Tag Archives: trust

Caring for a Pet After Death

Planning for pet care after one dies is an area of estate planning that people often overlook. Sometimes, a family member will step up to take care of the pet. However, when family members are not willing or able to take on the responsibility of caring for a pet, the pet could end up in a shelter.

Discuss pet care with your estate planning lawyer.

Discuss pet care with your estate planning lawyer.

Fortunately, an estate-planning attorney will make sure that a strong estate plan contains adequate resources to provide for the pet. In Illinois, one can go about providing for a pet in two ways. However, both methods are not equal.

The first option is for the pet owner to make a bequest in a will to a family member providing resources to take care of the pet. While this method is easy because the bequest is usually part of the main will, it may not be in the best interest of the pet. Illinois wills usually have to go through probate, which can mean long delays before the funds are available for the pet care. Moreover, wills are open to challenges during probate, which may mean even longer delays.

Another way to provide for a pet is through a trust for domestic or pet animals. Illinois specifically allows these types of trusts, and allows courts to construe the governing instrument liberally to implement the transferor’s intent. Moreover, courts are able to consider extrinsic evidence in order to carry out the transferor’s intent in providing for their pet.

More importantly, these types of trusts do not go through probate, meaning that the funds are available immediately for the care of the pet. Moreover, the Illinois statute contains two additional important provisions. First, if there is no pet at the time of the death, any funds allocated to pet care in the trust would either follow the terms of the trust or estate plan, or if there are none, they’d go to the heirs of the grantor of the trust. Second, a court is able to reduce the funds in the trust if it determines that it substantially exceeds the amount needed for the pet care.

Planning for the care of a loved pet is very important to many people. If you have questions, please consult an Illinois estate planning attorney.

Appointing a Guardian for Your Children

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 planningAppointing a Guardian for Your Children IMAGE

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.

If you or someone you know is beginning estate planning, do not go through it alone. Contact a dedicated Illinois estate-planning attorney today.

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Transferring the Family Home to Your Children

UntitledThe act of passing on the family home is no longer as simple as just handing over the deed to your children. According to Smart Money magazine, “there are nearly a dozen ways to give a home to your child. And a couple are tax-free.” Yet to make this kind of exchange or transfer possible, it cannot be done last minute, and definitely needs to happen before you are no longer able to handle your affairs. “In order for the transaction to work properly,” according to Smart Money, “you’ve got to plan ahead.” The most important first step of planning is to hire an estate planning attorney to begin the complicated process.

According to CNN Money Magazine, the federal estate tax exemption, the amount you may leave to heirs free of federal tax, is permanently set at $5 million, indexed for inflation. In 2013, “estates under $5.25 million are exempt from the tax. Amounts above that are taxed up to a top rate of 40 percent.” Rather than gifting the home to your children while you are still living there, states Smart Money, it is much better to stay in your home until you die, providing that your home is below the estate-tax exemption ($5.25 million). “Even if you pay a market-rate rent to your child, the IRS might argue the home’s full date-of-death value still belongs in your taxable estate.” This could leave your children with a higher tax burden than you intended.

Other options are to give the house as a gift to your children, but, according to Smart Money, “you will probably have to dip into your $5.25 million gift-tax exemption.” You can do this by using your annual $14,000 gift-tax exclusion—bear in mind that it is $14,000 per person, so if both you and your spouse gift the house to your child and his spouse, “you can offset $56,000 of the home’s value.”

Figuring out how to get your property transferred to your child is only one of the many complicated processes of estate planning. Do not go through it alone. Contact a dedicated estate planning attorney today.

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New Tax Laws for Estate Planning

TaxesThe end of 2012 saw a flurry of gifting in order to avoid proposed estate taxes by the government that was set to begin in 2013.  This was part of the fiscal cliff tax increases which also affected income taxes, payroll taxes and others.  Now that the rules are more settled after the enactment of the American Taxpayer Relief Act, it is a good time to plan your estate.

Now, the amount excluded from estate taxes is $5.25 million per person and can be doubled for couples to $10.5 million.  This is a limit that is set to be adjusted by inflation by $130,000.  A good estate plan can even limit taxes for amounts above that exemption by setting up trusts suited for your needs.   This is a lot more than the $1 million limit that was going to be law if the US government did nothing to stop the fiscal cliff.

There are also new tax limits for gifting to individuals, estate tax, and generation skipping transfers. Currently the highest rate for this tax is 40% which is a kind of compromise from the rate in 2012 to the initially proposed rate in 2013.  It increased from 35% in 2012 but is still less than the 55% rate after the expiration of Bush’s tax cuts.

Since these changes are more certain it is an opportunity to move money around to benefit from investments and other appreciating assets.  An estate planning lawyer will be able to review your current situation to make sure that gifting and trusts provide the most benefits to you and your family.  Contact an experienced estate planning attorney in DuPage County today to begin this important process.

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.

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