We sometimes compare estate planning to sailing — both because we love the water and it is a useful analogy. When charting a course, you need to know three things: 1) your starting
point; 2) your destination; and 3) what you might run into along the way.
Estate planning works the same way.
What is your starting point? Are you married? And is it the first marriage for you and your spouse? Do you have children? How much and what kind of assets do you
What is your destination? Do you want to avoid probate? Do you want to protect assets for yourself or your family? Do you want to reduce or eliminate taxes? Do you
want to ensure a legacy for generations of your family?
While there aren’t neat dividing lines between different categories of estate planning, there are topics and situations that we often address with our clients.
Core Estate Planning
Estate planning and incapacity planning starts with the core documents that everyone should have.
- Wills and Trusts. The first thing that often comes to mind when discussing estate planning is deciding what happens
to your assets when you pass away. Two of the most common ways to do this are by preparing a will or revocable living trust.
- Powers of Attorney. These important documents allow you to face any potential incapacity on your own terms.
A financial power of attorney lets your agent handle your affairs, avoiding a long, expensive, and intrusive guardianship process in Probate Court.
Ahealth care power of attorney identifies the person you want to make your health care decisions if you are incapacitated, rather than relying on Illinois law to choose
the person (or people) for you.
- Living Wills. A living will is like a cheat sheet for your health care decision maker. When you make a living
will, your family will know your intentions on the use of life sustaining treatment.
Estate Planning for Families
Parents need additional tools if their children are young or if there has been a divorce.
- Guardianship of Minor Children. Most parents, if they have done anything at all, have named guardians
for their children in their wills. But that plan leaves a gap, between the time a guardian is first needed and whenever the Probate Court gets around to looking at the will. Special
purpose guardianship documents fill that gap. Every parent of minor children should have them.
- Planning for Blended Families. A blended family, where one or both parents have children from a
prior relationship, often presents added complexity in the planning process because the risk of certain “bad” outcomes (such as accidental disinheritance) is higher.
- Planning for Divorce. Any divorced parent will probably tell you that, like most things in life, divorce
is more of a journey than a destination. And that special journey requires more than just a generic estate plan.
Protecting Your Hard-Earned Assets
When we talk about asset protection, clients often ask how they can get the same protection that a revocable living trust can give their heirs. To paraphrase Apple’s iPhone commercials,
“there’s a trust for that.”
- Asset Protection. Doctors, dentists, and others in high-risk professions may want to consider an asset protection
trust to protect their hard-earned money from lawsuits.
- Special Needs Trust. People with disabilities need a very specific type of asset protection. A special
needs trust holds assets for the benefit of a disabled person without ruining their eligibility for public aid programs.
- Medicaid Asset Protection. Long term care costs can wipe out a nest egg in a year or two. Planning ahead with
an eye toward Medicaid benefits can help keep that nest egg safe and sound.
Planning for High-Asset Estates
People with more stuffhave more to think about, and more tools to plan with. Taxes can take a big bite out of an estate — something we work hard to avoid. But there
is also tremendous opportunity.
- High Net Worth Estate Planning. Money doesn’t make the world go around. But it certainly
can do a lot of good for a lot of people — family, good friends, worthy causes. A wise person once said, “Give me a lever long enough and a place to stand, and I will move the world.”
The lever that most easily moves your high net worth estate is time. A successful plan is one that builds early, with an eye to the future. Believe it or not,
time is on your side.
- Estate Tax Planning. Uncle Sam is the number one beneficiary of many estates (followed closely by the motley band
down in Springfield). With plenty of foresight, you can disinherit the IRS and leave your estate to the people or charities you choose.
- Irrevocable Life Insurance Trust (ILIT). Many people don’t realize that life insurance is included
in their estate for estate tax purposes. In other words, there are many families who qualify as “high net worth” but don’t know it! An ILIT can remove the life insurance from your estate
and help protect the proceeds from a variety of wealth killers.
Planning for Unique and Personal Assets
While many assets can be looked at during the estate planning process as little more than a line on the balance sheet, a few kinds of assets deserve special attention.
- Art and Collections. As collectors ourselves, we understand the strong attachment that many
collectors feel toward their art or other collectibles. No one knows your collection, or your desires for it, better than you do. Your estate plan should reflect that.
- Business Succession. Estate planning for a business can seem so easy. Your attorney asks you to list
everything you own on an Assets questionnaire. In the box at the bottom labeled “Other” you write “closely held business” and fill in the value. You’re done planning for your business,
right? Not so fast! For your family to get the most value out of your business, it needs to be positioned to succeed under new leadership.