being on the right track.
One of the most complex aspects of a Cook County wills and trust lawyer’s job is making sure that a trust is properly funded. While the attorney will be able to do much of the work on behalf of the client, there are a number of documents that are needed in order to transfer assets into the trust. Each of these documents serves to ensure that the asset has been accounted for and that ownership of it has been transferred from the client to the trust.
In order to smooth this complicated process, the wills and trusts lawyer supplies clients with a list of what needs to be collected. Not every item on the list will apply to each client, but by going through and gathering the documentation that is relevant, an individual can speed up the process and make sure that their assets, as well as their businesses, heirs, and personal lifestyle, are fully protected. Some of that information includes, but is not limited to:
- Any recorded deed for property owned by the individual
- Copies of title and/or homeowner’s insurance policies
- Copy of the most recent property tax bill for any real property owned by the individual
- Deeds of trust, mortgages, and promissory notes
- Vehicle registrations, including mobile homes
- Checking and savings accounts
- Money market accounts
- Credit union accounts
- Safe deposit boxes
- Investments, mutual funds, and dividend reinvestments
- Certificates of deposit
- Original savings bonds or treasury notes
- College tuition and savings programs
Specific Assets or Credits
- Original copies of publicly traded securities held as certificates
- Deeds of trust, promissory notes, mortgages, or other financing statement held by the individual
- Shareholder agreements
- Original stock certificates
- Trust agreements when the individual is a beneficiary
- Deeds/Contracts for burial plots
- Financials and contracts for annuities
- Pension plans, IRAs, 401(k), deferred compensation, etc.
- Closely held business or professional association – corporate books
- Partnership agreements for general or limited partnerships
- Operating agreement for LLCs
- List of assets for sole proprietorships owned by the individual
While gathering each of these documents can be a time-consuming process, it is an important part of working with the wills and trusts lawyer in Cook County in laying the right foundation for your trust. Each of the items above may be used to fund the trust, and therefore a change of title, beneficiary designations, or other aspect may be in order. There are some pitfalls that can cause difficulties or delays, so getting a quick start will bring about a quicker end! Your Cook County wills and trusts lawyer will have solid advice and suggestions on how best to track down this vital information.
The short answer is: it depends.
This is a question we get a lot, and one we typically discuss at length with non-married parents during our planning sessions. When one of the parties of a divorce decree dies, this will end the custody agreement because there’s no longer anything to govern. In most cases, custody usually reverts to the surviving parent.
An exception to this is when one of the parent’s rights to the children has been terminated. If this is the case, many states allow third-parties, such as grandparents, to intervene. Grandparents can also intervene if they believe the surviving parent is not able to care for the children. The burden of proof would fall on the grandparents to demonstrate that the surviving biological parent is unfit. They would have to go through a lengthy custody proceeding that can be stressful on everyone – especially the children.
But, this can all be avoided…
The custodial parent can make it easier for grandparents (or other relatives) to step in after their passing with just a few estate planning steps. For starters, they can name an alternative guardian for the children in their will or trust. They can further explain their reasons for the nomination and why they believe the other parent is unfit.
Of course this doesn’t guarantee that the court will allow the guardianship, but it will certainly be a factor in the court’s decision. If the court approves the nomination of a guardian, it doesn’t sever the parental rights of the surviving parent; it simply states that the children will live with the nominated guardian instead.
The bottom line is that if you believe that your ex-spouse is not fit to raise your children, it is critical that you take the steps now to put an estate plan and guardian nominations in place that will be in the best interest of the kids should something happen to you. Call us now at (630)908-2752 to set an appointment with an experienced Cook County guardianship attorney if you need assistance getting started.
When setting up an estate plan, most people are concerned with what will happen to their belongings: money, jewelry, house, etc. But little thought is ever given to what will happen to their debts when they pass away, notably their mortgage.
For years, many people expected to pay off their mortgage long before they died, but the current financial landscape paints a much different picture, especially as more and more seniors take out mortgages and home equity loans to cover cost of living expenses. An analysis of data from 2001 – 2011 showed the number of homeowners aged 65 and over who held a mortgage increased from 22% to 30%, while homeowners aged 75 and over who held a mortgage more than doubled from 8.4% to 21.2%. These startling figures may prompt estate planning clients in DuPage County to ask themselves, “What happens to my mortgage if I die?”
The simple answer to that question is that after you die, the mortgage belongs to whoever inherits your house. The complications arise when it comes time to determine how exactly the mortgage will be paid off. Below are some common scenarios that DuPage County estate planning attorneys have seen when a person dies while holding a mortgage.
Your estate pays off the mortgage. This may be the most desirable scenario, though it can only occur through careful legal and financial planning. In order for the estate to pay off the mortgage, the estate must of course have enough assets to cover the debt. This may leave your beneficiaries with less cash distributions, but they will own the house free and clear. It is possible to make a provision in your Last Will or Trust to have the mortgage paid through estate or trust assets, but it is recommended that you consult with a DuPage County estate planning attorney to determine what your situation is and how to best address it.
Your beneficiaries pay off the mortgage. Of course, beneficiaries may already have mortgages of their own, so this could lead to some complications. If the beneficiaries are willing and able, they may take over the monthly mortgage payments for your house. In this case, your beneficiaries could refinance to get a better interest rate on the mortgage. If your beneficiaries already own their own home and have a mortgage, they could sell either their home or the inherited home to pay off the respective mortgages.
If the property is worth less than the value of the mortgage, confer with the lender to see if a short sale is possible. If the lender agrees to a short sale, the home would be sold for less than the value of the debt, but the estate would not be held liable for the difference or loss. You can discuss these possibilities with a DuPage County estate planning lawyer to determine what may be the best course of action to take.
It is important to review both assets and debts with your DuPage County estate planning attorney when forming your estate plan. Please contact us immediately at (630)908-2752 to set up a consultation so we may review your estate planning options.
As you work with a trust attorney in Schaumburg, you will likely end up making a list of your assets. Some of these are tangible, such as property and heirloom jewelry. Others are not so obvious and could include important documents related to marital status or military service. Each of these items is an important part of the plan you put together with your estate planning lawyer, and each needs to be kept secure and in a place where you can find it.
Oftentimes, a safe deposit box at your bank is the perfect place to keep these kinds of assets. Obviously, you can’t keep a home or a piece of property in a metal container at your financial institution, but the related deeds and titles can definitely be safeguarded in a safe deposit box. Birth certificates, marriage certificates, divorce decrees, death certificates, and military records are just some of the documents that should be safeguarded. However, you may find that you need access to them more often than is convenient to get them from your safe deposit box. A good trust attorney in Schaumburg should be able to guide you when it comes to which documents need to be kept at home and/or which ones may only require a copy at home while you keep the originals in your safe deposit box.
Who Can Access Your Safe Deposit Box?
One of the main reasons to rent and use a safe deposit box is because access to the contents is very limited. Other reasons include the fact that valuables are much less likely to be stolen or destroyed in a home invasion, fire, or natural disaster. It is possible to allow others access to your safe deposit box, and there are times when it can be a good idea. For example, the person you and your estate planning lawyer designate as the executor of your estate may be better able to do his or her job with access. Keep in mind, though, that the act of making them an executor of the estate can be enough to allow them access, although they will need the correct documentation and possibly a copy of your death certificate.
Additionally, someone you’ve given financial power of attorney may also be granted access in order to manage your affairs should you become incapacitated. In order to do this, you will need to follow the procedure laid out by your bank, which usually includes appearing in person with the other party so everyone can show identification and the new person can sign a signature card. This does mean that this person can access the safe deposit box any time, whether you are present or not, so there is some potential risk. Take care to thoroughly discuss the pros and cons with your trust attorney in Schaumburg before giving authority to access your safety deposit box to others.
Inheriting an IRA can be a financial blessing but you have to be extremely careful about withdrawing the funds. There are a number of mistakes you can make that can result in a missed opportunity for tax-deferred growth, or worse, a huge tax bill.
Luckily, surviving spouses have some leeway. It’s still tricky to transfer from spouse to spouse. But the rules for spouses are different than non-spouses.
If you have more than one child, it may seem logical to name the estate as beneficiary. This is not always a good idea. In this case, your children will be required to take all of the money out of the IRA by the end of the fifth year after your death – missing the opportunity to accumulate interest and enjoy the tax sheltering benefit.
Owners of traditional IRAs must start taking the required minimum distribution (RMD) when they turn 70 ½. Non-spouse beneficiaries must start taking RMDs upon inheriting. This means you can’t leave the entire amount in the account, allowing it to draw interest. The penalty for not taking RMDs on time is steep: A full 50% penalty on the amount that should have been withdrawn for the year!
Unfortunately, non-spouse beneficiaries can’t roll an inherited IRA into their own IRA. A separate account Inherited IRA must be set up and titled so that it includes the decedent’s name, the name of the person inheriting, and an indication of the purpose of the IRA. For example, it might say, “Rhonda Smith (deceased January 7, 2015) IRA for the benefit of Roy Smith.” If the account is split among beneficiaries, the original IRA must be split into separate IRAs and each one must be titled in the same manner.
To avoid this pitfall, name a separate share trust drafted by an experienced estate planning attorney to qualify as a permissible beneficiary of the IRA ( or your children directly if asset protection is not important to you or your children), and not the estate. By doing so, they will have a lot more flexibility. They can take annual distributions based on their own life expectancy which allows them to leave the money in the account and defer taxes.
Roth (not traditional) IRAs can usually be withdrawn tax-free. But, your beneficiaries will be prohibited from depositing them into their own IRAs and they’ll have to pay taxes on the whole amount.
The issues above are just some of the traps you can fall into when inheriting an IRA. When it comes to transferring IRAs, it is critical to seek the advice of a qualified, experienced estate attorney in DuPage County. They can help you decide whether or not to withdraw the funds or set up an Inherited IRA.
If you have questions about how to inherit an IRA or if you want to make sure the beneficiaries on your IRA are set up correctly, give our DuPage County estate planning law firm a call at (630) 908-2752 for assistance.