What is estate planning?
At its most basic, estate planning is a plan for distributing your property when you pass away. Typically, carefully drafted wills or trusts accomplish this goal. Estate planning can also address other goals such as minimizing taxes or even donating organs. More than simply wills and trusts, estate planning is a crucial tool for making certain families and loved ones are provided for properly.
Why do I need estate planning?
Estate planning is your way of answering many of the more difficult questions about your property and health care decisions so the people you leave behind do not have to guess or fight. With a will or a trust you decide who receives your property. You decide when they receive your property. You decide who will take care of your children. With other documents you decide how to answer very important end of life questions. Without estate planning, these questions are usually answered by lawyers, courts, doctors, and the State of Illinois which, in probate proceedings, uses a statutory formula devised by the legislature.
What will we discuss on the phone or when we meet?
As your estate planning lawyers, our first job is to get to know you. We will need to get a good sense of the amount and nature of your property. We will confidentially discuss your family, your health, and your work. We will need to understand how you want your estate distributed. And we may need to learn more about your other interests like your church, your hobbies, and schools or charities where you might volunteer. We will also want to learn more about your broad plans and expectations for the future. Only when we have this information can we begin devising an estate planning strategy that meets your individual needs.
After we meet, what will I need to do next?
First, we will work together to determine the accurate value of your estate. You may be surprised by the size of your estate when you begin digging into all the various components of it. You likely already know how much you earn annually, and you may even know the value of your retirement accounts, stock portfolio, and savings or checking accounts. Even so, you may only have a rough idea of the value of your home, and you may have forgotten the value of life insurance policies and other assets that may or may not need attention. We will help you gather recent account statements from your financial institutions and spend some time making a comprehensive list of all your assets. A little time researching on the Internet can often yield a good ballpark value for your real estate. Be sure to tell us about things like collections, automobiles, art, and other assets that may have significant value.
Once you have a better idea how you would like your estate distributed, we will have you make a list that includes names (be careful to spell names correctly), addresses, and birthdates. If you plan on leaving something to charity or to a religious institution, we will want you to include those names and addresses as well. Finally, someone has to carry out your wishes, so we encourage you to spend some time considering who you would like to nominate as executor of your will or as the trustee of your trust.
I have two kids. I don’t want to show any favoritism and I don’t want them to fight so should I name them both as my executor?
Some clients feel very strongly that they would like to name two people as co-executors or co-trustees hoping to avoid family friction. We do not generally recommend this approach. If you are considering doing this, we strongly urge you to reconsider even if you never become one of our clients. Although we can and will draft estate plans like this when a client insists, the plan frequently backfires. Sharing the responsibility for making important decisions can result in an impasse and then vital problems do not get solved. We generally encourage our clients to choose one executor or one trustee, and they may be the same person.
Will my estate be subject to the estate tax?
Many people do not realize that estates may be subject to several different taxes. The federal estate tax currently reaches estates valued at a little over $5 million. This amount is adjusted for inflation annually, so it tends to increase a bit every year. As it stands today, roughly the first $5 million of an estate is not subject to the federal estate tax. The State of Illinois reinstated its own estate tax in 2011, and the amount exempt from taxation today is $4 million. This means that many estates may be subject to the Illinois estate tax but not the federal estate tax. Other taxes like the federal gift tax may also apply. Most of these “death taxes” are aimed at larger estates and do not affect the majority of families. A great number of sophisticated estate planning techniques such as A/B/C planning, QTIP trusts, and Irrevocable Life Insurance Trusts (also known as ILITs) can minimize the impact of “death taxes,” but these taxes are not something that most people will face. We can offer constructive advice about what techniques to use once we have considered the nature and size of your estate.
I read someone else’s will and trust and it made almost no sense to me. Will I be able to understand my own will or trust?
Estate planning documents are legal documents and they do not typically read like an entertaining novel. It is usually necessary for us to draft these documents using precise legal terms which many non-lawyers may find incomprehensible or even off-putting. Before you put pen to paper and sign your name, however, we will take great care to explain everything precisely so you understand exactly what your estate plan will do. You will be a partner in developing your estate plan long before we set a date for you to sign it. As you review the estate plan, we encourage you to write down your questions and make certain everything we have included in your plan accurately reflects your wishes. Once you have reviewed your plan, we anticipate that you will ask us your questions, and we will happily discuss any and all changes you want to make before the final version is ready. Our goal is to provide you the planning you need in a readily comprehensible manner so that you can rest easy knowing you have provided for your loved ones in the event of your death. Many people understandably find it uncomfortable to contemplate estate planning questions. As much as we can, we want to make your experience pleasant.
How much will this cost?
Every estate plan is as unique as the family it serves, so it is impossible to provide you a quote without considering the nature of your estate planning needs. Once we have good information from you, however, we often find we can offer a flat fee for estate planning services. The exception to this general rule applies to planning services requiring a great deal of time or unknown factors. We typically charge by the hour for probate and other services that will require us to spend a not entirely predictable amount time in court. We believe estate planning is more predictable and our clients seem to appreciate the more predictable aspect of a quoted flat fee. Our fees for estate planning are reasonable and highly competitive, and as such, our clients are able to recommend us to their friends and family with confidence.