There are many assets such as bank accounts, brokerage accounts, insurance policies, annuities and retirement funds that allow a beneficiary to be named on the account. In the event of the account owner’s death, those funds go directly to the person named, avoiding a lengthy probate waiting period. An article in the Wall Street Journal highlighted the importance of keeping accurate and up-to-date documentation of those who have been named as beneficiaries and the serious issues that can arise if beneficiaries are not updates.

For example, it is important to remember that despite who is designated in a will, it’s the person named as the beneficiary on the account, policy, etc., who will receive the funds. It’s all too common for people to forget the beneficiary they named on as beneficiary on accounts opened years ago. Your will may be written so that your entire estate is left to one person, but if someone different is named as beneficiary on your bank accounts,the beneficiary on the accounts will receive the funds, not the person named in your will.

Another common oversight people make is forgetting to update beneficiaries when an event such as a death, marriage, or divorce occurs. Financial experts point out that it’s important to choose a beneficiary when you roll over a 401k or an IRA to a new plan or to a Roth IRA because the person who you had previously designated does not automatically carry over to any new accounts.

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End-of-life preparations are not easy, even when an experienced estate planning attorney is involved. Things become even more complicated when one makes said preparations later in life. In these cases, the probability of disputes from the beneficiaries increases because of the suspicion that elderly people are prone to undue influence.

Thus, litigation may follow whenever a person makes drastic changes to their will shortly before dying, especially when they disinherit family members for the benefit of non-family members.

Even high-worth individuals may encounter difficulties with their estate plans. Take the case of the copper mining heiress Hugguette Clark, who left behind an estate worth nearly $300 million.

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Estate planning can be a daunting task. If you do it right, your family will be well cared for long after you are gone. Without an estate plan, your family could be scrambling to pick up the pieces and paying expenses that would not be necessary with an estate plan. According to AARP Magazine, there are some simple but common mistakes people make when beginning to plan their estate. With the availability of online and do-it-yourself documents, many think hiring an attorney is a waste of money. In fact, one of the most important parts of estate planning is the assistance of someone familiar with the complicated legalese you will have to wade through. Retaining an experienced estate planning attorney could end up saving you and your family both money and frustration. According to AARP Magazine, one common mistake people make is “failing to tie your business to your estate plan.” As one attorney told AARP, “parents sometimes do not want to talk to their kids about it and just leave the business to the kids.” This method does not take into consideration how to provide for children who work outside of the business. Sometimes failing to adequately plan for a family or small business means that the business ends up being sold under market, and distribution is not always uniform. Another common mistake is to leave lump sums of money in cash instead of in a trust. A different attorney told AARP the anecdote of a father who left $250,000 “to his heroin-addicted son, who was penniless six months later.” A trust, according to AARP, “stipulates how you want the property distributed... the trustee holds your property and doles it out per your instructions.” A third common mistake is failing to keep your estate plan updated. “Each time the law or your family changes,” reports AARP, “revisit your estate plan.” Even with all this, the most important aspect of estate planning is retaining an experienced estate planning attorney. Do not go through planning your estate alone. Contact a dedicated Chicago-area estate-planning firm today.

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There are several aspects of estate planning, and while independent research can help to begin the process, the most important first step is to hire an experienced estate-planning attorney. While determining what type of trust or will is best for you can be begun on your own, navigating the subtle differences between them is best done with the assistance of an attorney. There are five different types of trusts that can be used when beginning estate planning, according to CNN Money Magazine. A trust, according to Fidelity.com, “is a fiduciary agreement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.” A trust specifies how you would like your assets to be passed on to the people who you have designated as beneficiaries, and differs from a will because it deals only with specific assets owned by the trust rather than an overall plan for your estate upon your death. The first type of trust, according to CNN Money Magazine, is a credit-shelter trust. This is also known as a family trust, in which you designate “an amount to the trust up to but not exceeding the estate-tax exemption.” The rest of your estate can then be passed to your spouse upon your death tax-free. Another type of trust is known as a generation-skipping trust, which “allows you to transfer a substantial amount of money tax-free to beneficiaries who are at least two generations your junior—typically your grandchildren.” The next type of trust, according to CNN Money Magazine, is a qualified personal residence trust, which “can remove the value of your home or vacation dwelling from your estate.” This type of trust is very useful if your home “is likely to appreciate in value.” Another type of trust is called an irrevocable life insurance trust. It can be helpful when your heirs need money quickly after you are gone, for example, to keep a family business running. The fifth type of trust is a qualified terminable interest property trust, which is particularly useful if “you are part of a family where there have been divorces, remarriages, and stepchildren.” Determining which type of trust is best for you is only one aspect of estate planning. When you are ready to begin planning for your family, the most important first step is to seek the counsel of a lawyer. Do not go through the planning process alone. Contact an experienced DuPage County estate-planning attorney today.

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Estate planning is not just about deciding where your money will go. When planning for your family after your death, your assets are not the only things about which you will need to decide. Especially if your children are young, you will need to take into consideration what will happen for them upon your death. It may seem morbid to think about, but planning ahead is far less morbid than not having a plan—which leaves your family to make decisions without you. Naming a legal guardian in the event of your death, if your children are minors, is an important part of estate planning. 

According to IllinoisLegalAid.org, a “guardian is a person who has been appointed by the court to handle the personal or financial affairs of another person.” Many parents opt to appoint a trusted relative or friend as the guardian of their children. It is important that the person who you prefer to have as your child’s guardian is trustworthy and close to the child—this person will be handling all the financial, as well as day-to-day, decisions in your child’s life if you are unable to do so. If your child is developmentally disabled and relies solely on you, even if your child is over 18 you will need to consider naming a legal guardian. According to IllinoisLegalAid.org, “many important decisions may need to be made concerning matters such as health care, living arrangements, and habilitation.”

According to CNN Money Magazine, “if you die without a will—a status known as intestate—you leave it up to the court to decide who will take care of your child.” First-time, young parents often name their own parents as guardians of their children, which can be a good decision at an early age, but given the fact that grandparents usually die before their children this may need to be amended at some point thereafter.

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