Tag Archives: Illinois estate planning attorney

Charitable Trusts in the Time of Giving

charitable trust IMAGEWith taxpayers owing such a high percentage of taxes on almost any type of long-term gain, in addition to other taxes –such as the Medicare surtax – those in the top tax brackets might consider establishing charitable remainder trusts for donations of highly-appreciated assets. A charitable trust is a trust established for some charitable purpose. Charitable trusts are limited in what they can do; they must fit into a certain category established by the law.

 Setting up a Charitable Trust

In order to establish a charitable trust, you must first create the trust and donate the property to the trust that will eventually pass to a charity that is approved by the IRS. The trustee will manage or invest the property to produce an income. A charitable trust can pay the person who established the trust a certain percentage of the income that was made from the trust over an agreed upon payment timeline.  After the person that established the trust passes away, the charity becomes the owner of the property.

 Why establish a charitable trust?

An income tax deduction may be available for the value of the property given to the charitable trust. The IRS will consider the value of the property and the amount of income you may receive from the trust in determining your deduction.

In addition to receiving tax benefits, remember that you are also doing something beneficial for an organization that works to put a little extra good in the world.  Current laws make charitable trusts irrevocable. Hence, while you may be able to obtain a cash flow from the property for the remainder of your life, the property cannot be sold later or given to an heir. The administration and management costs associated with charitable trusts should be carefully considered.

Charitable trusts are a great way to give back to your community, and gain a benefit for you as well. If you have any questions regarding charitable trusts, or any other estate planning questions, reach out to an experienced Illinois attorney today.

 

Legal Issues Surrounding Lost Art

 adverse possession IMAGEA recent Hollywood-like story out of Munich is setting the stage for some interesting issues regarding estate planning and the rights of heirs. In a raid on the home of Cornelius Gurlitt in Germany, the police found over 1,000 paintings, drawings, and other works of art packed alongside hoarded groceries.  Among the art discovered were works by Beckman, Picasso, Matisse, and Renoir – all taken from Jewish collectors in Nazi Germany.  According to an article from the Chicago Tribune, the art stashed away in Gurlitt’s house could be worth over $1 billion.

 The Nazi Regime and “Degenerate Art”

The art found in Gurlitt’s home was previously possessed by Gurlitt’s father, who helped Adolf Hitler sell art that had been stolen or quickly sold off by Jewish collectors throughout Europe. The Nazis categorized many great works of art as ‘degenerate’ and sold them on the open art market to provide additional wartime funding. Despite human rights organizations and Jewish groups around the world calling on Gurlitt to unconditionally return the art to their rightful owners, the German newspaper Der Spiegel reported that he has no plans of returning the artwork to those who owned the pieces sixty years ago.  Instead, Gurlitt said, he plans on spending his life with the paintings.

Legal Issues

How is it that Gurlitt is allowed to keep art stolen by Nazis?  Due to the sheer enormity of the find by German police officers, there is no legal precedent for what to do with all of the art. While many believe that the art should simply be returned to those who lost it during World War II, the solution is not that simple.  First, a statute of limitations may exist barring collectors who lost their work from making claims against Gurlitt.  A statute of limitations is a legally prescribed time limit in which a lawsuit may be filed in court.  Second, some are already claiming that Gurlitt owns the art through adverse possession.  Adverse possession is a way in which someone else may acquire ownership of property so long as a number of requirements are met, including ‘openly’ using the property so that the true owner is put on notice.

While in the U.S. the doctrine of adverse possession primarily applies to real estate, in Germany it can apply to art as well.  Hence, even if someone who lived under Nazi rule could show that they had lost their property to Hitler’s regime, after decades of the art being in someone else’s possession, any claims for restitution may be barred.

Sometimes the law regarding property ownership and the rights of heirs can be complicated, even nonsensical.  It is therefore important that you make sure all of your assets are accounted for and your estate is planned.  If you have any questions regarding your estate, contact an experienced Illinois estate planning attorney today.

Keeping Track of Beneficiary Designation Forms

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.

 beneficiariesFor 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.

Experts also advise against choosing a different beneficiary for multiple accounts. For example, if you have three children and each one is the sole beneficiary on three separate accounts and the accounts experience different rates of growth over the years, there will be an unequal distribution of assets upon your death. It may be advantageous to designate all three children as equal beneficiaries on all three accounts.

Careful consideration should be given before naming a minor child as a beneficiary without a trust in place. If a trust is not in place and a minor child is the beneficiary, the court will appoint a financial guardian over those funds until the child becomes of legal age. In addition, not all young adults of legal age are fiscally mature enough to handle a large sum of money responsibly.

Trusts for disabled children and disabled adult children should be set up as supplemental trusts so as not to interfere with any government assistance these children receive. Keeping your beneficiaries up to date and setting up the most strategic estate plan requires the guidance and knowledge of a DuPage County estate planning attorney.

Problems with Deathbed Planning

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.

Ms. Clark died at the ripe old age of 104.

She spent the last two decades of her life in a hospital, where she was cared for at $400,000 per year. In 2005, she executed a new will that disinherited most of her distant relatives, and gave significant sums to people involved in her everyday care, including her lawyer, doctors, hospital, goddaughter and her nurse (who received several millions dollars).

However, another will that was in existence only six weeks prior to the new will had left her distant relatives nearly $30 million. Needless to say, the sudden and significant change would cause even the most trusting of minds to be suspicious.

The relatives, who were disinherited in the second will, filed suit to void the second will. They argued that the non-family beneficiaries took advantage of their close position with Ms. Clark to exert undue influence on the elderly person. The beneficiaries of the new will, on the other hand, argued that Ms. Clark seldom spoke to her distant relatives and that her decision to execute the new will reflected her appreciation for the care and dedication that her caregivers had shown toward her.

The dispute ended in a tentative deal that included the distant relatives in the distribution scheme and excluded her lawyer and nurse (the doctor relinquished his portion of the inheritance).

An experienced Illinois estate planning attorney can assist clients with addressing these types of issues. If you have questions regarding your estate plan, or the will or trust of a recently departed family member, contact an attorney today.

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.