Illinois Estate Planning & Elder Law Blog

Andrea Donovan of Senior Living Advisors in Riverside, Illinois was recently quoted in a Chicago Tribune article about retirement communities in the Chicago area. In the article, Ms. Donovan points out that there are four kinds of contracts available at Continuing Care Retirement Communities, that is, a community which has independent living, assisted living and skilled nursing all in one area. This is an attractive feature because individuals not need to move to a different community in the event of a change in health status.

The first kind of community is a Full Life Care community. The resident is charged an entrance fee and a monthly fee. Residents receive unlimited access to all levels of care with only a small change in monthly fees to adjust for inflation and increased costs.

The second is Modified Life Care. The contract limits the number of days in assisted living or skilled nursing for the resident. Once those days have been used, the resident is often offered a discounted rate for continued care. This option is attractive for residents who believe their assets will be sufficient to pay for future health care needs.

The third is Fee for Services Care. The entrance fee and monthly fees are substantially lower than the Full Life Care and the Modified Life Care options. The monthly fee covers living expenses. Residents have access to all levels of health care and pay the entire cost.

The fourth is Rental. This option requires a monthly rental payment, similar to renting an apartment.

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A Trust Protector is someone who is appointed to watch over a Trust that will be in effect for a long time and ensure that it is not adversely affected by any changes in the law or circumstances.

There are a number of reasons for appointing a Trust Protector. Having a Protector allows a long term Trust to be more flexible and adapt to factual and legal changes. For example, beneficiaries may get divorced or die prematurely or the law may change. A Protector can also be helpful if you believe there may be a conflict among the beneficiaries and the trustee or if you don’t completely trust the trustee to fulfill your wishes.

You can name a Trust Protector in your trust document, which will also dictate the Trust Protector’s powers. The following are powers that a Trust Protector can be given:
• Remove and replace a trustee
• Allow the trust to be amended due to changes in the law
• Resolve disputes between trustees or between beneficiaries and the trustee
• Change distributions from the trust based on changes in the beneficiaries’ lives
• Allow new beneficiaries to be added if there are additional descendants
• Veto investment decisions

Whatever powers the Trust Protector has, you should be as specific as possible in the trust document. The more specific you are, the more likely the wishes will be carried out.

Anyone can serve as a Trust Protector. It is best to appoint an independent third party rather than a family member or beneficiary.

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It is often best to avoid probate, the court supervised process which makes sure that a deceased person’s assets are properly distributed. The probate process is costly and time consuming (usually 14 months). It also is a matter of public record, so your financial affairs become public information.

A Living Revocable Trust is a basic estate planning tool used to avoid probate. A living trust is drafted and assets such as real estate, investments and other property are titled in the trust. A trustee (relative, close friend, lawyer or financial institution) is given authority to distribute your assets when you die.

Because the trust is revocable, you can change its terms at any time or revoke it completely as long as you are legally competent.

For income tax purposes, the living trust has no effect. The income from the assets in the trust is reported on your Form 1040 as are any deductions related to those assets.

Continue reading "Illinois Living Revocable Trusts" »