Estate Planning FAQs

Q. What is estate planning?
A. In the past, estate planning was typically described as the process of helping you plan for the care of your property and your family after your death. Usually this is done by executing documents such as wills and trusts. Estate planning now often includes a "disability" component, to help you plan for the care of your property and your family if you become disabled. This may require the preparation of documents such as a living will or a power of attorney for health care or for property. But estate planning is more than just the preparation of documents -- at its heart, estate planning involves analyzing a client's finances and family situation, helping the client to assess his or her goals, and then working with the client to achieve those goals.
Q. What does a will do?
A. By a will, you can... a. Give away your probate property (see below); b. Name someone (in Illinois, called an "executor") to handle your affairs after your death; and c. Name someone (a "guardian") to care for your minor children after your death.
Q. What is Probate?
A. Probate is designed to create a "final accounting" upon death. It is the legal process of "proving up" a Will, or verifying that a Will is valid, takes place in one of two instances. First, if a person dies leaving behind a Will, or second, if the deceased has died intestate, that is, has not left behind a Will or estate plan of any type or the Will cannot be found.
Q. Does the Probate process take a long time?
A. Depending on the complexity of the estate and the thoroughness with which accounting has been carried out before death, probate can either be a relatively simple task or a daunting one. Be aware that no matter the situation, probate may be a lengthy process often taking months or possibly years to play out, and one which may take a considerable amount of an executor’s time.
To summarize the process, probate can be broken into six basic steps:
  1. Validation of the Will
  2. Appoint executor
  3. Inventory estate
  4. Pay claims against the estate
  5. Pay estate taxes
  6. Distribute remaining assets

Each of these steps involve legal documentation and validation, and more importantly, proper accounting each step of the way.
Q. What is Probate Court?
A. Probate begins and ends with the special Probate Court set up in each state to handle estate issues. (Sometimes known as the Orphan’s or Chancery Court in certain states.) All actions taken regarding the estate are accountable to this court, and must be noted and reported regularly. This court is staffed by special judges qualified to oversee estate resolution issues.
Q. What is probate property?
A. "Probate property" is property that you own in your own name at the time of your death. Probate property is not... a. Jointly-owned property. When a joint tenant dies, this type of property automatically passes to the surviving joint tenant; b. Retirement benefits, such as property held in a 401(k) or IRA account. This property passes according to the beneficiary designation that you filled out during your life; c. Life insurance. This property also passes according to the beneficiary designation that you filled out during your life; or d. Property held in a trust. This property passes according to the terms of the trust.
Q. What is a trust?
A. Essentially, a trust is an agreement between three parties: the trust's creator (known as the "grantor"), the trust's beneficiary, and the trustee of the trust. A trust is typically created when the grantor and the trustee sign the trust agreement and the grantor transfers property to the trustee. While the trustee holds legal title to the trust property, he or she cannot use it for just any purpose. Instead, the trustee must hold the property on the terms of the trust agreement, for the benefit of the beneficiary. Many different kinds of trusts can be created. Perhaps the most popular trust is a "living trust" (discussed below). Other trusts (such as gift trusts, insurance trusts, and charitable trusts) can be created in order to minimize taxes.
Q. What is a living trust?
A. A living trust (sometimes known as a "declaration of trust" or a "revocable trust") has become a popular estate planning vehicle in the past decade or so. In a typical living trust, the grantor of the trust is also its beneficiary and the trustee. This means that the grantor is not giving up any control over the trust property. But why is it advantageous to hold property under such an arrangement? There are a number of reasons:
a. Non-Probate Aspect. As mentioned above, property held in a trust is not probate property, and is therefore not subject to probate. b. Privacy. Unlike a person's will, a trust is a private document, and does not need to be filed with the court or made accessible to the general public at any time. c. Guardianship Avoidance. If an individual with a trust becomes disabled, his or her successor trustee can step in and administer the trust with little or no problem. If an individual without a trust becomes disabled, guardianship proceedings may need to be initiated in order to care for the individual. d. Control. A trust allows you to control the way in which beneficiaries receive property from the trust. In contrast to an outright gift, money or property placed in trust can be held for the beneficiary on terms and conditions that you have chosen. For instance, you may decide that property in your son's trust should be used only for his education, or that your daughter should not receive the money from her trust until she is 30 years old. e. Creditor Protection. Assets you place in trust for a child or grandchild cannot be reached by the child or grandchild's spouse in a divorce proceeding, or by most other creditors. f. Estate Tax Minimization and Deferral. A trust provides the easiest way to create arrangements that minimize and/or defer estate taxes.

If you would like to set up a free estate planning consultation, please contact Matt.