Manish C. Bhatia

Why is Estate Planning necessary?

In Illinois, if you have assets in excess of $100,000, which includes your home and life insurance benefits, outside of a Trust or other ownership instrument, your estate will be subject to probate at your death.

Probate is a public process by which a resident’s property is distributed by the state, specifically the Probate Court.  The process typically lasts 9 to 18 months, and allows individuals and creditors to challenge the decedent’s Will and file claims against the decedent’s property.  Additionally, the probate process can cost up to 10% of the estate, depending on its size and complexity.

A properly funded Revocable Living Trust can help you avoid or reduce the lengthy, costly probate process and allow you to distribute your assets according to your wishes.  You will remain in full control of your assets during your life.  You will also determine who will own or control your assets after death.  A WILL DOES NOT AVOID PROBATE! Only a Revocable Living Trust can help you avoid the Probate Court.

Furthermore, proper Estate Planning can help you reduce estate tax liability (also known as the death tax or inheritance tax) by utilizing the Federal and State estate tax exemptions to the fullest extent possible.  If you have a taxable estate, failure to plan could cost you nearly half of your taxable estate.

A Revocable Living Trust will also allow you to establish a distribution pattern for your children (rather than allowing the State, which distributes all assets at age 18, to do so) and include or exclude any individuals from receiving property from your estate.

An Estate Planning attorney can also help you reduce gift tax liability and protect your assets from creditors of yourself, your spouse or your descendants.

But do I need it?

If you own a home or have a child, you need some form of Estate Planning.

Proper Estate Planning will help you provide a distribution pattern for assets to your children and grandchildren, avoid the costly process of probate and minimize the effects of the Federal estate tax and State death tax.

I already have a Will.  Is that enough?

A Will does not avoid probate, nor does it allow you to fully utilize the Federal and State estate tax exemptions.  While a Will is the document that most people associate with Estate Planning, it does not help you achieve the goals that have been discussed above.  Proper Estate Planning does include the use of a Will, but often as an ancillary document rather than a primary tool.

I had an Estate Plan established a few years ago.  Is it still adequate for my needs?

An Estate Plan should be reviewed every two years or so.  There are several events in life that should trigger a review of your Estate Plan, including:

1. marriage or divorce;
2. the birth of a child or grandchild;
3. serious illness or mental or physical disability of yourself or a family member;
4. a significant change in your financial situation;
5. receipt of a large inheritance; or
6. change in your employment situation, such as starting a new business or retirement.

Additionally, State and Federal laws change frequently.  In recent years, the Federal estate tax exemption amount has changed drastically on an annual basis.  It is therefore recommended that you follow up with a qualified attorney to discuss whether changes to your existing Estate Plan are necessary.

For a detailed explanation of when to review your Estate Planning documents, please see Newsletter #6.  If you require a review of your existing documents, please contact me to discuss.  There is no charge for a document review.