Don’t Send Your Student to College Without These 3 Things

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Don’t Send Your Student to College Without These 3 Things

Accidental injury is the leading cause of death for adults between ages 18 to 24 with over a quarter million being hospitalized yearly for non-lethal injuries. Not a statistic that parents – who are busy preparing their young adult heading off to college – want to think about.

However, there is something you can do to help prepare for an unexpected event in your college student’s life. Along with the notebooks and shower slippers, make sure your child is armed with these three critical legal documents.

HIPAA AUTHORIZATION FORM

What is it: The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a federal law that protects an adult’s private health information by preventing unauthorized people from accessing it. The HIPAA Authorization Form allows a person to give named recipients the authority to receive his or her healthcare information.

What you should know: In the event your adult child has an accident or serious illness, and you’re seeking information about his or her medical condition, you will not be able to obtain it. Healthcare providers are prohibited by law to disclose an adult’s personal health information to those who are not authorized to receive it. That includes the parents (even if you do pay the insurance bill).

Without a HIPAA Authorization Form in place, medical practitioners are prohibited from revealing any information regarding your child’s health status and treatment – even in the event of incapacitation. The only option to obtain this information is to have a court appoint you as guardian, which can take time.

What you should do: Have your child name you as an authorized party on the HIPAA Authorization Form and sign it. If your child is reluctant to give you permission to see his or her medical history, stipulate in the document any specific information that cannot be disclosed, such as matters concerning sex, drugs or mental health. Make sure everyone has a copy of this form.

POWER OF ATTORNEY FOR HEALTHCARE (ADVANCE DIRECTIVE)

What is it: A legal document that allows you to appoint someone else to act as your agent for healthcare decisions in the event you’re unable to make those decisions yourself due to incapacitation. Medical agents are given specific authority to determine the best healthcare option for those in their care. Take note that this document can go by other names depending on the state.

What you should know: In the event of unconsciousness or incapacitation, you will have no voice in your adult child’s medical care. All healthcare decisions will be made by the healthcare providers unless you get a court-appointed guardianship.

What you should do: In compliance with state law, prepare and sign a healthcare power of attorney form (or similar form) naming a primary agent and a successor agent (for instance, mom as agent, dad as successor agent). Make sure everyone has a copy of this document.

DURABLE POWER OF ATTORNEY FOR FINANCE

What is it: A legal document that allows you to appoint someone else to manage your financial affairs if you become incapacitated. This includes paying bills, managing bank accounts, signing tax returns, and conducting other necessary financial and legal matters.

What you should know: In the event of incapacitation, you will have no authority to manage your child’s bank account, pay bills, file a tax return, or break a lease unless you seek a court appointed conservatorship to do so.

What you should do: In compliance with state law, complete and sign a financial power of attorney form naming a primary agent and a successor agent. (for instance, dad as agent, mom as successor agent). Make sure everyone has a copy of this document.

THE NEXT BIG QUESTION: Which state’s documents should we use if my child is attending an out-of-state school?

Different states may have different requirements for powers of attorney to be valid. Many medical professionals and organizations are also wary about accepting documents with unfamiliar language. To ensure your forms will be readily accepted, it’s best to execute these documents in the state your child is attending school. Either an attorney licensed in that state can assist you, or you can check with the school about forms they recommend for their students.

If most financial affairs are conducted in your child’s home state (holding accounts and filing taxes), then it may be best to keep the durable power of attorney local. However, be aware that many banks may still not accept it – even if it is in state. Liability issues are always a top concern for these firms. It may be better to share a joint account with your child or have a power of attorney on file with the bank so access will not be an issue.

It is possible to execute two sets of powers of attorney – one for each state – depending on the circumstances. If this applies to you, meet with a qualified estate planning attorney who can ensure these documents are prepared correctly.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

Your Living Will: Why You Need One

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Your Living Will: Why You Need One

When medical intervention only prolongs the dying process, a Living Will is needed for your end-of-life care if you become incapacitated. In fact, it’s possible that without one, medical practitioners will continue life-sustaining treatment in order to avoid liability. Learn why this document is essential for both you and your loved ones.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

Should You Create a Do Not Resuscitate Order (DNR)?

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Should You Create a Do Not Resuscitate Order (DNR)?

Why would someone not want to be resuscitated? It’s possible CPR could do more damage than good depending on your current medical condition. Make sure you understand the realities of this life-sustaining procedure so you can make an informed decision with your medical provider.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

Want to Avoid Probate? Here Are 6 Ways to Do It

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Want to Avoid Probate? Here Are 6 Ways to Do It

Life is busy. If you’re like most people, you have a long list of things to do. However, it’s critical to make time regularly to consider whether you’ve set up your estate in a way that will result in your wishes being eventually fulfilled.

You may have heard people say you should “avoid probate” in your estate and wondered: What does that mean? How can I go about accomplishing it? This article will discuss some of the issues and show you six ways you may be able to avoid probate.

Probate is when the executor named in the will petitions the court to accept the will as valid. In the probate proceeding, the executor collects the assets of the deceased, pays the debts, pays estate or income taxes if owed, pays administrative expenses such as funeral bills and attorneys fees, and distributes the remaining assets among the beneficiaries named in the will.

The whole process is a matter of public record. The will is public as well as the accounting of what the executor does if filed. The process can take up to two years or more depending on the complexity of the estate. The more complicated, the more expensive and time consuming. Further, if the will is contested or the accounting is contested, there could be expensive litigation.

Some people want to avoid probate for two reasons:

They want the distribution of their assets to be as private as possible; and
They want to lessen the time and cost of distributing their assets.

Ways to Avoid Probate

There are various estate planning tools that you can use to avoid the probate process. You may not be able to completely avoid the process, but you may be able to limit the amount of assets that are necessary to go through probate. How? By having “non probate” assets in your estate or by removing assets from your estate while you are alive.

Here is a list of six ways to accomplish these goals:

1. Form a living trust.

Living trusts allow you to avoid probate by listing the trustee as the owner of the assets. With a revocable living trust, you remain in control of the assets, but upon death instead of the assets going through probate, your successor trustee can distribute them pursuant to your wishes set forth in the terms of the trust. This allows for privacy because a living trust is not a public record in the majority of cases. And the whole process is generally less expensive.

You can hold various assets in a trust such as real estate and bank accounts. It is important that you have a professional draft the trust for you and help you transfer the assets to the name of the trustee.

2. Jointly own real estate or bank accounts.

Putting another name on your assets so you own them jointly is also a way to avoid probate. You can form bank accounts with a joint holder or even real estate with rights of survivorship. Upon either of your deaths, the assets transfer directly to the survivor without the need for probate.

3. Have bank accounts with “payable on death” designated beneficiaries.

There are some bank accounts that allow you to list a beneficiary. Upon your death, the beneficiary will simply receive the assets.

4. Own securities that are transferable upon death to designated beneficiaries.

Similarly, it may be possible to list a beneficiary for your stocks and bonds accounts.

5. List beneficiaries for your IRAs, 401(k)s, or pension plans.

By listing beneficiaries for your IRAs, 401ks and pension plans, you can keep those assets from going into probate. Once you designate a beneficiary (or beneficiaries), it is important to keep the designations up-to-date. There have been many cases in which a person names his or her spouse as a beneficiary and then gets divorced. If he or she dies without updating the IRA, 401(k) or pension plan, the ex-spouse may get the money — regardless of what the will states.

6. Engage in gift giving using trusts and/or a limited partnership.

For more complicated estates, you can create various gift giving trusts that allow for you to gift assets at a discounted value. That way, you can remove more assets from your estate in order to avoid estate taxes. Similarly, a larger estate may use techniques such as a limited partnership to remove assets from the estate — not only to limit estate taxes, but to lessen probate assets. For the basic tax rules involved in gift giving, see the right-hand box.

If you are interested in any of these options or have questions about probate, consult with your estate planning advisor.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

Special Needs Trust: What Expenses Can It Pay For?

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Special Needs Trust: What Expenses Can It Pay For?

A special needs trust or a supplemental needs trust can be established to help a disabled individual who is receiving assistance from the government — or is eligible to receive it. Disabled people, who cannot support themselves and rely on government assistance, are not allowed to have more than a certain amount of personal assets, so family members can’t just give them money to pay for just any expenses. The use of a trust can pay for some expenses and keep the disabled person from being disqualified from receiving public assistance, including Medicaid or Supplemental Social Security, because he or she has acquired too much money.

Let’s say you are appointed to be a trustee of a special needs trust or supplemental needs trust. Or perhaps you are a beneficiary of such a trust or you want to set one up for a loved one. In these cases, you want to know what permissible expenses the trust can pay for without losing governmental support. This article will address the products, services and debts that a trustee can pay for a beneficiary — and which expenses are not permissible.

Quick Overview of Special Needs Trusts

If someone is deemed incapacitated or disabled, and is receiving governmental assistance such as Medicaid or SSI, the law allows for the creation of an irrevocable trust. This is also true if an individual is disabled and eligible for public assistance but has not yet applied for it. A special needs trust is funded by either a third party (such as a parent) or from the applicant under certain circumstances so that a designated trustee can pay for some expenses of the applicant without him or her losing the governmental assistance.

Assets can be held in the trust and used to pay for the beneficiary’s special or supplemental needs, which the government does not provide. Meanwhile, Medicaid could be paying the significant medical bills for the individual and SSI could be used to pay for food and shelter. If the medical assistance provided during the individual’s lifetime does not turn out to be costly, then upon the death of the beneficiary there is a chance that assets may be preserved in the trust and pass to loved ones. It is important to plan carefully with your estate planning attorney because in some cases the remaining assets could revert to the government under a “payback clause.”

Families can also use special needs trusts to shield excess income for Medicaid purposes. By using a trust in this way, a disabled Medicaid recipient can actually keep the benefit of almost all of his or her income under certain circumstances, rather than having to pay a portion of it towards the cost of his or her care.

Types of Expenses Allowed to Be Funded

Generally, a trustee of a special needs trust could use the money without penalty to pay for:

- - Medical and dental care not paid by other sources;
  - Private rehabilitation training, services or devices;
  - Supplementary education assistance;
  - Entertainment, hobbies;
  - Transportation;
  - Personal property and services.

In-Kind Support and In-Kind Maintenance

In-kind support and maintenance means that someone else, including a trustee, is helping an individual with his or her food and shelter expenses. Receiving In-kind support and maintenance that contributes to some or all of an individual’s food and shelter expenses could penalize the recipient or prevent him or her from receiving governmental support. This applies if the support is given in the form of gifts or payment of money or items that an individual could sell to pay for food or shelter. For Social Security Disability purposes, food and shelter includes the following expenses:

- - Room and board;
  - Rent;
  - Garbage collection and sewer;
  - Water;
  - Electricity, gas and heating fuel.

If a trustee provides in-kind support and maintenance to the beneficiary for the above services, the SSI benefits will be reduced up to a certain point. The amount by which the Social Security Administration will reduce a beneficiary’s payments is determined using certain models. It’s important to know how much SSI a beneficiary is receiving and what payments would need to be made from a trust that could be considered in-kind support and maintenance. A cost-benefit analysis would be necessary to determine if it is worth a trustee making in-kind support and maintenance payments that will cause a reduction in SSI benefits.

Special needs trusts or supplemental needs trusts are complex and there are serious implications for incorrectly paying certain expenses with them. Consult with your attorney about these issues if you want to set up a trust — or you are the beneficiary of one.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

Should You Name Your Trust as Beneficiary of Retirement Plan Assets?

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Should You Name Your Trust as Beneficiary of Retirement Plan Assets?

As you may know, the person (or persons) designated as the beneficiary of your tax-deferred 401(k) plan, 403(b) plan traditional IRA, Roth IRA and other retirement plans will receive that money when you die. These retirement plan assets are transferred by “operation of law,” which means that your will has no effect on them.

In other words, they pass outside of your will and are considered non-probate assets.

In general, married retirement account owners name their spouses or children as beneficiaries (it may even be required to name a spouse).

But in some situations, you may not want to name a person (or persons) as the beneficiary of your retirement plan. You may want to name a trust.

Here are some examples:

- - You may not want the beneficiary to receive all the money in the retirement account at once. A trust will allow they money to be distributed over time.
  - An individual may want to name his or her siblings as beneficiaries of a retirement account. But in the event one of the siblings dies, the account holder wants the children of the sibling to receive the money. A trust would allow this type of flexibility.
  - You may want to restrict the use of the money by a beneficiary (for example, to pay for college) or to care for a special needs child. Again, a trust would allow this while simply designating the beneficiary on your account would not.
  - The bulk of your money is held in retirement accounts and you want to set up a marital bypass trust to be the beneficiary in order to decrease estate tax.
  - An individual is remarrying and wants to set up a trust to ensure his new spouse and his children from a previous marriage receive a certain amount of money from the retirement accounts.

In these cases, as well as in other situations, you may be able to meet your goals by designating a trust as the beneficiary of your retirement account(s).

Tax Implications

However, naming a trust as the beneficiary of your retirement plan has tax implications.

In general, when a distribution is made from a tax-deferred retirement plan, the amount is taxable in the year it is received.

When a trust is named as the beneficiary of the retirement plan, the plan itself is not transferred. The assets are eventually distributed from the plan to the trust after the account holder’s death, and distributions are taxable at that time.

Therefore, if you are setting up a trust and funding it with retirement plan assets, you need to look at the tax costs and benefits. For example, if you want to leave retirement assets to your spouse and you want to defer taxes for years into the future, it is generally better to name the spouse outright as a beneficiary of the account rather than name a trust as the beneficiary. With a trust, a federal (and possibly state) income tax bill would be due in the year of the retirement plan distribution to the trust while as an outright beneficiary, your spouse has the ability to take a distribution or allow the tax deferral to continue for years.

Naming a trust as a beneficiary of your retirement plan can be a complex transaction. You need to first find out if the plan administrator allows a trust to be a beneficiary. You should also consider alternatives. For example, more emphasis on a properly prepared look-through trust can avoid negative income tax consequences and allow the trust beneficiary to take distribution over years. Consult with your estate attorney or a qualified adviser before finalizing any decisions.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

How to Handle Someone’s Taxes After They Die

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How to Handle Someone’s Taxes After They Die

The death of a loved one is always difficult but it can be even more challenging if you are the one who must handle all the resulting tax responsibilities.

There are a couple different ways you can assume the required duties:

- You may be named as the executor of the decedent’s estate under his or her will.
- In the absence of a will, you could be appointed as the administrator by the probate court.

Either way, the duties are essentially the same, so for purposes of this article, we’ll call the person with the responsibility the executor.

What must be done? The executor is charged with the task of finding the estate’s assets, paying off its debts, and distributing whatever is left to the rightful heirs and beneficiaries. The executor is also required to file the necessary tax returns and pay any taxes due. If you are the executor and fail to do this, the IRS can come after you personally for tax underpayments, plus penalties and interest. So you need to understand what is involved and get the proper assistance from your attorney.

One of the duties is to make sure the decedent’s final 1040 form is filed. The decedent’s final tax return covers the period from January 1st through the date of death. The return is due on the normal date (generally April 15 of the following year). If the decedent was unmarried, the final 1040 is prepared in the usual fashion. When there is a surviving spouse, the final 1040 can be a joint return filed as if the decedent were still alive as of year end. The final joint return includes the decedent’s income and deductions up to the time of death, plus the surviving spouse’s income and deductions for the entire year.

The Handling of Medical Expenses

If large uninsured medical expenses were accrued but not paid before death, the executor must make an important choice about how they are treated for tax purposes. Along with any medical expenses paid before death, these accrued expenses can generally be deducted on the decedent’s final 1040 to the extent they exceed 7.5% of adjusted gross income (AGI) in 2017 and 2018.* This is an exception to the general rule that expenses must be paid in cash before they can be deducted. Final medical expenses can easily exceed 7.5% of AGI, especially if death occurs early in the year before much income is earned.

Alternatively, an executor can choose to deduct the accrued medical expenses on the decedent’s federal estate tax return. Of course, this is the wrong choice if no federal estate tax is owed. However, when estate tax is due, deducting accrued medical expenses on the estate tax return is usually the tax-smart option. Why? Because the estate tax rate is 40% while the decedent’s final income tax rate could be as low as 10%. Plus, the full amount of the accrued medical expenses can be deducted on the estate tax return (not just the excess over 7.5% of AGI).

In addition to the final tax return and the medical expenses, here are the rest of the tax-related duties:

File the Estate’s Income Tax Returns. Immediately after death, the decedent’s estate may take over ownership of some or all of the decedent’s assets. If so, the estate will be taxed on its income under complicated IRS guidelines applicable to trusts.

Important distinctions: We are talking about income taxes for the estate, not the final income taxes of the decedent. And the federal estate tax is an entirely different subject.

Small estates (with gross income under $600) aren’t required to file income tax returns. If you are in charge of an estate that must file, get professional help to assist you with this onerous chore because the tax law is very complex.

File the Estate’s Estate Tax Return. The federal estate tax return is filed on Form 706. Assuming the decedent did not make any sizable gifts before dying, no estate tax is due, and no Form 706 is required, unless the estate is worth over $11.18 million in 2018 (up from $5.49 million in 2017). By sizable gifts, we mean in excess of $15,000 to a single recipient for 2018 (up from $14,000 in 2017). If sizable gifts were made, the excess over the $15,000 threshold is added back to the estate to see if the annual limit in effect for that year is surpassed.

Form 706 is due nine months after death, but the deadline can be extended up to six months. Remember: While life insurance proceeds are generally free of any income tax, they are usually included in the decedent’s estate for estate tax purposes — even if the money goes directly to policy beneficiaries. In fact, life insurance proceeds are the most common cause of unexpected estate tax bills.

One other very important point: Assets inherited by a surviving spouse are not included in the decedent’s estate, as long as the surviving spouse is a U.S. citizen. This is called the unlimited marital deduction privilege and it’s the most common reason why many large estates don’t owe any federal estate tax.

If you are the executor of a substantial estate, consult with your tax advisor even if you think no estate tax is actually due. If you’re correct, the cost to confirm your conclusion will be minimal. If you’re wrong, filing Form 706 is generally a complicated matter and you may need professional assistance. Also, an experienced estate advisor may be able to find perfectly legal ways to substantially reduce the tax bite or even make it disappear.

*Important Note: This figure previously rose to 10% for some taxpayers but thanks to the Tax Cuts and Jobs Act of 2017, it reverts to 7.5% for 2017 and 2018.

More Miscellaneous Details

- If an estate must file income tax or estate tax returns, a federal employer identification number (EIN) must be obtained from the IRS.
- You should open a checking account in the name of the estate with some funds transferred from the decedent’s accounts.

The bank will ask for the estate’s EIN. Use the new account to accept deposits from income earned by the estate and to pay expenses – such as outstanding bills, funeral and medical expenses, and, of course, taxes.

- Finally, state income tax returns and perhaps a state estate tax return will have to be filed.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

No Will? Who Gets the Assets?

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No Will? Who Gets the Assets?

Let’s say an individual dies without a will. Who will inherit his or her assets? The first in line are spouses and children. But what if the individual is single, has no children, no siblings and his or her parents are dead? What if the only relatives the deceased person has are aunts, uncles or cousins? How will the estate be divided?

Without a will, state laws will determine exactly who will receive the assets and who should serve as an executor or personal representative.

In cases of intestacy, there may be a kinship or heirship proceeding to determine the identity of the heirs and the shares of the estate that each individual is entitled to receive. Relatives who come forward have to prove their ancestry. Individuals not only have to prove they are family members; they also have to prove there are no other relatives who can receive the inheritance ahead of them.

A notice may have to be published in a local newspaper stating there is a proceeding to determine kinship or heirship.

The result can be a long, drawn out process.

Example of a Lengthy, Acrimonious Dispute

Before he was a Supreme Court judge, Justice John G. Roberts heard a case involving a bitter heirship dispute that he likened to Charles Dickens’ novel Bleak House. The case followed years of litigation involving matters related to the estate.

Facts of the case: According to court documents, Lew Gin Gee Jung died in 1995 and was survived by five children. Although multiple versions of her will were drafted by her son-in-law, an attorney, she never signed a final version and therefore died intestate.

Shortly after Jung’s death, one of her daughters challenged the heirship of one of the sons named Bow. In a court proceeding, Bow was required to produce a birth certificate to prove that he was a natural born son of Mother Jung. Born in rural China in 1933, Bow could not produce a ”Western style” birth certificate issued contemporaneously with his birth, but instead produced immigration papers and other records indicating that he was the son of Jung.

The Probate Court ordered the exhumation of Jung’s body for DNA testing to settle the heirship dispute. Justice Roberts wrote, “Even Dickens would have been impressed by the modern twist in this chapter of the Jung family’s Bleak House.” (Jung, U.S. Ct. of Appeals for the D.C. Circuit 6/25/04)

The DNA testing established that Bow was the son of Jung and so a judge ordered the personal representative to distribute her share of the estate to him. It was finally disbursed to him more than five years after his mother’s death — only to be involved in more litigation over the amount of interest paid on the delayed distribution.

Other lawsuits were filed by Jung family members alleged intentional infliction of emotional distress, sought attorney’s fees and charged malpractice by the law firm originally drafting the final will not signed by Jung.

A Cautionary Tale

The Jung family dispute over kinship is an extreme cautionary tale about why you should have a will that can stand up to challenge. You don’t want your estate held up for years by individuals claiming a right to inherit your property or having to prove their ancestry.

When Does the State Receive an Estate’s Assets?

As explained earlier, if a person dies without a will, the state where he or she resides in at the time of death determines who will receive the assets under its rules of intestate succession. Only if no heirs can be found does the estate pass to the state government.

If you don’t have close relatives, a will can ensure your assets are distributed to friends, charities, or other parties that are important to you. Even if you do have close relatives, a will can ensure that you, and not the state, decide who gets your property at your death. Consult with your attorney for more information in your situation.

Today’s Family Size Provides Another Reason to Have a Will

For decades, U.S. Census figures have shown that married couples are having fewer children. More people are living alone, unmarried or residing in non-traditional households.

With family sizes shrinking, it may be more difficult to find heirs if a person dies without a will.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

No Children but Lots of Cousins? Who Inherits Without a Will?

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No Children but Lots of Cousins? Who Inherits Without a Will?

Here’s an issue that sometimes occurs in the administration of an estate: A person dies without a spouse or children. The individual’s nearest family members are cousins or other extended family members and they cannot be found. Who inherits the decedent’s assets?

When a decedent dies without a will (called “intestacy”), the distribution is generally as follows:

1. To the spouse (and possibly part of the assets pass to the children);

2. If there is no spouse or the spouse is predeceased, then assets pass to the children;

3. If there is no spouse and no children, then assets pass to the parents;

4. If there is no spouse, no children and the parents have died, then assets pass to the siblings;

5. If there is no spouse, no children, the parents and the siblings have died, then assets pass to nieces and nephews;

6. If there is no spouse, no children, the parents have died, there are no siblings or the siblings have died without children, then assets pass to the grandparents (if living) and if not, then to aunts and uncles. If the aunts and uncles are deceased, then assets pass to the cousins.

So, in an intestate situation, a person could die and leave only cousins as heirs.

This can also occur even if the decedent has a will and many of the beneficiaries listed have predeceased the person. If a beneficiary dies before the testator, it is called “lapsing” and his or her share goes to other named residuary beneficiaries of the estate (those people who inherit assets after paying specific bequests) unless it is specified otherwise. The laws of each state vary.

Depending on where you live, there may be anti-lapse statutes wherein state law allows certain decedents (usually children of siblings) to inherit if the sibling predeceases the testator even in cases when the testator failed to mention them in the will.

Conversely, if a beneficiary who was intended to inherit part of the residuary estate predeceases the testator, and that beneficiary is not covered by the anti-lapse statute, then that beneficiary’s inheritance will return to the residuary estate, to be inherited by the other residuary beneficiaries. If there are no surviving residuary beneficiaries and the anti-lapse statute does not apply, then possibly extended family members may inherit.

Therefore, depending on the various scenarios, there can be situations when the estate assets would go to extended family members even if there is a will.

If there’s a possibility that the extended family members will inherit from the decedent, it’s a good idea to draft a family tree during the estate planning process. That way, the personal representative of the estate will have a family tree diagram and possibly an affidavit to review when determining which extended family members will inherit the assets of the estate.

Otherwise, it can be extremely time consuming and costly for the personal representative to find the names of the extended family members — and their locations — in order to serve a citation or notice for them to appear in court or become aware of the estate proceeding.

Kinship Proceeding

Further, if there is ambiguity in a family tree, when it comes time to account for and distribute assets, a kinship proceeding may be necessary to resolve who is entitled to inherit from the decedent.

In a kinship matter, the heir or heirs who seek to establish kinship must prove it, or the court will dismiss their petitions to establish kinship and the court will order the assets be deposited for the benefit of “unknown distributees” with the state. No one wants the money to go to the state because proof of kinship cannot be established.

Therefore, it is important for you to have a proper estate plan that sets forth all your wishes and prioritizes your relationships. Speak with your attorney about these issues.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

7 Estate Planning Questions to Ask When Marrying Late in Life

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7 Estate Planning Questions to Ask When Marrying Late in Life

Although senior citizens are aging, their hearts remain young. Marrying later in life to establish companionship is a route that many people take. For many older people, there is nothing stopping them from continuing their adventures and at the same time enjoying their extended families.

However, if older people marry late in life, how should they handle estate planning? Most people in their seventies or even eighties still have their mental capacity to make proper estate planning decisions. However, as people reach their late eighties and nineties, there is more likelihood they may have diminished capacity.

Therefore, prior to marrying or re-marrying, older people should consider putting their estate plans together so they cover their intentions.

People marrying in their later years confront a variety of issues that younger couples do not face. For example, they may have accumulated considerable assets separately and may both have children from earlier relationships.

Getting married has a range of financial implications when it comes to Social Security, receiving alimony from a former spouse, Medicaid, retirement benefits, taxes and health insurance. For these reasons, many people decide to live together, rather than marry.

But if you are considering tying the knot later in life, here are seven questions to consider:

1. Where Are You Going to Live?

When you marry, you will have to choose a place to live. If you own, do you give it up to live with your partner? Or should you have your partner move in with you? Or do you find a new place to live? What happens if you move and then your partner dies? What happens if your partner lives with you and you pass? Who inherits the real estate and property?

Some of these issues can be handled with a revocable trust or maintaining a life estate. So, if you move into your partner’s home, you can have a life estate set up or put the house in a trust so you can live there. A trust or a life estate protects you from uncertainties when one of you passes. Also, it allows for you to pass your inheritance to other family member while allowing you or your partner to be taken care of in your lifetime.

1. How Are You Going to Pay for Your Expenses?

You may need to look into Medicaid planning in case one of you has to go into a nursing home. Forming a supplemental needs trust may help you avoid paying your assets for nursing home expenses — and yet still obtain Medicaid to help pay the bill.

1. Who Will Make Financial Decisions if You Need Help?

It is important to have a Power of Attorney in place in case you need someone to help with your banking and finance needs. Your new spouse could be your attorney-in-fact, in other words, the person who has a right to handle your finances when you cannot do so. Or perhaps you have another family member or friend who can be the attorney-in-fact. If you marry later in life, your spouse may eventually have diminished capacity too, so it is important to pick someone who can be there for you over the long term to make financial decisions.

1. Who Will Make Your Health Care Decisions if You Become Incapacitated?

This decision is very important. So many times, family members dispute who should make health care decisions — especially if you have children and have remarried. If the children do not agree with your new spouse, this can cause complications. Be very careful to draft a health care proxy so people know who can make decisions for you.

1. If You Have Assets for Distribution, Who Will Receive Them?

If you marry later in life, you may not want all of your assets to go to your new spouse. You may have children from a previous marriage, grandchildren, nieces, nephews or friends that you have known for years that you would like to designate as beneficiaries. Testamentary trusts that become active when you pass could be a way to help you distribute your assets to your family and friends while at the same time providing for your spouse during his or her lifetime. Also, you should also consider drafting a written prenuptial agreement that outlines who gets what upon death.

1. Who Is Going to Run Your Estate?

You need to pick a person to be the personal representative or executor of your estate. You may also need to pick a trustee. If you choose your new spouse, you should also select a successor representative so if your spouse is incapacitated or unable to handle the estate, you have someone else that you trust to handle it.

1. If You Have Children, How Are they Going to React?

If you have children and you remarry late in life, the children may feel threatened by your new spouse. They may have concerns in regard to inheritance, finances and health care decisions that will be made for you. Addressing these issues with your children can go a long way toward promoting family harmony and helping your family members accept your new spouse. Talk with your children before you get married so they know that you will protect their interests while at the same time allowing yourself the happiness you deserve.

There are likely many decisions to make and documents to sign if you tie the knot later in life. Both parties should consider drafting new wills and a prenup. Consult with your estate planning attorney about these matters prior to the ceremony.

This article only discusses some of the estate planning issues involved with getting married.

Have an estate planning question or concern? Please let us know! Call us at 630.665.2300 or click the button to schedule a complimentary consultation.

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