Category Archives: Wills

Estate Planning and Marriage

Estate planning is important for determining the distribution of assets after death. However, property distribution after death can become a contentious issue that creates deep schisms in the family and can lead lengthy litigation. Fortunately, proper planning can avoid these issues.

RigsTake the case the hypothetical of Jim and Ann. Jim and Ann spent most of their lives married to one another. They had three children who are now adults.

Eventually, Jim and Ann got a divorce and lived separately. As Jim became older, he required around-the-clock care by an experienced nurse. As time passed, Jim and the nurse grew closer, with Jim eventually asking the nurse to marry him. Only a few months after the marriage, Jim passed away from a long illness. To his family’s surprise, Jim’s attorney revealed that Jim had revoked his old will and had intended to execute a new one; however, he passed away before doing so. Jim’s estate planning attorney also revealed that Jim left an estate worth $4 million.

Under these circumstances, Illinois inheritance laws dictate that half of the property would go to Jim’s spouse (despite them only having been married for a few months) and the other $2 million to his three children. It is easy to see why such a distribution scheme would invite legal challenges.

Jim’s children would likely challenge the distribution through a collateral attack on the marriage. They would argue that the judge should declare the marriage as invalid because Jim lacked the capacity to consent to the marriage due to his old age and deteriorating health. They could also argue that the nurse used her position as Jim’s caretaker to gain his confidence and manipulate him into marrying her.

Independently of the outcome in Jim’s case, estate planning can avoid many of these issues. An experienced Illinois estate-planning attorney would have surely recommended that Jim execute a prenuptial agreement prior to his second marriage and a new will contemporaneously with revoking his old one.

 

Prenuptial Agreements: The Beginning

Prenuptial Agreements IMAGEMany people avoid estate planning because they feel it is either not for them—perhaps only for the wealthy—or because it seems too morbid a task to undertake early in life. Yet estate planning is not just for the rich, and it is never too early to begin planning for the future. In fact, many experts think that estate planning should begin before marriage, before kids. The earliest form of estate planning can be considered to be obtaining a prenup before marriage. According to the AARP Magazine, “a prenuptial agreement… is a legal contract, between you and your spouse-to-be, setting forth what will happen to the money when you die or divorce.” Having one, even at the beginning of a healthy, young marriage, can save headache not only for you and your spouse but for your children as well when it comes to estate planning.

While for some, a prenuptial agreement feels as though it is plan enough, it’s only the very beginning of an estate plan, and sometimes people overlook important aspects of estate planning because they feel protected by agreements such as this. According to the New York Times, the top oversights that should be double-checked in estate planning—likely with the help of a qualified estate planning attorney—include, but are not limited to:

  • The designation of wrong beneficiaries.  People commonly forget to update documents years after they were originally filled out. Things like new spouses, new children, and new bank accounts must be current on all documents in order to avoid confusion.
  • Liquidity deficit. Estate taxes are due nine months after death. Your heirs will need enough liquid cash to pay them.
  • Deciding on an executor. Your spouse may be the love of your life, but that spouse may not be the best with money.

Prenuptial agreements are just the beginning to estate planning, a long process that is best undertaken with the assistance of a dedicated estate planning attorney. Contact our offices today.

Image courtesy of FreeDigitalPhotos.net

Determining The Need For a Trust

Determining The Need For a Trust IMAGE

There is plenty of legal jargon when it comes to estate planning, and the difference between a trust and a will is often confused. A will, according to CNN Money Magazine, “governs the distribution of nearly everything in your estate.” A trust, on the other hand, deals with specific assets, “such as life insurance, or a piece of property.” While the idea of drawing up a trust may seem like something that is only necessary for very wealthy families or real estate magnates, that’s not so. According to a different CNN Money Magazine article, a trust is useful if your family has a net worth of at least $100,000 and meet one of the following conditions:

  • you have some real estate holdings, money invested in business, or money invested in fine art
  • you think it’s best that your belongings be stratified upon distribution to your heirs—that is, they don’t receive everything at once, or you want to set parameters (ie: they’ve graduated from college first, etc.)
  • you want your surviving spouse to be taken care of, but you want the majority of your assets to be left to your children after your spouse dies
  • you’d prefer to maximize estate-tax exemptions
  • you’d like to provide for a disabled relative without disqualifying him or her from Medicaid or other governmental assistance

There are several different types of trusts. According to the National Association of Financial and Estate Planning, one such trust is an IRA Checkbook Control Trust, “a special purpose trust which is either fully or partially owned by a self directed individual retirement account.” This can be useful if your retirement savings are in an IRA, of which very few permit direct ownership of real estate or other non-traditional investments.

Determining the best estate plan for you is a complicated process, and is best figured with the help of a qualified estate-planning attorney. Contact a dedicated Illinois estate-planning attorney today.

Image courtesy of FreeDigitalPhotos.net

Ray Charles’ Children Win Legal Battle to Reclaim Song Copyrights

Ray CharlesSeveral of late singer Ray Charles’ children have won their legal battle to reclaim the copyrights on 60 of the entertainer’s most famous songs. A lawsuit filed by the Ray Charles Foundation attempted to block his children’s’ right to ownership.

In 1976, a revision to the Copyright Act gave authors the ability to reclaim their works assigned to publishers after a certain period of time. However, works “made for hire” cannot be reclaimed. If an author is deceased, then the heirs of the estate are allowed to recover works.

In 2010, seven of Charles’ twelve children filed termination to reclaim ownership of the 60 compositions from Warner/Chappell Music. Warner/Chappell did not challenge the validity of the termination notices. The Ray Charles Foundation did, however, because it reaps royalties from the copyrighted music.

According to a report in Variety, the judge would not rule on whether or not the songs were “made for hire” but instead wrote that “because the foundation is not a grantee of the rights to be terminated or its successor, Congress did not even require the statutory heirs provide it with statutory notice of the termination, let alone give it a seat at the table during the termination process.”

The foundation was also claiming breach of contract, claiming that in 2002, the children entered into an agreement with their father under which he set up a $500,000 trust for each of them and they waived “any right to make a claim against his estate.” The judge ruled that the termination notices were not claims against the estate because the estate had been probated and closed in 2006, prior to the notices being sent out. Therefore, there was no breach of contract.

Foundations, trusts, and any other estate planning issues can be very complicated and through knowledge of the law is important. Make sure you consult with a qualified Illinois estate attorney for all your estate planning needs.