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Frequently Asked Questions

Hinsdale asset protection lawyer FAQ

What Is a Basic Estate Plan?

A basic estate plan generally consists of four documents: a will, a revocable trust, a health care power of attorney, and a property power of attorney. A basic estate plan accomplishes the following goals: (1) creates administrative efficiencies to keep you out of guardianship and probate court; (2) provides for your beneficiaries and the administration of your estate in the manner you dictate; (3) minimizes estate taxes and income taxes associated with the transfer of assets; and (4) provides asset protection for beneficiaries.

What Is the Minimum Recommended Estate Plan for a Young Family?

A young family just beginning to build their wealth may not have the immediate need for revocable trust planning. In this instance, a will with testamentary trust provisions may be utilized along with a health care power of attorney and a property power of attorney. The will incorporates a trust so that assets do not transfer directly to a minor child, which would necessitate court proceedings. The will also includes guardian provisions so that you may name the person(s) whom you would like to take care of your minor children (rather than allowing a judge to make this determination).

What Is a Revocable Trust?

A revocable trust is a private document that you control during your lifetime. Since you have the power to amend the revocable trust, it uses your Social Security Number for tax filings and does not require additional tax returns to be filed. The purpose of the revocable trust is to act as a management vehicle for your assets and to allow for their efficient estate administration. Unlike a will, a revocable trust does not get filed with the court following your death, and it will remain a private document. The revocable trust sets forth your tax planning (there are many tax planning techniques dependent on your situation), and it provides for your beneficiaries in the manner that you choose. Assets funded into the revocable trust are not subject to probate court, and your successor trustee has immediate authority to act without needing a judge's order.

Does a Revocable Trust Provide Asset Protection for Me?

No. Assets that you transfer to a revocable trust are still considered your property for asset protection purposes. There are other types of trusts that can provide asset protection from potential creditors. Your revocable trust can, however, provide asset protection for your third-party beneficiaries (your spouse, children, etc.).

Why do I need Powers of Attorney?

A power of attorney allows you to appoint an agent to step in your shoes and act for you, as a fiduciary, at a time when you are unable to act. With a power of attorney you appoint the agent that you desire, rather than relying on a judge to make your guardianship determination in the event of your incapacity. The agent you appoint as your health care power of attorney is able to make medical choices on your behalf. This medical agent can be a different individual from the person that you trust to make the best financial decisions on your behalf. The guardianship process is very expensive because courts are reluctant to remove a person's legal decision-making rights. Guardianship can be avoided in most cases by including powers of attorney in a comprehensive estate plan.

What Are the Most Common Estate Planning Issues That You See?

  • Failure to fund a revocable trust with assets. In these cases, probate administration is still necessary to fund the trust.
  • Appointing the correct successor trustee or successor co-trustees to administer the estate. Individuals or corporate trustees may be utilized.
  • Providing assets to beneficiaries without the proper guidance, structure, and guardrails to support their lifestyle.
  • Life insurance proceeds adding to the value of an estate. This can result in additional estate taxes. It is usually preferable to hold insurance in an irrevocable life insurance trust separate from a decedent's estate.
  • Closely-held business shares being transferred equally to children, which can cause managerial issues. Business owners should consider how to treat children fairly with other assets, and allow for children or other family members who are active in a business to own the business equity.
  • Old plans that have not been modified to consider the changes in the federal estate tax exemption, current income tax laws, and state estate taxes.

Trust Attorney for Illinois and Florida

Ellsworth Law, LLC is experienced in creating strong and effective estate plans. We have been preparing plans for clients for over fifteen years. Contact us to schedule a complimentary consultation. Ellsworth Law, LLC serves clients primarily throughout Cook, DuPage, Lee, Collier, and Miami-Dade Counties.

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Hinsdale, IL 60521

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