Aurora Illinois Estate Planning Lawyer: Fundamentals of Estate Planning

 Posted on December 30, 2022 in Estate Planning

The fundamentals of estate planning are the way to build financial security. An estate planning attorney assists clients anticipate future problems and develop a solution to these potential conflicts. Estate planning and asset protection combine to set-up roadblocks and prevent future liability concerns by setting up limited liability companies and other liability protection strategies devised to maximize asset protection.

Living Trust are Smart Estate Planning

A living trust is a legal instrument that appoints a trustee to over see and manage one’s financial assets. A person or couple create a written agreement called a “trust agreement” where they are appointed as co-trustees to manage their property interests. The goal of living trust is to create an easy transition of one’s assets upon a death or incapacity. A living trust differs from a last will and testament because it avoids probate processes and court procedures. Second, a living trust is a private document, which is shielded from the public view. 

On the contrary, a last will and testament must be filed at the local courthouse. A last will and testament must be probated and approved by a Judge to be implemented. An estates and trusts attorney must notify heirs and legatees of admittance of the will, which invites estate conflicts. Estate conflicts costs thousands of dollars and produce headaches. Headaches are the opposite of smart estate planning. Smart estate planning is providing loved ones with easy administration of one’s assets in case of a death or incapacity. 

Unlike a last will and testament, a living trust avoids court processes. A living trust passes outside of probate and without the need for probate because a family’s assets are re-titled in the trust name. By re-titling assets in a living trust’s name, the asset transfers outside of probate court to one’s loved ones.

Smart estate planning consists of utilizing joint trust and single trust when appropriate. A joint trust is a legal arrangement set-up by a married couple (or partners) to co-manage their financial affairs. A Co-Trustee arrangement is set-up to transfer one’s marital assets to the surviving spouse upon a death or incapacity. A well-written trust agreement sets forth written powers and responsibilities of the co-trustees, which provides that any trustee may bind the trust. The trustee powers provide similar powers as a couple typically has, but the difference is the powers are written down. 

A single trust is appropriate when a couple is a blended family. A blended family is a family involving stepchildren and stepparents, which often have suspicions and conflicts. These suspicions and conflicts result in thousands of dollars in estate conflicts when mismanaged. One’s assets are transferred in a manner that minimizes the legal risks.

Advanced Healthcare Directives and Powers of Attorney for Medical Decisions

An Illinois Short-Form Statutory Power of Attorney for Healthcare (“power of attorney for medical decisions”) is a legal document where a person appoints an agent to make medical decisions if they cannot make the decisions. A power of attorney for medical decisions empowers a spouse or child (in most cases) to make health-related decisions for a person when they are incapable or have diminished capacity to understand their medical decisions. A medical power of attorney is smart estate planning because healthcare is a major legal risk. The medical power of attorney provides a person protection against medical legal risks by appointing a loved ones to make medical decisions in their incapacity. Incapacity may be full or partial incapacity meaning that one is limited in understanding the impact of medical procedures. These medical procedures may require the expertise of a loved one or the ability to make joint decisions. A medical power of attorney will provide vital information to a party and provide a HIPPA release. 

The HIPPA release enables a medical provider or doctor to release relevant medical information to a trusted loved one. Information assists an agent to have relevant information to give advice and counsel.

Illinois Short Form Power of Attorney for Finances Provides Peace of Mind and Reduces Financial Risks

The second type of power of attorney involves financial decisions. This type of power of attorney is called a power of attorney for property. In Illinois, the legislature has created a specific form to appoint people to be legally approved to make financial decisions for another. This type of power of attorney is called an “Illinois Short-Form Power of Attorney for Property” or otherwise called a financial power of attorney.

A financial power of attorney empowers another person to make financial decisions if they lack capacity or need assist in transacting financial transactions. The person creating the power of attorney can create and modify the financial powers that a person enjoys. Most people desire to give their agent broad powers. These broad powers assist the creator of the power of attorney for property manage their financial assets and minimize legal risks. Without a power of attorney for property, legal proceedings called a “guardianship proceeding” may be necessary.

A guardianship procedure is a sub-set of a probate because it involves a court appointing a guardian to make financial, estate, and/or personal decisions for a disabled adult. Accidents, diseases, and health problems produce significant legal risks, which may be addressed in a smart estate plan.

Pour Over Will

A Pour Over Will is a type of will used with a living trust. The pour over will be a safety device, which transfers one’s assets to their living trust upon a death. Unlike a traditional will, a pour over will leave one’s financial assets to their living trust. The benefit of this approach is privacy and ease of administration. A Pour Over Will also minimizes estate costs by waiving the need for a surety bond. A surety bond is a type of insurance providing insurance against the risks of an executor’s malfeasance. A pour over will be a type of will that provides a catchall exception in the event that a person fails to transfer their assets to their living trusts.

Aurora Illinois Estate Planning Attorney: Providing Guidance and Strategic Counsel to Minimize Risks and Provide Peace of Mind Estate Planning

In summary, smart estate planning consists of building a strong legal foundation. Building a strong estate foundation consists of providing the following estate plan documents:

• A Revocable Living Trust

• A Pour Over Will

• Medical Power of Attorney

• Financial Power of Attorney

Peace of Mind Asset Protection, LLC provides peace of mind asset protection by assisting couples and individuals with their estate planning decision-making. Drafting estate documents is a small part of an estate planning attorney’s job. An estate planning attorney assists people anticipate family conflicts and problems, which they cannot anticipate. Family conflicts are difficult to anticipate because people have blind spots. These blind spots are where the legal risks arise and produce conflicts, which compromise peace of mind and produce legacies of shame and regret. Call an estate planning attorney today at 630-882-2467 or fill out the contact form.