Category Archives: Estate Planning

Leave your Trust to your Grandchildren NOT the Government!

A Dynasty Trust in Roselle and Schaumburg Can Help Leave Your Assets to Your Grandchildren – Not the Government!

A lot of people complain about high taxes. Looking at what the government takes from your weekly paycheck can be frustrating. But, it could be worse. Even people who don’t complain about taxes (there are a few) and understand it takes money to run the government would complain if they understood that it is possible for the government to tax the same money over and over and over. And, it happens more than you think.

Here’s a scenario:

You and your spouse leave a very large amount of money to your daughter without a trust – or, in a poorly drafted trust (yikes!). The money is taxed when it is transferred to your daughter. Your daughter leaves money she inherited to your grandchildren without a trust. Guess what? You’ve got it – that money is taxed again!

It is upon learning this that a well-meaning grandparent suggests leaving the money to their grandchildren rather than the child to avoid one of those tax events. Not so fast! In that scenario the federal generation-skipping transfer tax could apply.

Here’s another scenario:

You and your spouse leave $10 million to your child. If her inheritance grew over time, it would be subject to the estate tax at her death. That could result in millions going to pay estate tax.

There is a solution that could be used to stop the government from double-dipping. It’s called a Dynasty Trust. Assets that you put in a dynasty trust, plus any interest earned over the years, are still subject to federal estate tax, but just once – when you transfer them into the trust. The assets will not be taxed again even though several generations can benefit from them.

It’s important to note here that income taxes are still due on any income that is generated by the assets in the trust. Therefore, most people choose to put assets that do not earn money in the trust, such as growth stocks that don’t pay dividends and life insurance policies.

Dynasty trusts are complex legal documents, so they should be prepared by experienced estate planning lawyers in Roselle and Schaumburg who have experience with trust and tax planning strategies. If you are interested in talking with an attorney with this experience, call our office at 630-908-2752 to set up a consultation.

Long-Term Care Insurance

Everything You Need to Know About Long-Term Care Insurance from a Roselle and Schaumburg Elder Law Attorney

Long-term care is one of the most common dangers to the life savings of senior citizens. The fear of losing assets, possessions, and homes drive people to search out ways to protect themselves from the enormous costs associated with long-term care.

Many seniors turn to long-term care insurance, which is supposed to cover them through expensive medical episodes and pay for life in an assisted living or nursing home. However, there is a lot that seniors need to know before buying long-term care insurance and deciding on the best plan for their individual situation. Elder law attorneys in Roselle and Schaumburg have laid out some of the issues seniors should be aware of when thinking about long-term care insurance.

One thing seniors should know when making decisions about long-term care is the average amount of time for stays in nursing homes. Typically, most seniors will not stay in a nursing home any longer than 6 months – if at all. Unfortunately, many long-term care insurance policies lapse before the beneficiary ever makes it into a nursing home, and if benefits are paid to the nursing home through the insurance policy, they’re usually much less than the actual cost of care. As an investment in your well-being, long-term care insurance may not hold up.

In some cases though, long-term care insurance may be a good decision – usually if you look at it in terms of a safety net rather than a be-all, end-all to paying for long-term care. Most experts, including Roselle and Schaumburg elder law attorneys, agree that long-term care insurance is a worthwhile investment only if the premiums amount to less than 5% of your monthly income – keeping in mind that your income will drop as you age while the premiums will rise. In addition, it is advised that you do not even consider long-term care insurance that does not cover assisted living facilities, as it is far more likely that you will stay in an assisted living facility for a greater amount of time than you would stay in a skilled nursing facility.

Once again, with all of this in mind, your individual situation is what will truly determine whether or not long-term care insurance is a sound investment for you. A Roselle and Schaumburg elder law attorney can meet with you to determine your situation and plan out your future needs in order to advise you better when you’re making a decision regarding long-term care insurance.

If you have any questions about long-term care insurance, or if you’d like to have your long-term care insurance policy reviewed to make sure it’s the correct one for your situation, please call our Roselle and Schaumburg elder law firm at 630-908-2752 to schedule a consultation.

5 Steps to Making a Living Trust

Roselle and Schaumburg Wills and Trusts Lawyer: 5 Steps to Making a Living Trust

A living trust is a perfect document for protecting privacy, avoiding probate, and determining who can take care of your affairs while you’re incapacitated and after you’ve passed on. It’s often an essential element for estate plans in Roselle and Schaumburg as it gives an extra layer of protection to estates and gives the trust maker, also known as the Grantor, added peace of mind that their interests will be protected and their wishes will be carried out. So before you visit a Roselle and Schaumburg wills and trusts attorney to set up your living trust, there are some issues you should start thinking about in order to give yourself the best opportunity to achieve your estate planning goals:

  1. Pick the Goals You Want to Achieve with the Trust

Each person has different needs when it comes to estate planning, and there are many goals that a living trust can help you achieve. For instance, if you want to keep your financial and personal affairs private and avoid a long, drawn out probate proceeding, a living trust will ensure your wishes are met.

 

  1. Determine What Assets You Want Protected By the Trust

Once you’ve planned your goals, you will want to decide which assets you’d like to place in a trust. Many people will put their house in the trust since it is their most valuable asset and will likely put them over the threshold when determining whether their estate will go through a large or small probate process. In addition, you may want to consider which financial accounts should go into the trust (typically those held solely in your name) and which should stay out.

  1. Decide Who Will Act as Successor Trustee
    A successor trustee will not only be responsible for the administration of the trust estate once you pass on, but may also be called on to handle your affairs if you become incapacitated, or possibly if you do not want the responsibility of handling your own affairs at a certain point. The successor trustee may also be in charge of managing any property or assets left to minors in your trust, so it is important that you choose someone with a keen financial acumen who you can trust to carry out your wishes.

 

  1. Choose Your Beneficiaries
    It’s your decision as to whom you want to leave a financial legacy for in your living trust, and it’s something that you must think about very carefully. If you make a choice to omit a family member from your estate plan who would otherwise expect to receive an inheritance from you, it may be a good idea to leave behind an explanation of your wishes concerning the matter.
  2. Hire an Experienced Roselle and Schaumburg Wills and Trusts Lawyer to Draft Your Trust
    There are a lot of do-it-yourself programs and cheap alternatives available for creating a living trust, but unfortunately, these documents are often inadequate and will not hold up under probate court scrutiny. That’s why it’s important to research experienced wills and trusts attorneys in Roselle and Schaumburg to draft your trust so you have peace of mind knowing that it’s done correctly and your wishes will be carried out.

If you have any questions about setting up a living trust, or if you’d like to have your existing living trust reviewed in order to make sure it is set up properly for your situation, please give our Roselle and Schaumburg wills and trusts firm, Haugh Law Group, a call at 630-908-2752 to set up a consultation.

Annual Estate Plan Review Checklist for Illinois Resdents

Hopefully you go to the doctor for a yearly physical. Getting a good checkup gives you a feeling of contentment
knowing you are doing all you can do to keep yourself healthy. Have you considered a yearly estate planning checkup? Going through your documents and reassessing your decisions will give you peace of mind knowing you’ve done all you can do to keep your family secure if something happens to you.An annual review doesn’t mean you have to read the legal documents front-to-back. Just go through the most important elements to make sure you would make the same decisions today. Here’s a checklist that will walk you through the process:
  • Major life changes

Have you had any life changes since you last updated your estate plan? Have you gotten married? Have you had a child? Have you recently moved from another state? All of these life changes may impact you estate planning which require your will or trust to be updated.

  • Consider your executor and/or trustee designations
Is the person you selected to be executor the person you would select today? If circumstances have changed and you now question whether this person is responsible and trustworthy you should consider updating your will or trust. Also, if you named one person, you may want to choose co-trustees who would work together. You may also want to set up additional levels in case your first choice of trustee is unable to execute.
  • Grandma’s wedding ring
Is there a particular family heirloom or other item or property that you want to go to a specific person? You might now want to update your will or trust to make sure that happens.
  • Financial power of attorney
Your financial power of attorney will act for you in a wide array of financial and business matters. It is essential that you think about the person you named and make sure that you still consider them the best choice for you.
  • Your health
Review your health care power of attorney to make sure that the person (or people) you named is someone you still trust to make major medical decisions for you. If your health care power of attorney lives in another city or state, you might want to consider naming someone local in case of an emergency.
  • Life insurance and retirement funds
While technically not a part of your estate plan, be sure to assess the choices you made as beneficiaries of your life insurance and retirement plans. Many people forget to update these after a divorce and you certainly don’t want your ex-spouse to inherit those funds.
This checklist should take you quickly through some of the most important parts of your estate plan here in Roselle, IL. If you need to update them, don’t delay. Procrastination is not your friend when it comes to estate planning!

Developing a Qualified Personal Residence Trust with a DuPage County Estate Planning Lawyer

Most people recognize that DuPage County estate planning lawyers work hard to protect their clients’ assets to maximize an estate after the individual’s death, but this is really only one aspect of the job. Estate planning lawyers help families and individuals to plan for their own futures with retirement planning, help with investment strategies to increase personal wealth, and provide legal advice on lowering the amount of taxes their clients are required to pay.

A Qualified Personal Residence Trust is a tool that can play into each of these concerns. Often referred to as a QPRT, this allows a client to transfer ownership of a personal residence to his or her children while retaining the right to live in the home rent-free for an agreed upon period of time. The parent basically has free-rein over the house, but it legally belongs to the children.

Estate planning lawyers in DuPage County might suggest this option to clients who are seeking ways to lower the value of their taxable estate. When the parent passes away, the home isn’t subject to estate taxes because the trust is not considered a part of the taxable estate. It can be a pretty great deal, especially since it also affects gift taxes positively, with less taxes owed overall due to the decreased value of real estate that comes with the stipulation that someone else can live there without paying rent.

While the parents are in residence, they are responsible for upkeep of the property. Whether it’s regular maintenance, remodeling, or real estate taxes, the beneficiaries of the trust are off the hook during the time the parents remain in the home. Money paid for these purposes is considered to be a gift to the trust. These things can get a little complicated, but a good DuPage County estate planning lawyer will be able to thoroughly discuss the advantages and disadvantages of a QPRT.

Speaking of disadvantages, there are some to consider. For example, if the property appreciates in value, there may be capital gains taxes for the children to pay. Additionally, the trust won’t lower the taxable estate value if the parent passes away before the agreed upon term has expired.

As mentioned, the QPRT is a tool that an estate planning lawyer may suggest in order to fulfill multiple needs: planning for retirement, lowering taxes, investing, etc. It’s not the right choice for every family situation, but it is something worth considering with your DuPage County lawyer.

If you are interested in learning more about QPRTs and other estate planning strategies, please contact us at 630-908-2752 or s.haugh@haughlawgroup.com to set up a consultation.

Schaumburg Estate Lawyer: 4 Steps to Avoid Stress at the End of Life

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

A Helpful Look at the Differences between Estate Planning and Asset Protection in DuPage County

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.

  1. Generally, the trust should be for the benefit of the beneficiaries, rather than the person setting it up. There are, however, exceptions to this.
  2. 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.

Western Suburbs Estate Lawyers Consider Same-Sex Marriage and Social Security

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.

Estate Planning Advice to Protect Your Children if They Get Divorced in Schaumburg

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.

Schaumburg Trust Attorney: Tips When Storing Valuables and Documents in Safe Deposit Boxes

Storing Valuables in a Safe Deposit Box

Close-up portrait of a happy senior couple at home

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.