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Articles Posted in Estate Planning

One important part of estate planning is helping your children and grandchildren with the ever-escalating costs of their education. If they are already in school, you can do this by writing a check for their tuition directly to their educational institution. For younger children or grandchildren who are not yet enrolled, you may wish to delay giving them these funds until it is time for them to pay for college tuition costs. In this case, you have a few options, including making a gift into a custody account or into a trust that qualifies as a current gift under the Uniform Gifts to Minor’s Act. You can also choose to fund a Qualified Tuition Plan under IRC Section 529.

The two types of 529 programs are prepaid plans and savings plans. Unlike a Uniform Gift to Minors Act plan, the earnings on the assets in a 529 plan aren’t taxed until the funds are distributed, and distributions are tax-free up to the amount of the student’s qualified higher education expenses (defined below).

Prepaid Programs: Certain colleges make it possible for you to buy tuition credits or certificates at current tuition rates, even though the beneficiary (child) is not yet starting classes, locking in today’s rate for tomorrow’s education. Through this program, if a child is accepted into college and will start next year, you can purchase tuition credit for all four years at the current year’s rate. This can save a lot of money if tuition costs are rising quickly but isn’t a good option if tuition costs are declining.

Remote witnessing and notarization is becoming increasingly more common for executing estate planning documents. To do this, a witness or notary can use two-way audio-video communication technology to witness or notarize an act instead of doing so in person. As of June 2020, at least 44 US states now allow remote witnessing and/or notarization in some form, be it permanently by statute or temporarily by governor’s order.

Just as execution requirements for wills, trusts, powers of attorney, and advance healthcare directives (or healthcare powers of attorney) vary widely between states, so do the requirements for remote execution of those documents during the COVID-19 pandemic. Many states allow for remote witnessing, while others have temporarily suspended witness requirements for all documents aside from wills. There are also certain states requiring notaries to be specially registered as an “online notary” or require specific software to be used to record the videoconference. Below are the estate planning document execution requirements in Illinois:

Illinois Governor J. B. Pritzker issued Executive Order 2020-14 on March 26, 2020. It was then amended and re-issued by Executive Order 2020-33 on April 30, 2020, and again re-issued by Executive Order 2020-39 on May 29, 2020. These orders allow for remote witnessing and notarization procedures.

Many people are under the impression that families that accrue an above-average amount of wealth or assets will pass down these fortunes generation after generation. However, a Wealth-X report shows that 68% of the those whose net worth exceeds $30 million are self-made, 24% of those individuals have a combination of inherited and self-created fortunes, and just 8.5% solely inherited their wealth.

This comes as less of a surprise when one considers how difficult it is to transfer wealth from one generation to the next. Another study that spanned decades and followed 2,500 families found that 70% of family fortunes run out by just the second generation and 90% run out by the third generation.

Wealth can be difficult to retain and easy to mishandle, especially without preparation. Parents might spend time and money to properly organize their estate and later pass it on to their children, but those efforts may be in vain if their children are not prepared for that wealth. Future generations need to be equipped with the values, the knowledge, and the life skills needed to sustain inherited wealth so that they don’t find themselves overwhelmed and underprepared when they inherit the wealth you have accrued.

Preparing a will and estate plan is a normal process for those who wish for their assets to be protected. Things such as a home, car, family heirlooms, art, stocks, or other items will pass to surviving loved ones intended by the deceased as instructed in a will. Dying without preparing a will, then, leaves the distribution of your assets outside of your control and will also take more time, money, and more of a stressful toll on your loved ones.

Mitch Adel, managing partner at Cooper Adel Vu in Centerberg, Sidney and Chillicothe; Steve Gariepy, partner and chair of the estate planning group at Hahn Loeser & Parks LLP in Cleveland; and Beatrice K. Sowald, partner at Sowald, Sowald, Anderson, Hawley & Johnson in Columbus, share about the difficulties faced when an individual dies without having properly prepared a will.

“The first thing is the family should confirm there is no will,” Gariepy said. “Ask around and just be doubly sure of that. After that, we have what is called intestacy laws, which cover dying without a will. They kick in and dictate who the beneficiaries and administrator of the estate are.”

As the COVID-19 pandemic continues, many are worried about their health and are putting more thought toward whether their financial and legal affairs are in order in the event of serious illness or death. Pandemic or not, it is always recommended that every person have an estate plan in place, including at least four primary documents:

  • A will
  • A medical power of attorney

A 30-year-old patient with COVID-19 who was on a ventilator passed away last week. He hadn’t laid out his end-of-life wishes (referred to as advance directives). After seeing the numbers related to his son’s condition, his father was devastated and felt that further treatment was only painfully prolonging the inevitable. His mother wanted to try everything possible to save him. If the patient himself was able to speak, he could have expressed what his wishes were and saved his family from this heart-breaking conflict.

But he hadn’t planned to die.

This tragic situation is too common as families often fail to discuss emergencies and end-of-life wishes ahead of time. It’s even more stressful to make this kind of decision when the stakes are high, as they often are now amid the coronavirus pandemic. This is why it’s so important to learn about and make end-of-life treatment choices before a crisis occurs. None of us want to imagine the worst, but the worst is a callous reality.

Although the coronavirus pandemic began only concentrated in large cities, there are cases now in all states both in cities as well as more rural areas. More and more people are considering what they want to do if they become infected, including thinking about estate planning.

“You start asking yourself, what happens if I become sick?” Jack Garniewski, president of the National Association of Estate Planners and Councils says. “Do I have the proper legal documents in place so that someone would be able to make decisions for me financially and from a medical standpoint?”

Garniewski says that more Americans are now making sure they have a durable power of attorney, which gives another person the power to make financial decisions for them if they become incapacitated. Many people are also planning how they want their property to be transferred if something happens to them.

During the COVID-19 pandemic, many of us in Illinois are complying with the governor’s stay-at-home order. We are hunkered down in our homes – making only necessary trips for essential matters such as medical treatment, supplies, or perhaps taking a walk to breathe in in some fresh air and soak in some sunshine while maintaining social distancing. We thank and applaud everyone who is doing their part in curbing the spread of this virus.

At this time, some of you may reflect on the “what ifs” of the future. What will happen if you become incapacitated, or worse, if you pass? What if your child has special needs and you wish to preserve assets for the benefit of your child? What if you have minor children? How or who will take care of them and assets for their benefit should you be unable to care for them, or worse, die? Are you able to make or coordinate health care and financial decisions for your spouse, parent or other elder loved one?

Illinois law provides defaults for distributions through probate court proceedings if you were to pass away and a legal process (namely, guardianship) should you become incapacitated. Depending on Illinois law could involve what could be costly court proceedings. Ultimately, the result of the Illinois laws may not reflect your wishes as to the disposition of your assets and/or who will be in charge. A properly executed estate plan sets out your wishes and names the trusted persons you want in charge of your affairs during life and afterward. Estate plan documents can and often include wills, powers of attorney, living wills, and trust documents – such as living trusts, special needs trusts, or asset protection trusts.

The stock market has been in a free fall, and Americans are experiencing a type of fear that hasn’t been seen since the polio epidemic in the 1940s and 1950s.

During those decades, polio outbreaks in the U.S. crippled more than 35,000 people yearly, on average. Parents were afraid to let their children go outside, travel and commerce were restricted, and homes and towns where polio cases were found needed to be quarantined. Similar fears are resurfacing for many people now, and estate planning attorneys are being asked many questions.

“Suddenly business owners — from mom and pop shops to CEOs of large corporations — are meeting with estate planning lawyers like no other time than I can recall,” says Bakersfield, California, estate lawyer Patrick Jennison. “Appointment books are getting filled.”

It was recently National Love Your Pet Day, and although you might think of your pet as family, under the law, pets are regarded as property – so although you can’t leave them money in your will, there are other ways you can make sure they are protected in the event of your passing.

You may have heard stories of people who left their entire fortune to their dog, but that isn’t exactly how it works. You can leave all your money to ensure your pet will be taken care of after your death, but it needs to be done in a certain way.

Because pets are considered property, you won’t be able to name them as a normal benefactor in your will, says Peter Elikann, Boston 25 legal analyst.

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