Legacy Planning For Your Estate

Illinois & Missouri Legacy Planning


The estate planning toolbox includes a number of available techniques, including the transfer-on-death (TOD), pay-on-death (POD), Last Will and Testament, Pour-Over Will, Living Trust, Revocable and Irrevocable Trusts, General Durable Powers of Attorney, HIPAA Releases, Living Wills, and Health Care Powers of Attorney, to name the most common. In the absence of a plan designed with your unique family and asset mix in mind, the State has selected certain provisions which will apply to you and will constitute your estate plan. You have the opportunity, however, to design a plan which is different than the "plan" which the State has mandated for you.

Both Missouri and Illinois are "Dynasty" States.  This means that it is possible to create trusts which protect assets from taxes, creditors and predators through multiple generations, and even for all time, if desired.

 

ESTATE PLANNING SERVICES OFFERED

Last Will and Testament

Under our system of laws, we have the right to own property and, at our death, to pass that property on to those whom we select as our beneficiaries. However, this right is not absolute. We can only pass property to our loved ones by following certain formal requirements. These formal requirements are met by the execution of a proper Will, prepared and signed in accordance with State law. (Each state has its own law about Wills.) A Will does not avoid the necessity of probate. All Wills go through probate. If you die without a Will, the State has prepared one for you–-your property passes to those persons whom the law has designated to receive your property. This may or may not be what you want. Although anyone can legally write a Will, there are many pitfalls. If proper language is not used, the entire Will, or certain bequests in the Will, may be unenforceable.

Non-Probate Transfers, PODs and TODs

Probate can be avoided by transferring each type of property that you own via a “non-probate transfer.” Bank accounts can be titled "POD" (Pay on Death) to a specific person or persons. Real estate can be conveyed outside of probate by a Beneficiary Deed which takes effect only on your death. Stocks, bonds and vehicle titles can be made payable "TOD" (Transfer on Death) to whomever you choose. Every type of property has a method by which it can be passed outside of probate. A lawyer will need to advise you on how to pass specific types of property in this manner. All property transferred via non-probate transfers is simply "dumped" to the named beneficiaries at the moment of your death. Although non-probate transfers avoid probate, you are not able to establish the same types of personal protections for your beneficiaries which you are able to establish for them in a Living Trust.

Durable Powers of Attorney

A Power of Attorney is a document by which you appoint another person to act as your authorized agent (also known as your "attorney-in-fact"). You may not be aware that a Power of Attorney which you give to someone is revoked automatically if you become mentally incapacitated. Under Missouri and Illinois law, a properly prepared Power of Attorney can be made "durable." This means that your attorney-in-fact may continue to act on your behalf whether or not you are mentally incapacitated. This will allow your agent to pay your bills, contract for nursing home services, and make basic health care decisions for you. This type of Power of Attorney is useful both before and after incapacity, but it must be executed prior to becoming mentally incapacitated. Powers of Attorney can be revoked at any time.

Health Care Powers of Attorney

You are legally entitled to appoint some person as your health care attorney-in-fact, which allows that person, in the event that you are comatose or otherwise unable to participate in your health care decisions, to make your health care decisions for you. In this document, you can ensure that the treatment you receive is the treatment that you desire, and no more. This document can reduce the likelihood of a doctor, hospital, or court requiring you to be "plugged in" interminably on life support systems, if you do not desire to be kept alive in that manner.

Living Wills

You can also sign a brief statement indicating your desire that certain medical treatments be either withheld or withdrawn under certain circumstances. Both Missouri and Illinois law allows treatment, including intravenous feeding, to be withheld or withdrawn upon your written statement. This statement is only binding on health care providers if you have a terminal condition and are unable to participate in decisions regarding your medical treatment. In that case you can direct the physicians to withhold or withdraw medical procedures that merely prolong the dying process and are not necessary to your comfort or to alleviate pain. You cannot, in Missouri or Illinois, authorize affirmative or deliberate acts or omissions to shorten your life; instead you may only permit the natural process of dying.

Living Trust Information

Living trust-based estate plans have many advantages. First, they avoid probate. This means that your assets can transfer quickly and efficiently at your death, without the delay, attorneys fees, and unnecessary expense of probate. In addition, living trusts ensure absolute privacy for your financial matters. Since trusts are not filed in the Probate Court, "inquiring minds" do not have an opportunity to see an inventory or valuation of your assets, or to find out how much you are leaving to your beneficiaries.

Living trusts are very flexible--they can be changed any time by the Trustmaker. They allow you to retain absolute control of the terms of the trust--you continue to buy, sell, spend, invest and make gifts of trust property just the way you do now. No gift is made when the Trustmaker transfers assets into the trust, and no separate tax returns are required to be filed by the trust during your lifetime.

Even people who have smaller estates can benefit by doing living trust planning. This is especially true for people who are either married or have children or have an estate in excess of two hundred thousand dollars. Re-marriage protection for a surviving spouse is typically a serious concern with most families. A trust which incorporates personal protections for the surviving spouse can keep him or her from being preyed upon financially by third parties or by a subsequent spouse. A trust with strong personal protections can insure that your money goes to your children and not to a new spouse or the family of a new spouse.

Similarly, personal protections in a trust can provide divorce-proofing strategies for children’s inheritance. Trusts can be readily designed to protect children and beneficiaries from other types of creditors and predators as well, including the IRS.

Personal protections incorporated within trusts are also an excellent tool to preserve assets from "impulse spending." Research indicates that most inherited money is spent within 17 months of receipt. (Surprisingly, the figures are not radically different if the money is inherited by wealthier and more sophisticated beneficiaries.) It is generally undesirable to simply "dump" money on children at any age -- it is more important to pass "value" to one's family, not merely money. “Value” includes protecting the beneficiaries from our very human tendency to quickly dissipate "windfall" funds. This “value” can only be obtained through family-oriented trust planning.

When properly designed, trusts can be a valuable adjunct to retirement planning. It is important to synchronize the estate plan with the retirement plan payout options. The advent of the stretch IRA makes qualified funds an extremely powerful investing tool. Qualified retirement plans have always been a superb investment while the account owner or spouse is alive. However, very little of those funds may survive to the next generation. (Retirement plan money is frequently decimated by taxes at the death of the roll-over spouse, resulting in a loss of 76-89% percent of the entire account!) The stretch IRA has changed that. Now it is possible to not only pass the entire fund whole and untouched by taxes at death, but to pass it in the same type of tax-deferred vehicle which allowed the account owner to accelerate growth in those funds during his or her life. Because of the potential of these investments to produce huge amounts of asset growth and income over the life expectancy of the next generation, it is extremely unwise to attempt stretch IRA planning unaccompanied by trust protections.

A personally designed living trust is the only planning device which allows people to design their own disability plan. Anyone who is interested in receiving home health care (rather than being left in a nursing home) should design a disability plan inside a living trust. In addition, those who want to avoid having a guardian appointed for them, or who are concerned about making sure that their family members can access funds if the breadwinner should become disabled, need a well-designed living trust.

There are many legal changes which take place every year. Clients need a reliable and inexpensive system in place to update the plan as necessary to comply with these many changes.

Conscientious planners are now recommending to clients that they implement a formal estate planning update system. This planning method makes great sense in light of the many legal changes which occur every year. A formal updating program can be designed at a very small cost to ensure that the estate plan will not become obsolete and that the investment in the plan will not be wasted.

Special Needs Planning (also known as Supplemental Needs Planning)

Parents of Special Needs children (whether minors or grown) want to make sure that their children are cared for after the parent dies. Parents who own significant assets want to find a way to leave them for the benefit of their children without disqualifying their child from governmental benefits. Other parents do not have significant assets, and are concerned that governmental benefits may not always be sufficient to provide a good quality of life for their disabled child. Special Needs Trusts provide a solution.

Don't have an "estate" to leave for your disabled child? No problem!

Learn how you can inexpensively:

1. Create an estate for your disabled child;

2. Take the complexity out of planning for your disabled child;

3. Protect your disabled child throughout his or her life (even after your death!);

4. Qualify your disabled child for public assistance;

5. Augment the public assistance benefits for your child with other resources;

6. Appoint a family or professional "Care Manager" to make sure that your child receives proper resources to have a good quality of life.

Medicaid Trusts

Virtually all assets which you own (other than a few exempt assets) are “countable resources” for purposes of determining Medicaid eligibility. Medicaid Trusts can be legally designed and created to hold assets free of nursing home spenddown requirements. Done properly, these trusts can provide a host of additional tax and family protection benefits. See “Elder Law” tab.

Irrevocable Trusts

An entire “alphabet soup” of irrevocable trusts (ILIT, IDIT, IDGT, GDOT, SNRT, SLAT, etc. etc.) has been developed to achieve goals such as removing assets from the taxable estate, providing superb asset protection and providing multiple tax and gift benefits. In addition, most Medicaid Trusts are irrevocable trusts (see “Elder Law” tab). The design and creation of irrevocable trusts requires specialized language, design skills and experience and should not be attempted by persons who lack the expertise necessary to accomplish these goals without creating catastrophic adverse results.

Retirement Plan Trusts (also known as IRA Inheritance Trusts)

The "Stretch IRA" concept, if properly structured, can allow you to pass tax-qualified retirement funds (IRA, 401(k), etc.) to your beneficiaries in a manner which allows them to keep the IRA assets growing tax-deferred during the next-generation beneficiaries' lifetime, resulting in exponential growth in the account.

Tax-qualified retirement plans are governed by extremely complex rules. We will be happy to simplify these in our discussion with those who wish to preserve significant tax-qualified plans for the benefit of family members or charities.

Charitable Trusts

Many persons feel a deep need to “give back” to a society which has helped them achieve success. Others simply want to assist the poor, the hungry, those in pain and those in need. Whatever the reason, savvy people want to give “tax-wisely.” We can help you design a charitable-giving vehicle to maximize tax benefits while accomplishing your altruistic goals. These vehicles can be designed to involve subsequent generations of family members in the ongoing charitable-giving process.

Both Missouri and Illinois are "Dynasty" States. This means that it is possible to create trusts which protect assets from taxes, creditors and predators through multiple generations, and even for all time, if desired.

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