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Illinois Estate Planning And Probate Legal Blog

Health care directive most underused document in estate planning

Many people don't pause to think about the importance and necessity of having an estate plan. When Illinois residents do make time for estate planning, some usually neglect one crucial document: a health care directive. In fact, two-thirds of all Americans don't have this document in their plans and that may be a major error.

A health care directive outlines what the maker would want done or not done in the event of serious illness or dementia -- in other words when he or she couldn't make decisions on his or her own. A health care directive designates an individual or individuals (known as an agent) to make those decisions on a person's behalf. These documents are often known as living wills, durable health care powers of attorney or medical directives. They can also stipulate what is to be done with the body of the person granting the power after his or her death.

Estate planning for cohabiting seniors in Illinois

More seniors are choosing to live together rather than get married. There are a number of reasons for this, but these individuals in Illinois also need to take some time for estate planning -- especially since they're cohabiting. The rationale behind the jump in these statistics is that many seniors don't find marriage to be financially feasible. 

Seniors who live together without marrying need to update their wills to make sure their lifestyles don't impact their beneficiaries. Experts suggest they should also keep their bank accounts and assets separate. They also need to ensure other estate planning documents are updated and to keep them that way -- documents like a power of attorney, trusts and health care directives. There are various forms available to individuals in this situation and they're things with which a lawyer can help.

The benefits of life insurance in Illinois estate planning

There are some things that can bode very well when it comes to an estate plan. Illinois residents thinking about their estate planning decisions might want to know how life insurance can play a part in those plans. Life insurance, for one, is exempt from taxes, so when there is a sizable financial gain for beneficiaries, a testator may wish to give life insurance some important consideration. Life insurance policies can actually be used in creative ways in estate plans.

IRAs and 401(k)s are still taxable for beneficiaries whether children, spouses or others named in wills. Stretch IRAs might become limited, and in fact, Congress is looking to limit them to 10 years at most. Life insurance provides tax-exempt funds to pay off debts and to allow families to keep assets instead of selling them. When it comes to those who are married, the tax-free benefits of life insurance can be used by a surviving spouse to pay a conversion tax if the benefits are rolled into a Roth IRA.

Long term care planning necessary for unforseen events

Many have said that getting older is a privilege. But advancing age may come with the need for extra care and that costs money. The need for long term care planning for Illinois residents has never been more crucial since more than half of those aged 65 or older will have long term care costs. Statistics from the U.S. Department of Health and Human Services' Administration on Aging show that men will need help in old age for more than two years, while that number is nearly four years for women.

Nursing home costs are escalating and the cost of a private room is now more than $100,000 annually. For those who choose in-home care, a health care aide is more than $50,000 a year. Although Medicare does help somewhat, it will not usually cover custodial expenses, which could mean that a retiree's savings could be wiped out pretty quickly. Such people may end up on Medicaid, which could pay for up to half of nursing home or custodial care, but it's usually not enough.

Why estate planning should include intangible assets

It is not easy to know what type of legal and financial protections may be necessary for a person in the future. This is one reason why estate planning can be complicated for some Illinois adults. When drafting estate plans and getting important documents executed, a person will find it helpful to think beyond his or her money and health care wishes and also consider digital assets.

Although not a physical asset, a person's digital life is important, and sometimes it is also quite valuable. It is important to include these types of assets when estate planning. It is beneficial to consider what steps may be necessary to fully protect online accounts and other digital aspects of a person's life. Without including these things in an estate plan, complications for loved ones could arise in the future.

Estate planning for unmarried, child-free Illinois residents

More and more individuals are choosing never to marry or to settle down. That doesn't mean they don't spend many happy years doing the things they enjoy, having solid careers and building fulfilling lives. Such Illinois residents should still consider giving thought to estate planning. Having one's personal affairs in order is essential whether one is married or not or whether one has children or not.

Most unmarried individuals have family members who would become beneficiaries of their estates. People still need to have estate planning documents -- like wills, powers of attorney and health care proxies -- in place. If family members are thousands of miles away, some of these duties might be entrusted to honest, reliable and trustworthy friends. In any case, estate planning documents should be updated as life circumstances change.

Trusts: What do trustees in Illinois actually do?

Most individuals understand what a trust is even though they might not completely understand the dynamics of various trusts, but what about a trustee? What exactly is the role of a trustee in Illinois when it comes to administering trusts? Essentially, a trustee can be a person or an organization holding the legal title of one or more assets for another person, known as the beneficiary. Specifically, a trustee's role is indicative of the type of trust and what is included in that trust.

Assets in the trust must be kept safe and under the trustee's control. Trustees must have an understanding of the dynamics of the trust so that they can fulfill their duties, which include keeping beneficiaries abreast of any accounts and taxes. They are makers of decisions regarding the trusts they administer and are beholden to make the best decisions possible on behalf of beneficiaries. 

Safeguarding long term care planning documents

Taking the time to plan for unforeseen future events also means keeping the documents safe upon which those plans are written. Illinois residents who have taken the time for long term care planning should have those documents well-organized and in a safe place accessible for when the time comes. Not having documents at the ready could create a nightmare situation for the person who has written them and for their family members. 

Long term care planning documents could include the wishes of the person writing such plans and may provide instructions for individual care depending on health issues and needs. A care plan is a written document that records the outcome of the care planning process which includes communication with the parties involved such as family members and health care practitioners. Such a plan can be reviewed as life changes or when health changes. Some experts suggest a plan should be reviewed yearly.

The usefulness of flexibility in trusts

There is more to building a complete estate plan than simply writing a will and putting it on a shelf for years. Illinois residents may welcome the flexibility that trusts can provide in their estate plans. But these trusts should be built to be flexible so that they can change as life circumstances change and tax laws change over the years. 

There are three issues about which individuals should be concerned when it comes to trusts in an estate plan: trustee discretion, decanting and a trust protector. Discretionary trusts essentially spell out when, if and how beneficiaries will get their funds. Rules a trustee must follow can be built right into the trust. The trustee for a discretionary trust has the authority to decide if, how much and when to distribute assets to the beneficiaries of the trust. 

Long term care planning: Separation may be better than divorce

Couples who are thinking about divorce have many things to ponder. One of those may be how divorcing could affect long term care planning efforts. Illinois couples who are 55 years of age of older and who are contemplating divorce may do better separating instead of ending things formally when it comes to having enough financially for care as they continue to age. 

This is especially true for couples who don't have health care coverage. People are living longer these days, and divorce could seriously eat away at a person's savings – savings which would have been used for long term care. Women are particularly affected since many who have left marriages too early may still be too young to access a spouse's retirement or disability benefits. If a former spouse has died, access to those funds is only an option if the couple was married for 10 or more years at the time of their divorce.