Even while many people still think of the family in terms of the nuclear family, consisting of “only a father, mother and children,” the reality is that the majority of families in the Unites States no longer fit into the “traditional family” architype. Families now take on so many different forms that it is difficult to make general assumptions about how a family might be structured, let alone about the dynamics of an individual family.
Despite the diversity of American family structures, laws regarding intestate succession are written with generalities in mind. In Illinois, the estate of a person who dies intestate (without a will) is divided into percentages for that person’s spouse, and children, or other relatives in the absence of either of these. Not surprisingly, the laws do not and cannot account for the reality that the relationships within families are incredibly complicated. The “modern family,” whose defining characteristic might just be its tendency to be unique, creates countless ways in which the default rules of intestate succession might fail the average American family.
For example, stepchildren do not inherit from their stepparents (absent adoption). This would hold true even if a stepparent might have raised and supported a child from a very young age and treated that child as his or her own. Additionally, half-siblings are treated the same as full siblings- which might be exactly what many people would wish for, however, it would hold true even if one of those half-siblings is the deceased’s much older and estranged sibling whom he or she has never even met.
Because of the law’s inability to accommodate the endless possibilities, it is of great importance that individuals take the time to plan for their own families. In the case of blended families, this often means that a parent wishes to design a plan that is fair both to their children with a previous partner, and their current spouse, as well as their children with their current spouse. This might mean a percentage left to the spouse and to each child, but it also might mean that a greater amount could be set aside for younger children if the older children from the previous relationship have already had their college tuition covered. A testator might trust their spouse to provide for the children that they have together, but wish to have the assets set aside for their children with an ex-spouse protected in a trust.
Proactively taking steps to provide for the people you care for is an important way to protect them from suffering from default rules that are based on generalities. Additionally, planning ahead now, and explaining your decisions to your family is the best way to encourage family harmony in the future. Your estate plan should be designed to protect you and the small group of people that make up your own unique family.
Sarah Roberts - WillCounsel attorney
The True Costs of Estate Planning - Part 3 "What is a Revocable Living Trust and what are the Benefits"
In Parts 1 and 2 of “The True Costs of Estate Planning” it was discussed that at a minimum, having a Will is priceless to protect your young or disabled children and although you can save money in probate by having a valid Will, you can potentially save thousands of dollars by also having a Revocable Living Trust.
So, even though there are many different types of trusts, we are going to focus on just the Revocable Living Trust and its benefits. Simply put, a Trust is two things:
*In a Revocable Living Trust, the initial grantor is usually the initial trustee thereby allowing full use, transfer, and access to all assets.
Once the trust is signed by the Grantor, the Grantor puts the assets into the trust, aka “funding the trust.” There are different rules for different accounts, but essentially, the assets are titled in or granted to a different name. For instance, prior to establishing my trust, my bank account was titled in my name, J. Denise Arnold. After I established my trust, it is now titled in the name of my trust, the J. Denise Arnold Family Trust, J. Denise Arnold, Trustee. I still have complete control over my bank account and can still deposit, withdraw and transfer all funds from my account the same as when it was in my name only. Also, I can name the trust as the beneficiary or contingent beneficiary of any accounts that have a beneficiary designation, such as life insurance or an IRA. (I highly recommend working with a financial advisor with this part!)
There are three main benefits of a Revocable Living Trust.
1. It avoids probate. As stated before, up to 5-6% of your estate can be spent in probate. A trust allows the gathering and distributing of assets without continual court appearances and court supervision which allows your heirs to receive their assets quicker and not as much money spent on court and attorney fees.
2. You, as the grantor, can choose when your children receive their inheritance if they are young when you pass away. With only a Will, children could receive large sums of money at 18 years old; however, a Trust allows you to choose varying ages, such as your children receive ½ of the trust principal at 25 years old and the other ½ at 30 years old.
3. It helps in the event of the disability of the grantor. If you become disabled, a successor trustee has immediate access to the trust assets. A trust can be written to require the successor trustee to use the trust assets for your care and comfort if you become disabled.
One added benefit of a trust is that it helps you to get your accounts and financial affairs in order when funding your trust. This is a huge blessing to your family when you are no longer with them. This isn’t all the information on a trust, but hopefully it helps you and your family make a decision on whether a trust is right for you. Dee Arnold – WillCounsel Attorney
Many families choose to draft and sign a Will because they want to appoint guardians for their minor or disabled children and choose executors to wind up their affairs. However, one of the biggest misconceptions of why people draft a Will is that a Will avoids probate. To be clear, a Will does not avoid probate. Having a valid Will helps the probate process proceed in a more organized manner as discussed in Part 1 of this Article, but you will still be under court supervision for the opening and closing of your estate and the gathering and administering of your assets.
Generally speaking, if not complex or contested, a probate proceeding in Illinois lasts 9-12 months or longer. This is because there is a set timeline of procedures. First, the Will must be filed with the County; then the Executor has 30 days to present the Will; then within two weeks the Executor must send notice to all named heirs and those who might inherit if the Will is proved invalid; then a claims notice must be filed for three consecutive weeks to notify any creditors who then have 6 months to file a claim against the estate; then the assets can be distributed. During this process, the executor also gathers assets; pays expenses; pays taxes; and performs accountings. If this process runs smoothly, that is already 9 months of court appearances and numerous documents to prepare. The worst part, though, is your family has to wait to receive your assets since the assets can’t be distributed until the set procedure takes place.
Also, it is calculated that on average, due to lawyers’ fees, court fees, etc., that probate costs 5-6% of your gross estate. Your gross estate is everything you own, with a few exceptions. It includes things such as property you own and life insurance. So, if you have a $200,000 estate, that’s $10,000 for probate costs!
So, how can you avoid probate? One way is to have a revocable living trust with your Will. The revocable living trust allows the gathering and distributing of assets without continual court appearances and court supervision which allows your heirs to receive their assets quicker and not as much money spent on court and attorney fees.
Stay tuned for Part 3 – “What is a Revocable Living Trust and what are the Benefits?”
Dee Arnold – WillCounsel Attorney
For decades, many have failed to draft and sign a Will and die with no estate plan in place. In fact, based on various sources, between 55-60% of people do not have a valid Will. Reasons vary as to why, but one of those is the question “how much does a Will cost?” I think the more appropriate question is “how much will it cost if you don’t have a Will?”
In my previous articles on this site, I discussed what happens when someone does not have a valid Will when they die. There is a huge emotional cost if the parents die without a Will and therefore have not chosen guardians to raise their children. There is also a huge burden, financially and emotionally, when someone who is married with children passes without a Will, since it results in the surviving spouse receiving only one-half of the assets. (See articles posted in May and June) These two reasons alone, I believe, make a Will priceless, but let’s talk actual monetary costs of not having a Will. Probating an estate with or without a Will goes through very similar processes, with a few exceptions. These two exceptions are discussed below and can add additional expenses to the probate process.
When a person dies with a valid Will, their Will appoints an executor. However, if there is no Will, prior to commencing probating the estate, the Court will appoint an administrator. This adds an extra court date since the person wanting to be appointed as the administrator will need to file a Petition with the Court and give notice to the heirs of their intent to be the administrator. If no one objects, the Judge can appoint the administrator; however, if any of the heirs object, this could lead to additional attorneys’ fees and court dates. All the while, the decedent’s assets remain tied up and inaccessible to your heirs.
Once the administrator is appointed, Illinois law requires a surety bond to be paid. This simply means that the administrator ensures he/she will perform their duties properly. In Illinois, this usually ranges from a few hundred dollars to a few thousand dollars based on the value of the estate. However, the surety bond can be avoided altogether with a Will since most Wills have a clause that states that the surety bond is waived and is not required to be paid.
So, your estate has likely already spent a few extra thousand on legal fees and surety bonds because you don’t have a Will and your estate hasn’t even started the formal probate process! This is money that could have gone to your family but instead was paid to lawyers and for court fees. Isn’t it worth spending a little money now on your Will than spending thousands later?
Stay tuned for Part 2 – the True Costs of Estate Planning “Probate and How to Avoid It.”
If you die without a valid will in the State of Illinois, a “default” estate plan has been made on your behalf based on the laws of intestate succession. Under these laws, the State of Illinois has already determined who your “heirs” are; thereby deciding who gets any property that passes through probate and when they get it. (Note: Some assets do not pass through probate, including, but not limited to, accounts or real estate with joint ownership, accounts with beneficiary designations, pay on death designations or transfer on death designations.)
Shouldn’t you and not the State of Illinois decide who receives your assets and when!?
Sometimes these laws distribute your assets to your loved ones as you would have intended. For instance, if you are married with no children at the time of your death, according to the law, your spouse receives everything. But according to these same laws, did you know that if you are married and have children at the time of your death your probate assets would be divided with one-half going to your spouse and one-half divided in equal shares among your children? The questions that arise with the State’s default estate plan are plentiful.
1. What if the surviving spouse needs all the assets for his/her support and financial survival? This is often the case for couples who have older children who are able to support themselves without their parents’ help.
2. What if the children are under 18? Although the children’s one-half share would be used for their support while minors, they would have full rights to their remaining share at 18 and can spend it on anything they want. Further, they can ask the surviving spouse or guardian for an accounting of the funds, and if they don’t believe the funds were handled properly, they can file a lawsuit against the surviving spouse/guardian.
3. What if you want to leave unequal shares to your children? The laws say that each child receives an equal share.
4. What if you want to leave some money to your church, school or a charitable organization through your will? The laws don’t account for this.
5. What if you have a family member with special needs? Even a small inheritance could make them ineligible for needs-based government assistance.
6. What if you have step children that are not legally adopted? Those children who you treated as your own emotionally, would not be treated that way by the State and would not automatically receive part of your assets.
7. What about unmarried couples? Under the State’s current law, the surviving person would have virtually no rights.
Obviously, this is not a full explanation of the laws of intestate succession, but it definitely should get you thinking about whether you want to decide to whom your assets go, or if you want the State of Illinois to decide.
There are no two identical parenting styles. Parents can be a combination of strict, hovering, laid back, or authoritative. Despite differing parenting styles, I believe that most parents are just trying to provide the best life for their kids, with the goal that they grow to be well adjusted members of society. In trying to obtain this goal, from a child’s birth parents make endless choices, both little and big, including what they eat, where they live, what they watch on TV, where they will go to school, what religion they will practice, what sports and activities they will do, and more. Parents help kids work through hard times and celebrate fun times. Parents know the way they laugh and cry, know their fears and dreams and know what is best for their own kids. So, why do so many hesitate to make one of the most important choices for their children... choosing a guardian to care for their children if the parents are no longer alive. This is an extremely hard choice for most parents, but as the parents, who know their children better than anyone, shouldn’t they be the ones to choose? It’s estimated between 55-68% of people don’t have a Will and therefore haven’t legally chosen a guardian. The result of not choosing for your children is that you leave it in the hands of someone who doesn’t know you, your family, or your wishes. A judge will choose for you and without your input. The judge may have to decide between clashing family members and your kids may end up with someone of whom you never would approve. Further, your kids are in emotional limbo while waiting for a judge to decide! It’s scary to think of not being here for your kids and no one could ever replace you as parents, but you can choose the next best thing for your kids, a guardian. To choose someone who will parent and love them like you do is the best choice you can make for your kids.
If you're married with young children, you might assume your spouse would receive your entire estate if you pass away without a Will. Surprisingly, that's not the case. If you don't have a Will when you die, your estate would be distributed according to the state's default inheritance rules. You may be dismayed to learn that those default inheritance laws direct only half of your estate to your spouse, and the other half to your children. Worse yet, if any of your minor children inherit part of your estate, your representatives may be required to set up expensive court guardianships for each child. A Will allows you to override the default inheritance rules, ensuring your entire estate goes to your surviving spouse.