Overview, Part I
By Paul Nicolosi
Why Plan Your Estate?
The knowledge that we will eventually die is one of the
things that seem to distinguish humans from other living
beings. At the same time, no one likes to dwell on the
prospect of his or her own death. But if you postpone
planning for your passing until it is too late, you run
the risk that your intended beneficiaries those
you love the most may not receive what you would
want them to receive either because of extra
administration costs, unnecessary taxes or squabbling
among your heirs.
This is why estate planning is so important, no matter
how small your estate may be. It allows you, to ensure
that your assets and other possessions will go to the
people you want, in the way you want, and when you want.
It permits you to save as much as possible on taxes,
court costs and attorneys fees; and it affords the
comfort that your loved ones can mourn your loss without
being simultaneously burdened with unnecessary red tape
and financial confusion.
All estate plans should include, at minimum, two
important estate-planning instruments: a durable power of
attorney and a will. The first is for managing your
property during your life, in case you are ever unable to
do so yourself. The second is for the management and
distribution of your property after death. In addition,
more and more, Americans also are using revocable (or
living) trusts to avoid probate and to manage
their estates both during their lives and after
Your will is a legally binding statement directing who
will receive your property at your death. It also
appoints a legal representative to carry out your wishes.
However, the will covers only probate property. Many
types of property or forms of ownership pass outside of
probate. Jointly owned property, property in trust, life
insurance proceeds and property with a named beneficiary,
such as IRAs, insurance policies or 401(k) plans, can all
pass outside of probate.
Why should you have a will?
Here are some reasons.
First, with a will you can direct where and to whom your
assets (what you own) will go after your death. If you
died instate (without a will), your estate would be
distributed according to state law. Such distribution may
or may not accord with your wishes.
Many people try to avoid probate and the need for a will
by holding all of their assets jointly with their
children. This can work, but often people spend
unnecessary effort trying to make sure all the joint
accounts remain equally distributed among their children.
These efforts can be defeated by a long-term illness of
the parent or the death of a child. A will can be a much
simpler means of affecting ones wishes about how
assets should be distributed.
The second reason to have a will is to make the
administration of your estate run smoothly. Often the
probate process can be completed more quickly and at less
expense to your estate if there is a will. With a clear
expression of your wishes, there are unlikely to be any
costly, time-consuming disputes over who gets what.
Third, only with a will can you choose the person to
administer your estate and distribute it according to
your instructions. In Illinois this person is called your
personal representative. If you do not have a
will naming him or her, the court will make the choice
for you. Usually the court appoints the first person to
ask for the post, which is most closely related to you at
the time of death.
Fourth, for larger estates, a well planned will can help
reduce estate taxes.
Fifth, and most important, through a will you can appoint
who will take your place, as guardian of your minor
children should both you and their other parent both pass
Filling out the worksheet that our office provides will
help you make decisions about what to put in your will.
Bring it and any additional notes to our office and our
estate planning professionals will be able to efficiently
prepare a will that meets your needs and desires.
Estate Administration- Probate Procedure
Probate is the process by which a deceased persons
property, known as the estate, is passed to
his or her heirs and legatees (people named in the will),
the entire process, supervised by the probate court,
usually takes about one year. However, substantial
distributions from the estate can be made in the interim.
The emotional trauma brought on by the death of a close
family member is often accompanied by bewilderment about
the financial and legal steps the survivors must take.
The spouse who passed away may have handled all of the
couples finances. Or perhaps a child must begin
taking care of probating an estate about which he or she
knows little about. And this task may come on top of
commitments to family and work that cant be set
aside. Finally, the estate itself may be in disarray or
scattered amount many accounts, which is not unusual with
a generation that saw banks collapse during the
Here we set out the steps the surviving family members
should take. These responsibilities ultimately fall on
whoever was appointed executor or personal representative
in the deceased family members will. Matters can be
a bit more complicated in the absence of a will, because
it may not be clear who has the responsibility of
carrying out these steps.
First, secure the tangible property. This means anything
you can touch, such as silverware, dishes, furniture, or
artwork. You will need to determine accurate values of
each piece of property, which may require appraisals, and
then distribute the property as the deceased directed. If
property is passed around to family members before you
have the opportunity to take an inventory; this will
become a difficult, if not impossible, task. Of course,
this does not apply to gifts the deceased may have made
during life, which will not be part of his or her estate.
Second, take your time. You do not need to take any other
steps immediately. When bills do need to be paid, they
can wait a month or two without adverse repercussions.
Its more important that you and your family have
time to grieve. Financial matters can wait. When
youre ready but not a day sooner, meet with one of
our attorneys to review the steps necessary to administer
the deceaseds estate. Bring as much information as
possible about finances, taxes and debts. Dont
worry about putting the papers in order first; our
attorney will have experience in organizing and
understanding confusing financial statements.
In general rules of estate administration include
the following steps:
1. Filing the will and petition at the probate court in
order to be appointed executor or personal
representative. In the absence of a will, heirs must
petition the court to be appointed
administrator of the estate.
2. Marshalling, or collecting the assets. This means that
you have to find out everything the deceased owned. You
need to file a list, known as an inventory,
with the probate court. Its generally best to
consolidate all of the estate funds to the extent
possible. Bills and bequests should be paid from a single
checking account, either one you establish or one set by
our firm on your behalf, so that you can keep track of
3. Paying bills and taxes. If an estate tax return is
neededgenerally if the estate exceeds $675,000 in
valueit must be filed within nine months of the
date of death. If you miss this deadline and the estate
is taxable, severe penalties and interest may apply. If
you do not have all of the information available in time,
you can file for an extension and pay your best estimate
of the tax due.
4. Filing tax returns. You must also file a final income
tax return for the decedent and, if the estate holds any
assets and earns interest or dividends, an income tax
return for the estate. If the estate does earn income
during the administration process, it will have to obtain
its own tax identification number in order to keep track
of such earnings and file an estate income tax notion in
addition to the decedents final income tax return.
5. Distributing property to the heirs and legatees.
Generally, executors do not pay out all of the estate
assets until the period runs out for creditors to make
claims, which in Illinois is 6 months from the date the
estate, notice of death in the newspaper. But once the
executor understands the estate and the likely claims, he
or she can distribute most of the assets, retaining a
reserve for unanticipated claims and costs of closing out
6. Filing a final account. The executor must file an
account with the probate court listing any income to the
estate since the date of death and all expenses and
estate distributions. Once the court approves this final
account, the executor can distribute whatever is left in
the closing reserve, and finish his or her work
Avoiding probate through joint ownership or trusts can
eliminate some of these steps. But whoever is left in
charge still has to pay all debts, file tax returns, and
distribute the property to the rightful heirs. You can
make it easier for your heirs by keeping good records of
your assets and liabilities. This will shorten the
process and reduce the legal bill.
Guardianship and Conservatorship
Every adult is assumed to be capable of making his or her
own decisions unless a court determines otherwise. If an
adult becomes incapable of making responsible decisions
due to a mental disability, the court will appoint a
substitute decision maker, called a guardian.
Guardianship is a legal relationship between a competent
adult (the guardian) and a person who because
of incapacity is no longer able to take care of his or
her own affairs (the ward). The guardian is
authorized to make legal, financial, and health care
decisions for the ward. Depending on the terms of the
guardianship, the guardian may or may not have to seek
court approval for various decisions, but generally the
guardian acts without being required to incur the expense
of court approval.
Some incapacitated individuals can make responsible
decisions in some areas of their lives but not others. In
such cases, the court may give the guardian
decision-making power over only those areas in which the
incapacitated person is unable to make responsible
decisions (a so-called limited guardianship).
In other words, the guardian may exercise only those
rights that have been removed from the ward and delegated
to the guardian. Guardianships are consuming and
expensive. Prefer planning with Power of Attorneys for
health care and financial matters will significantly
reduce cost and time in the event you became
incapacitated. (See Page for detailed discussion of Power
Generally a person is judged to be in need of
guardianship when he or she shows a lack of capacity to
make responsible decisions. A person cannot be declared
incompetent simply because he or she makes irresponsible
or foolish decisions, but only if the person is shown to
lack the capacity to make sound decisions. For example, a
person may not be declared incompetent simply because he
or she spends money in ways that seem odd to someone
else. Also, a developmental disability or mental illness
is not, by itself, enough to declare a person
Anyone interested in the proposed wards well being
can request a guardianship. An attorney is usually
retained to file a petition for a hearing in the probate
court in the proposed wards county of residence.
The proposed ward is entitled to legal representation at
the hearing, and the court will appoint an attorney if
the allegedly incapacitated person cannot afford lawyer.
At the hearing, the court with the help of the Guardian
ad Litem attempts to determine if the proposed ward is
incapacitated and, if so, to what extent the individual
requires assistance. If the court determines that the
proposed ward is indeed incapacitated, the court then
decides if the person seeking the role of guardian will
A guardian can be any competent adult-the wards
spouse, another family member, a friend, a neighbor, or a
professional guardian (an unrelated person who has
received special training). A competent individual may
nominate a proposed guardian through a durable power of
attorney in case she ever needs a guardian.
The guardian need not be a person at allit can be a
non-profit agency or a public or private corporation. If
a person is found to be incapacitated and a suitable
guardian cannot be found, courts in many states can
appoint a public guardian, a publicly financed agency
that serves this purpose. In naming someone to serve as a
guardian, courts give first consideration to those who
play a significant role in the wards life
people who are both aware of and sensitive to the
wards needs and preferences. If two individuals
wish to share guardianship duties, courts can name
Court often give guardians broad authority to manage the
wards affairs. In addition to lacking the power to
decide how money is spent or managed, where to live and
what medical care he or she should receive, wards also
may not have the right to vote, marry or divorce, or
carry a drivers license. Guardians are expected to
act in the best interests of the ward, but give the
guardians often-broad authority; there is the
potential for abuse. For this reason, courts hold
guardians accountable for their actions to ensure that
they dont take advantage of or neglect the ward.
The guardian of the property inventories the wards
property, invests the wards funds so that they can
be used for the wards support, and files regular,
detailed reports with the court. A guardian of the
property also must obtain court approval for certain
financial transactions. Guardians must file an annual
account of how they have handled the wards
finances. Guardians must offer proof that they made
adequate residential arrangements for the ward, that they
provided sufficient health care and treatment services,
and that they made available educational and training
programs, as needed. Guardians who cannot prove that they
have adequately cared for the ward may be removed and
replaced by another guardian.
For more information, please see Part
II of this
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