Estate Plan Review
The Law Offices of June, Prodehl & Renzi, L.L.C. have been in existence for over twenty years. We have extensive experience in estate planning practice and seek to provide the most up-to-date and relevant information for our clients. We believe that it is essential for any individual to seek the advice of an attorney for an estate plan. We are specifically trained through our practice to identify your individual needs and ensure that your estate plan will provide for your maximum independence and respect during your lifetime and will disburse your assets in a manner you decide upon your death.
This review is not intended and can not be construed as a substitute for legal advice through an attorney-client relationship. The use of any information in this documentation will not constitute an attorney-client relationship with the Law Offices of June, Prodehl & Renzi, L.L.C. or Jennifer M. Lynch. This information must only be used as a guideline for your discussion with a qualified attorney in the preparation or utilization of an existing estate plan.
Powers of Attorney
A power of attorney is a document in which you appoint another individual to make decisions on your behalf. The individual singing the document is called a “principal” and the individual appointed is called an “agent”. In Illinois, these documents, the power of attorney for healthcare and the power of attorney for property, have been reduced to a statutory form which is most commonly utilized by attorneys and health care providers. Although other forms may be used, the statutory form should generally be used because it will trigger all statutory protections, including protections for health care and financial institutions who may rely on the form.
Regardless of the form, it should include a start date and ending date. You may choose to make the document effective immediately or chose a later date, such as a determination of your disability. You should also consider naming successor agents in the event that your primary agent is unwilling or unable to accept the responsibility at a later date. The specific powers of an agent do supersede the powers of a court appointed guardian to those specific matters. Because an agent can only be removed through complex court proceedings, it is essential to take great care in naming an agent and review this document regularly. The document can be revoked at any time, often even during a period of incapacity.
A power of attorney also creates a special relationship between the principal and agent known as a fiduciary relationship. A fiduciary relationship requires that an agent take special care to manage the principal’s affairs independently and prudently. By simply naming an agent, the agent is considered your fiduciary, even if they never take any actions. This does create unique legal responsibilities, especially in the area of gifting.
Statutory Power of Attorney for Healthcare
In this document, you appoint an agent to make healthcare decisions on your behalf. The document will allow your agent to make arrangements for the disposition of your remains upon your death. The form does allow you to make a decision regarding organ donation. Most importantly, the form does allow you to make a general statement regarding life-sustaining treatment, whether you wish to be kept alive at all costs or you wish to avoid life sustaining treatment. These provisions may supplant the need for a Living Will. You may add additional provisions regarding your wishes for certain medical procedures, especially in the case of faith beliefs. The document must terminate no later that the disposition of your remains.
Statutory Power of Attorney for Property
In this document, you appoint an agent to handle financial affairs on your behalf. This can be very expansive or very limited. If you have any trusts, especially a land trust, you must specifically address them. This document can terminate no later than your death. By statute, your agent is required to keep an accounting of all actions taken. This document can be further tailored to include additional financial protections.
Guardianship is the court process in which a court determines that that an individual is disabled to some degree and needs assistance. The disabled person is often referred to as a “ward”. Guardianship is strictly a legal proceeding and can not be completed outside of a courtroom.
Guardianship proceedings are initiated by a petition alleging that the ward is unable to manage personal or financial affairs. Anyone can file the petition – not just a family member. The petition will include a report of a physician setting forth the ward’s limitations or will ask that a Judge appoint a medical doctor to examine the ward. The petition must also state estimates on the ward’s income and assets and include the names and addresses of each of ward’s immediate family members. The petition will then state the name of the person who is nominated to serve as guardian.
Often, a petition for guardianship is accompanied by a petition for temporary guardianship. A temporary guardianship may be granted before a formal decision is made on the final guardianship if a Judge determines that the ward’s immediate welfare would otherwise be in jeopardy. It can last for a maximum of sixty days.
A guardianship is not granted until the ward is personally served with a copy of the petition and another individual called a “guardian ad litem” speaks with the ward and informs the ward of all rights accorded under a guardianship proceeding. Additionally, a copy of the petition must be sent to all family members of the ward at least fourteen days before a court may make a decision on the matter. Each family member may object to the guardianship. The ward may also contest the proceeding and ask for such relief as a court-appointed attorney and a jury trial.
If a guardianship is granted, the court will appoint a guardian of the person and the estate. The same individual can serve in both capacities. The duties of the guardian are limited to the actual needs of the ward and may still allow the ward to make some decisions. A guardianship can be terminated for such reasons as the recovery of the ward or the death of the ward.
A guardian has extremely detailed responsibilities. A guardian of the estate is also often bonded. Like an agent under a power of attorney, a guardian is required to keep accountings. The accountings must be presented to and approved by the court on a regular basis. The guardian may not take actions including making gifts of a ward’s estate, selling real property or placing the ward in a residential facility or nursing home without specific court authority.
Guardianships are often used to appoint individuals to care for minors whose parents are unable or unwilling to provide care. A minor guardianship also does require strict statutory procedure. Minor guardianships are appropriate in many circumstances such as grandparents caring for grandchildren because they may enable the grandparent to carry health insurance. A minor guardianship can not be initiated for the sole purpose of registered a child for school.
A Will is a written formal declaration in which you set forth how you wish for your assets to be distributed upon your death. In Illinois, this document must be written and properly witnessed in order to be valid. The individuals who receive money as a result of your Will are referred to “legatees”. The person named to be responsible for the disbursement of assets is often called an “Executor”. Just as in a power of attorney, you can name successors. In a Will, you are given the opportunity to nominate guardians for minor or disabled children. The process in which a Will is administered is referred to as probate proceedings.
A Will can allow for flexibility for the disbursements of assets to your legatees. For instance, special provisions should be included for children and disabled persons. In Illinois, you are not required to leave any certain sums to specific individuals, including a spouse and children. However, there are statutory means in which these same individuals may force a share of your estate.
After your death, any individual who has possession of your Will is required to file the Will with the court within thirty days. The Will is not an active document until after your death and after a Judge admits the Will to probate, or finds that the Will meets basic statutory requirements. Likewise, an Executor has no power until appointed by a Judge. The Will only has control over assets left in your own name upon your death. For example, a home held in joint tenancy with another living individual will not become part of your probate estate unless other proceedings are initiated.
The process to admit a Will does not occur until an individual submits a petition to a Judge alleging that you had assets in your own name upon your death and that a Will exists to direct payment to your legatees. After a Will is admitted, the Will is subject to contest proceedings. Any legatee or heir, an individual who would inherit from you if you had no will, may file a petition to challenge your Will. The petition may allege circumstances such as your incompetence at the time of signing the will to undue influence exerted by a legatee in drafting your Will. A Will contest can be a lengthy and expensive procedure. No disbursements are generally made from an estate until the contest is settled.
In addition to a contest, creditors have an opportunity to file claims against your estate. A creditor may not file a claim later than six months after notice of the probate proceedings is published or two years after your death. Creditor claims are ranked based on their statutory priority. The first claims that must be paid are for attorneys, funeral expenses, executors and custodial claims. As a note, Illinois attorneys should not charge a percentage fee to handle an estate. Instead, attorneys are required to bill based on their actual time and expertise. Other than these initial claims, other priority claims include awards to spouses and children and debts to the government. The last claims to be paid are those to general creditors, such as credit card holders. It is only after all claims are paid or otherwise disposed of that any disbursements can be made to a legatee.
A Will is an appropriate estate planning document for most individuals over eighteen years of age. They can be specifically helpful in shielding assets in the event that your debts exceed your assets. Even if you do not have any significant assets, a Will is a necessary document to complete if you have children.
A trust is a written document which sets forth the means in which your assets can be managed and distributed. A trust written during your lifetime and controlled by you is often referred to as a “revocable” or “living” trust. The writer and owner of the trust is referred to as a “grantor”. The individual responsible for the management of your assets is called a “trustee”. The major difference between a trust and a Will is that a trust is active during your lifetime.
Trusts are unnecessary for most individuals. They are most appropriate for individuals who have real property in multiple states, have assets exceeding estate tax limits, are in a second or more marriage, for individuals who wish to make “unpopular” dispositions, or in when a beneficiary may need immediate support. A trust may be used to disinherit individuals who are expected to challenge a decision as a trust can be more difficult to attack in court proceedings.
Trusts are ineffective unless they are funded. Funding means putting property into the trust. This may include deeding real property into the name of the trust or making life insurance proceeds or investments payable on death to the trust.
The main advantage to a trust is the more immediate access to the trust assets upon the death of the grantor. This may be especially helpful for children or disabled beneficiaries. Additionally, although it is possible, trust assets are often not seized by creditors.
Currently, there is much disinformation about trusts. Trust seminars often disseminate this disinformation. Unlike you may hear at a seminar, trusts do no provide lifetime creditor protection nor do they shield assets from Medicaid or other public assistance programs. Additionally, they are much more expensive to create – often five to six times the cost of a simple Will.
Other Estate Plan Documents
There are other various estate planning tools that an attorney may utilize in the creation of a plan for your estate. These may include a Living Will, the Declaration for Mental Health Treatment, the Disposition of Remains Declaration, a Land Trust, or special trusts. These documents are usually used in certain cases and may not be required for a general estate.
Meeting with an Attorney
An attorney is only able to create a useful estate plan if you provide the attorney with all pertinent information. An attorney will need to know the names of all of your immediate family members and a breakdown of all of your assets including retirement and life insurance policies in order to help choose the appropriate estate planning documents for you. You should also be prepared to discuss any issues of disabilities in your family as well as any specific faith beliefs you may have with your attorney. An attorney may serve as a witness to your estate plan in contested hearings and should be able to fully explain your position. The most difficult decisions you will need to make is to nominate caregivers for children and yourself. You should feel comfortable to ask questions of your attorney regarding any concerns you have, including any rumors about estate planning or probate proceedings you have been told. The entire process can be completed in a short time. You are encouraged to seek advice as soon as you are able.