will

The Difference Between a Will, a Living Will and a Living Trust

A recent survey on estate planning found that 74% of those surveyed thought estate planning was a confusing topic. That’s no surprise considering estate planning has a language all its own. Today, we’ll sort out the difference between a Will, a Living Will and a Living Trust. Three separate estate planning tools with similar names, but different roles to play in your planning.

Last Will & Testament

This is what people commonly refer to as a “Will.” It is the most popular estate planning tool. This legal document is used to determine where assets go and who is in charge (the executor) after you die. Until you die, your Will and your executor do not have any legal authority. Wills often must go through the time and expense of probate court.

Living Will

A Living Will states your end of life wishes, such as when to “pull the plug.” This document reduces stress and confusion for your loved ones. It gives guidance to the person serving as your healthcare power of attorney. This is the person who ultimately decides when to stop treatment and let you go if it becomes necessary.

Living Trust

A Living Trust does a lot of what a Will does, but it does it more efficiently. It is kept private and avoids probate court. A Living Trust also states your wishes after death, but also includes instructions if you become disabled. The Trustee is in charge of the trust. Usually, you are the Trustee while you’re healthy, but then a successor takes over if you become disabled (by a stroke, Alzheimer’s, etc.) or when you pass away. (Read more here about choosing good helpers for your plan.)

Helping educate people and demystify estate planning is one of our highest priorities because effective plans can only be created when clients and attorneys work together. You bring your knowledge of your family and it’s unique circumstances. We bring our knowledge of estate planning and the law. Together we create effective plans that bring peace of mind and protection for those people and things you care about. (Read more about that here.)

To continue learning more about the unique language of estate planning, click here to read “What’s the Difference Between a DNR and a POA?” To learn more about Wills and Trusts, check out the dates for our upcoming workshop, “Wills & Trusts: How to Get Started”.

will

8 Costly Myths About Wills

There are a lot of misconceptions surrounding wills. These wrong assumptions cost families time, money and stress on a regular basis. Here are eight costly myths to be aware of:

1. Wills avoid probate. False! In fact, wills are designed to go through probate. A will states your wishes, but your executor may need a court order to be able to take action. Going through probate court will always add delay and expense. Most probates last at least a year or more. A living trust is often the best solution to this problem.

2. Your will and your assets remain private. Wills are public documents, which is how we all know that 20% of Michael Jackson’s estate went to charity. However, we don’t know which charities, because Jackson had a trust set up, and trusts remain private.

3. A will prevents fighting over assets. This could not be further from the truth! Wills are the most contested legal document in our courts. And just because you request something in your will, does not mean it will be carried out. Many estates have been drained of all their money because of long legal battles over wills.

4. A will helps you avoid taxes. A will does nothing but help distribute your property. If you are concerned about the complicated taxes surrounding death, estates and what you leave behind, it’s best to consult with an experienced estate planning attorney who will do more than simply fill in the blanks of a simple will for you.

5. Estranged family members do not need to be notified of probate if the will excludes them from inheritance. In Illinois, your next of kin must be notified as part of the probate process, even if they are not getting anything under your will. In fact, when they are notified they are reminded of their right to challenge the will and told the deadline for filing their challenge. Plus, they are given a sample of the form to use!

6. A will from one state is not legal in another. This myth is not true — your will should be valid in another state, if it was valid when it was signed. However, each state’s laws are different and those different laws could impact how well your will works. For instance, there may be different real estate laws or differences in how each spouse has rights to the other’s assets. Therefore, it is best to consult with an experienced estate planning attorney in your new state, rather than leaving things to chance with your old will.

7. A will helps when you become physically or mentally incapacitated. A will does nothing until death. It is a death document. When you become physically or mentally incapacitated, you need powers of attorney or healthcare directives. A trust is the tool that can provide more planning opportunities and the ability to be more detailed about your wishes during disability.

8. The cost of your estate plan is only the cost of drawing up the documents. Many people focus on the costs now, but ignore the costs later. But you should consider all of the costs. A simple will now may result in more costs later. An effective plan now, possibly including a living trust, may cost more now but will save expenses later and make it easier on your family. It’s a dirty little secret that over the years many estate attorneys make the bulk of their money after death – once the client is gone and they have to fix what they didn’t do right to begin with! A good estate plan will anticipate any unique issues your situation presents, and put protections in place to make sure it’s smooth sailing for your family after you’re gone. (At least where your assets are concerned.)

Despite the many online options these days, it is still best to consult with an experienced attorney when it comes to estate planning. The experience they bring to the planning process along with your intimate knowledge of the details of your family will create the most effective plan. If you’d like to learn more about the basics of estate planning, check out one of our upcoming workshops, Wills & Trusts: How to Get Started. Just call 217-726-9200 to reserve a spot!

Illini or Probate? What’s worse?

Maybe you’ve heard the joke about the Illini tickets left on the dash of the car in plain sight? Yep. Someone broke into the car and left 2 more tickets on the dash with them! (Cubs fans can thank me. Originally, I was going to use the Cubs in the joke.)

Today we’re going to talk about “What’s worse than Probate?”

What is Probate?

Probate is where the judge has to get involved in carrying out an estate after death — where nothing can be done until the judge signs the order appointing an executor. Wills are designed to go through probate. That’s just how the law works. Probate ALWAYS adds extra expense and delay. Plus, it’s public record.

What’s worse than Probate?

Uncle Fred was getting older. He finally got to the point where he was not able to stay at home any longer. His favorite nephew in Missouri said, “Come live with me.” So Uncle Fred moved to Missouri and enjoyed several years there before passing away. After he was gone, the family realized that he still owned his house in Illinois, so they had to go to probate court in Illinois. Plus, he had moved his bank and investment accounts to Missouri when he went to live with his nephew. So now they were faced with probate court in Missouri, too!

So… what’s worse than Probate? 2 Probates!!

Anyone with assets in more than one state needs to plan carefully to make their plan work smoothly in each and every state. Watch out for timeshares, vacation homes and ownership in family real estate. If overlooked, all of these could add time, expense and hassle in the form of extra probate for you or your loved ones.

Good planning, especially with a Living Trust, works well across state lines.

Attend (or tell a friend about) our FREE New Client Orientation Workshops — a good first step towards preparing an effective estate plan. At this 1-hour workshop you’ll hear about how we work, whether Edwards Group is right for you and key steps in our unique process. Just call us at 217-726-9200 to RSVP or get more information. In the meantime, be sure to sign up for our weekly e-newsletter with estate planning tips and up to date workshop information.

What is probate and why do people want to avoid it?

You may have heard people discuss probate and how horrible it is.  But what in the world is probate?  And why do people want to avoid it?  Probate is, simply, when the court has to get involved to help transfer assets after someone has died.  This court process is set up to make sure things are done properly and the family is aware of what is being done.  As a result, there are several truths about probate that cause many people to want to avoid it:

Public Process  Your last will & testament, as well as the probate court documents, are all public record.  Your nosy neighbor could go to the courthouse, or maybe just look online, to see where you are leaving your assets.  She may also be able to see how much you were worth at death and where you owed debts.

Delay  Because of the court process and various required tasks (petitioning the court, publishing a claim notice, notifying family members, reporting to interested parties), there is additional delay before the estate can be finalized.  At a minimum, probate will usually take 8-10 months, and often takes 18-24 months.

Expense  Because of the additional tasks required by the court process, there is additional expense involved, both in paying the attorney but also in publishing notices and providing reports to the rest of the family.

Reminders to Contest the Will  One of the required probate steps is to notify the family of the last will & testament being admitted to the court.  As part of this notice, all family members (who are legal heirs according to the law) are given notice of the proceedings as well as a reminder that they have the right to challenge the Will.  The notice even gives them the deadline for challenging the Will and basic steps to be taken.  So, the lack of privacy is an issue, not just with the nosy neighbor, but also with the family troublemaker who was purposely left out of the estate plan.

To learn more about wills, trusts and other estate planning issues, check out the Wills and Trusts section of our website.

Michael Jackson: King of Pop (and Estate Planning?)

Are you tired yet of hearing about the Michael Jackson saga? One thing for sure, the gossip media should have plenty to talk about for quite a while. It turns out Michael did have a Last Will & Testament after all. (Thanks to those who sent me links to good articles on his estate issues.) Despite the circus atmosphere, Michael’s estate situation gives us some reminders about important planning issues:

1. Wills are public. Usually, there are many issues that are much more important to your family than keeping your estate matters secret. But at the same time, do you really want people to see your private info? And with increasing online access to court records, it will be easier and easier for your neighbor or nosy relative to look at your Will in court records without leaving home.

2. Living Trusts are private. A living trust is a good way to keep your info private at your death. And that’s exactly what Michael did. Look at his Will. It is what we call a “pour over will”, meaning his will doesn’t have much in it except instructions to dump assets at his death into what they are calling his “Family Trust” (which is private and will stay private). So all the gory details about who gets what and when they get it are only in that private document, incorporated by reference into his Will. And it seems to me that Michael’s Will actually included more info than necessary. For instance, I usually would not put something in the Will about disinheriting anyone (as he did with is ex-wife). That kind of info can go in your trust to keep it all private.

3. Asset titling is key. We haven’t seen how this part plays out yet. Even though Michael had a living trust, if he didn’t properly title his assets in that trust before his death, then the probate court will have to do it using his will. Without assets organized properly, he will lose part of the benefits of the living trust.

4. Feeding frenzy? Michael’s death is a media frenzy, but also a money frenzy too. Friends, relatives, business associates, will all be scrambling to take financial advantage. Those who are controlling his assets will be approached by all kinds of people with all kinds of ideas and schemes, all designed to get some money from the estate. Marlon Brando’s estate attorney said people came “out of the woodwork making all sorts of claims” after Brando died. At your death, who will be in charge of your estate and who will be at risk for being taken advantage of?

5. Personal items are important. There is a court dispute over 2,000 personal items. Michael’s mom has control of them, but the real executors want them back. The judge told them to try to work it out. I have seen a lot of hurt feelings and disputes over personal items, sometimes of small dollar value. But sometimes the items of small dollar value have huge sentimental and emotional value. What have you done to make sure your personal items don’t cause a dispute later? What have you done to preserve the stories behind items of emotional value?

6. We never know when. We look at Michael and figure he was living a life on the edge that could lead to an early death. But the fact is that none of us know when our time is up. One thing about estate planning – you need to do it when you don’t need it, because when you need it, it’s too late to do it.

Despite some feeling like the topic has been covered way too well, there is even more we can learn from this situation, including how to choose guardians for your children. Check out Part II of this post here.

9 ways to cause a dispute after you die – probate and trust administration nightmares

Often we get calls from someone who is facing a mess because a loved one died and failed to plan properly. So, my advice is this: If you want to create a mess for your family, don’t leave it to chance. Do it right and plan the mess yourself.

Here are 9 ways you can create a mess after you die

1. Don’t organize your assets. Assume that what you own will fit in with your legal documents. Somehow by accident it will work out.

2. Don’t talk about what you are planning to do. So your wife and your kids (some maybe from a previous marriage) can both assume they knew what you wanted. Leave it vague enough so no one really knows, and there certainly is no legal guidance. And be sure to keep your financial situation secret, from your kids and even your wife. They don’t need to know yet.

3. Name an executor or trustee without much thought. Just name the obvious choice, regardless of their track record for honesty or handling money. Even though trustees sometimes run off with the money or mishandle investments, that probably won’t happen to you. Even though the person you chose has never shown themselves to be up to such a task, they will step up and do fine. Right? And certainly don’t ask yourself one of the best questions – “would I trust this person with my checkbook today, while I’m still alive?”

4. Don’t pay for professional legal advice. Just do it yourself. Type up (or hand write) your own trust or will. Fill out those IRA beneficiary forms, even customize them yourself without knowing the law. I’m sure it will work out somehow.

5. Make promises to family members. You know, about what you plan to leave them. Then don’t do it that way. They will understand. I’m sure they won’t want to fight in court about whether your wishes were written down wrong or whether you were in your right mind. They will understand that you didn’t keep your promise.

6. Talk about your estate in vague terms. Say things to your wife like, “you will be taken care of” and “you won’t want for anything.” Say things to your kids like, “you will be treated fairly.” Don’t talk specifics, but just talk about generalities, so the people listening to you can
assume what they want to about what you plan to leave to them.

7. Don’t use a professional trustee. Such as a bank. You don’t want to spend money on something like that, where a professional will know how to get the job done and make sure that your wishes are carried out in a way that’s legal and proper. Much better to leave it to friends or family members who may not exactly know what they’re doing, incurring extra taxes or making messes that need to be cleaned up later.

8. Use your plan to give the family chances to learn to get along better. Create your plan in a way that creates conflict among your loved ones. For instance, name your spouse and a kid from a prior marriage as co-trustees. I’m sure they’ll get along well enough to be able to sort out your estate.

9. Name a family member as a trustee of the funds you leave behind for someone else. Put your trustee in a difficult situation after your death where they have to refuse to give some of your money to another family member, particularly when it’s someone from the other side of the family. And be sure not to give clear guidance about when and how that person should be able to access funds. This will put the maximum pressure on the trustee and increase the hard feelings of the person asking for the money. No matter how the trustee decides, someone will feel either mistreated or pressured.