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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.

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!

Moving Assets into a Trust with a Wills and Trusts Lawyer in Cook County

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:

Real Property

  • 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

Financial Statements

  • 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.

Business Documents

  • 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.