If you’ve recently married, remarried, had children or grandchildren, or had other new life events, you may not yet have an estate plan. But in any stage of life, it’s important to make arrangements for your loved ones.
Whether you’re starting your estate planning or are regularly reviewing it, a will is an integral part of the overall plan. If you don’t have a will yet, the best time to start is now. Once you’ve finished the will, move onto your estate plan.
Writing a will is a list of instructions for the disposition and distribution of assets and property at the time of death. In it, an executor or trustee is named to take care of the decedent’s stated wishes. It’s important to select an executor who will be able to locate all assets, pay the estate’s debts including income taxes, and file the final tax return for the deceased.
The will must go through probate, a court-supervised proceeding, which can take anywhere from a few months to as long as two years, depending on the complexity of the estate.
If there are minor children, a will also designate who will have custody going forward. This is especially important to address in the event that both parents die at the same time. In the case of a divorced parent, the will should also address whether the other parent should have custody. Should the other parent not have custody, arrangements for visitation should be set.
If someone dies without a will, the state of Illinois will take over and handle the estate accordingly. This means that assets in your name will go through probate, and everything distributed according to the state’s intestacy laws. However, the state’s plan may not work the way you’d hoped, and your spouse, children, or other beneficiaries may not receive what you wanted. Even worse: a relative that you had no intention of giving anything to could inherit your assets.
Remember that the only valid will is the one that is current and valid at the time of your death. Therefore, reviewing your will regularly is a good idea to keep it updated and valid. You can’t go back and change it if you’re incapacitated or gone.
The Estate Plan
A will is simply a document with directions. But it’s part of an overall strategy to help preserve and distribute assets without going through the probate process. The idea is to preserve assets to provide for a surviving spouse and children, funding for the education of children and grandchildren, or leaving a legacy to a favored charitable cause.
Estate planning is preparation for the necessary tasks to handle and distribute assets when a person becomes incapacitated or passes away. These assets can include real estate, jewelry, vehicles, and other valuables. They can also include family wealth, life insurance, pensions, and retirement plans.
The first step in estate planning is writing a will, but it isn’t the entire estate plan. It’s important to also name an executor and establish beneficiaries for both the will and for the estate plan distributions. You’ll also make other decisions, such as:
- Adding and/or updating beneficiaries on things like life insurance, retirements, and 401(k) accounts
- Naming a guardian for minor children, and for other living dependents (i.e., disabled child, elderly parent)
- Making funeral arrangements
- Arranging trust accounts in the name of each beneficiary to limit estate taxes, keep it out of probate, and make the transfer easier
- Set up a durable power of attorney to transfer other investments and assets
- Further, reduce your taxable estate with annual gifting to qualified nonprofits and charitable organizations
Another aspect of an estate plan covers your affairs if you are incapacitated and unable to take care of things for yourself. Do you let your family scramble around trying to handle your affairs and arrange your medical care—or final arrangements?
An estate plan will also include powers of attorney for:
- Transactional (buying and selling on your behalf)
Medical directives for the possibility of incapacitation should also be added into the estate plan, along with a HIPAA authorization. These documents allow someone to make health care decisions on your behalf. Both documents should be “durable,” meaning that they remain in effect during the entire period you are incapacitated. Another general or “durable” power of attorney may or may not be included.
Estate planning is an ongoing process and should be updated regularly as your circumstances change. While it’s difficult to predict a future state when you’ve passed away, making the best plan can make it easier for your survivors when they need all the help they can get.
For both incapacity and death, an estate plan gives you control over what happens at the appointed time.
Let Provenza Law Guide You Through Estate Planning
Work with an estate planning attorney who understands estate planning law and can help you design an estate plan that’s right for you and your family. James C. Provenza is an Illinois estate planning attorney with more than 25 years of estate planning experience. Call our firm today at (847) 729-3939, or use our online contact form.