Although most Americans acknowledge the need to have at least a basic estate plan in place, more than half of them do not have one. Various explanations are given for the seeming disparity, including the fact that estate planning can be intimidating for the first-time planner. Along with the need to make potentially life-changing decisions, estate planning involves the use of a number of tools and strategies with which the average person is not familiar. To help take some of the mystery out of the process, the estate planning attorneys at Nash, Nash, Bean & Ford, LLP explain some common estate planning tools.
Last Will and Testament
A Last Will and Testament is a legal document that communicates your final wishes pertaining to possessions and dependents. Your Will allows you to make both specific and general gifts. For example, you might make specific gifts of your vacation home along with $50,000 in cash to your son. You could also gift a percentage of your estate to a beneficiary. For example, you could gift half of your entire estate to your daughter. Your Will is also where you will appoint someone to be the Executor of your estate. Your Executor plays a vital role in the probate of your estate after your death. Finally, a Will provides you with the only official opportunity you will have to nominate a Guardian for your minor children in the event one is ever needed after you are gone. One of the most important benefits to executing a Will is that it ensures your estate will not be administered using the state’s intestate succession laws which distribute a decedent’s estate to legal heirs according to priority.
Trust – Testamentary or Living
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker, Trustor, or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor and which is typically activated by a provision in the Settlor’s Will. A living trust is a trust that takes effect as soon as all the legalities of creation are in place. Living trusts can be further divided into revocable or irrevocable living trusts.
An advance directive is a written statement of a person’s wishes regarding medical treatment that is created and executed to ensure those wishes are carried out should the person be unable to communicate them to a doctor. Because advance directives are predominantly governed by state law, the type of advance directives that are recognized, the decisions that can be made, and the language necessary to create an advance directive can vary slightly from state to state. Illinois recognized two types of advance directives, an Illinois Statutory Short Form Power of Attorney for Health Care and an Illinois Living Will. The Illinois Statutory Short Form Power of Attorney for Health Care allows you to appoint someone to be your Agent who will have the legal authority to make healthcare decisions if you can no longer speak for yourself. An Illinois Living Will allows you to direct that, if you are suffering from a terminal condition, death-delaying procedures will not be utilized to prolong your life.
Power of Attorney
A Power of Attorney allows you to appoint an Agent to act on your behalf in legal matters. A general POA gives your Agent almost unlimited authority to act on your behalf whereas a limited POA only gives the Agent the authority specifically enumerated in the POAs document. A traditional POA terminates on the death or incapacity of the Principal (the creator). If you make a POA durable, the authority you grant your Agent survives your incapacity.
Letter of Instructions
A Letter of Instructions provides you with the opportunity to include anything not included elsewhere in your estate plan, such as practical instructions and information an Executor might need to administer the estate. It is also frequently used to provide explanations for decisions made in an estate plan. The instructions or wishes included in a Letter of Instructions are not legally binding; however, they can be extremely helpful and can even prevent litigation if you made unusual or unexpected choices in your estate plan.
Contact Estate Planning Attorneys
For additional information, please join us for an upcoming FREE seminar. If you are ready to get started on your estate plan, contact the experienced estate planning attorneys at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.