Illinois Estate Planning & Elder Law Blog

Have you ever thought about whom you would invite if you could invite any group of six people to your house for dinner on Saturday? I don’t mean people you know. I mean if you could invite absolutely anyone.

I know my sons, who are teenagers, would invite professional athletes. Somewhere at the table would be sitting Jacoby Ellsbury or Jonathan Papelbon.

In my mom’s case, it would be a Who’s Who of daytime television show hosts. Martha Stewart, Oprah Winfrey and Barbara Walters are likely choices.

In my case, I can tell you exactly who it would be: Jerry Seinfeld, Kim Strassel, Steffi Graf, Larry Kudlow, Reese Witherspoon and Sue Murrey. Can you imagine the great information you could get from Kim and Larry? Then you turn to Reese and find out what’s on the mind of someone who is incredibly talented, hardworking and has her priorities in order. Then you have the chance to hear from Steffi, the greatest woman tennis player ever. And in between all this, you have Jerry making hilarious comments that have you falling off your chair. I can’t imagine a better time.

You may ask, who is Sue Murrey and why is she there? The answer is I’ve known her since seventh grade, and I have to have someone there I can relive the evening with every time we play golf.

Special Needs Trusts allow a disabled individual to receive lawsuit settlements, gifts and other funds while retaining eligibility for government programs. They are designed not to provide basic support, but to pay for things like education, recreation, counseling and medical attention.

Special needs can include medical and dental expenses, special equipment (such as vans for the disabled), training and education, insurance, transportation, special dietary needs, spending money, electronic equipment, computers, vacations, movies and payments for a companion.

In her article, Meeting Special Needs and the Need for Peace of Mind, New York Times writer Hillary Chura points out the many advantages to establishing special needs trusts. Ms. Chura writes,

"Most services for the disabled are provided through state-administered Medicaid programs, with Federal Supplemental Security Income providing a monthly stipend for adults. To be eligible for Supplemental Security Income, however, potential recipients cannot have more than $2000 in assets. Because that amount is inadequate for a lifetime of haircuts, hobby supplies, vacations and DVDs – expenses not covered by the government – a supplemental-needs trust can enhance quality of life. Without a trust, a lifetime of care for a disabled person could eat through even a sizable inheritance. . . .

While the term trust tends to imply great wealth, many special-needs trusts contain less than $100,000. Because the trust does not belong to the disabled person but is used to supplement a lifestyle, it does not compromise government benefits. . . .

Still, many parents are reluctant to start a trust because they fear making the wrong decision, do not want to face the idea that one day they will be unable to care for their child, or do not know how to establish one or whom to ask. In addition, they may not like the notion of putting their child on what is perceived to be welfare.

Some may believe they can avoid drawing up a trust by leaving the money to a trusted relative or friend. Specialists universally discourage that. Even people who intend to follow up on a moral obligation to care for the disabled child could lose the money in a divorce, bankruptcy, lawsuit, premature death or other unforeseen calamity, the specialists say."

For more answers to questions about Special Needs Trusts, contact a law firm that concentrates its practice in the area of Estate Planning Law.

In Amy Hoak’s Wall Street Journal article, "Mortgage Lending for Sellers", she points out the advantages to both buyers and sellers when a private mortgage is used to purchase a home.

With a private mortgage, the seller or some other interested individual holds the mortgage on the property. There are no bank or mortgage company requirements for the buyer to meet such as a steady income history for the past two years or a particular credit report score. Instead, the buyer and the seller reach their own agreement with their own terms.

Private mortgage income is attractive to sellers who are looking for a steady stream of income and are looking to defer capital gains.

Ms. Hoak points out that sellers should protect themselves by requiring a sizable down payment of at least 10%. That way, if the seller needs to reclaim the property through foreclosure, there is a cushion between what the seller is owed and what needs to be recovered at the foreclosure sale.

Ms. Hoak also notes that sellers should consult an attorney to draft the necessary language for the loan documents including provisions regarding late payment, default and inadequate insurance of the property. In addition, sellers might want to consider hiring a loan servicer to collect payments and keep records.

Click here for more information regarding owner financing.

Click here for more information regarding loan servicers.

Click here for more information regarding private financing.

In her article "When it comes to wills, how strange can you get?", Erline Andrews tells of a woman from Beverly Hills, California who stipulated in her will that she was to be dressed in her favorite nightgown and burried in her Ferrari. There is also the man from Springfield, Oregon who included a provision in his will stipulating that his skin was to be tanned like leather and used to bind a poetry book he had written.

Regardless of the request, there is nothing preventing someone from including that request among the provisions of his will. Whether those provisions are enforceable is another matter. A California court refused to enforce a provision in a will by a woman who ordered that her dog be put down after she died so that the dog would be saved the pain of living on after his beloved owner died. The request violated a law regarding the treatment of animals.

The best advice when deciding what to put in your will is to give the matter a good deal of thought. Give the attorney drafting your will as much information as you can regarding members of your family, all of your assets and how you would like those assets to be distributed in light of all the circumstances you are aware of. The more information you give to your attorney, the more options he can give you to maximize the benefit to those individuals you care most about.

If a husband dies with many unpaid debts, it is often tempting for the surviving wife to want to do nothing regarding opening a probate estate. She may feel that there are more debts than assets, so why get into it. However, there is good reason to pursue probating an insolvent estate.

The Illinois Probate Act addresses the situation where the debts and claims of an estate exceed the estate’s assets.

At Section 18-13 of the Probate Act, a determination of the priority of payment is set out. That Section provides that the estate shall pay all claims in order of their classification. The classification of claims is provided in Section 18-10 and reads as follows:

(1) Funeral and burial expenses, expenses of administration, and statutory custodial claims.
(2) The surviving spouse’s or child’s award.
(3) Debts due the Untied States.
(4) Money due employees of the decedent of not more than $800.00 for each claimant for services rendered within four months prior to the decedent’s death and expenses attending the last illness.
(5) Money and property received or held in trust by decedent which cannot be identified or traced.
(6) Debts due this State and any county, township, city, town, village or school district located within this State.
(7) All other claims. (General Creditors.)

In other words, a surviving spouse may pay the costs of the funeral and burial, the attorney’s fees and is entitled to receive a minimum of $10,000 for herself and a minimum of $5,000 for each child -- all before any creditor is entitled to payment. The creditors are entitled to receive a fractional share of whatever is left in the estate after the earlier claims have been paid.

The surviving spouse should bear in mind that if she does not open en estate because of the various claims that would be filed and charged against the estate, Section 9-3(j) of the Act gives creditors of the decedent the right to petition for Letters of Office and open the estate if the spouse or others designated with authority to do so will not.

In other words, if the wife doesn't open an estate because of the claims against it, the creditors very well might. This provision provides even more reason for the surviving spouse to open the probate estate despite its insolvency.

If you live in Illinois, you are married and you own your home, it's worth becoming familiar with the meaning of holding title to your home in the form of a tenancy by the entirety.

A tenancy by the entirety differs in several important ways from the other two ways title to real estate may be held by two or more people (tenancy in common and joint tenancy with rights of survivorship).

First, only married couples may hold title as tenants by the entirety. There is no marriage requirement to hold title as tenants in common or as joint tenants with rights of survivorship.

Second, the property must be a primary personal residence. No restriction exists regarding the type of property which can be held by tenants in common or joint tenants with rights of survivorship.

Third, there must be agreement between the tenants by the entirety if the tenancy is to be broken by them. No such agreement is required if fewer than all tenants in common or all joint tenants want to change how they hold title.

Fourth, only joint creditors (creditors of both the husband and the wife) may reach the home of the husband and wife where the home is held in tenancy by the entirety. If a creditor has a claim against only the husband or only the wife, the home held in tenancy by the entirety cannot be partitioned, sold or encumbered without the permission of both spouses.

Fifth, specific terminology must be used to create a tenancy by the entirety. In Illinois, the deed language must indicate that the parties are married and must use specific words creating the tenancy by the entirety. The following language is commonly used to create a tenancy by the entirety between Sam and Sally Smith: "to Sam Smith and Sally Smith, husband and wife, not as tenants in common nor as joint tenants with rights of survivorship but at tenants by the entirety".

As stated earlier, a tenancy by the entirety may be terminated by agreement of the tenants. It may also be terminated by a court ordered sale to satisfy a joint debt of the husband and the wife, by a divorce or by the death of either the husband or the wife.

One last point, in many states, a husband and wife who take title jointly will automatically take title to their home as tenants by the entirety. Illinois is not one of those states. The specific language referenced earlier must be used for a tenancy by the entirety to be created in Illinois.

Few dogs are lucky enough to be left $12 million by their owners like Leona Hemsley’s Maltese named Trouble. But this doesn’t mean that your pet can’t be provided for when you consider how you want your possessions to be handled in your will.

In “Heirs to the Bone – Estate Planning for Pets” written by Attorney Frances Carlisle, Ms. Carlisle gives several options to individuals drafting wills and looking to have their pet cared for when they, the pet owners, are no longer around.

Number 1: Make a gift of your pet to someone who will be its caretaker after you die and then have your attorney include a provision in your will leaving the animal to that person. Leave money for expenses the new owner will incur caring for the pet.

Number 2: In your will, give your executor discretion to choose from several people to take your pet. Also give your executor discretion to find a suitable adoptive home in the event there is no one who is willing and able to care for the pet.

Number 3: Make arrangements with a local animal rescue and placement charity to take your pet after you die and find a home for the pet. Name the charity in your will and leave money to the charity.

It is important to include a statement in your will that you are bequeathing all of the animals owned by you at your death. If you name a specific animal in your will, other animals you own will not be covered.

Creating a trust for your pet is another option available to pet owners. The applicable Illinois statute, Ill. Comp. Stat. 760 ILCS5/15.2 which became effective on January 1, 2005, specifically states, “A trust for the care of one or more designated domestic or pet animals is valid”.

You can create a trust which is in existence while you are alive or you can create a trust that comes into existence upon your death. The advantage of creating a trust while you are alive, an inter vivos trust, is that you will have arrangements ready should you be incapacitated or have to go into a nursing home.

Estate planning by pet owners insures that their pets will continue to enjoy a happy life after the owner is no longer around.