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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.

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.

DuPage County Estate Planning Lawyer: What happens to your mortgage after you die?

What happens to my mortgage when I die?

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.