When most people think about the concept of estate planning, they focus first on executing a Last Will and Testament. This isn’t surprising given that a Will is by far the most common and most recognized of all estate planning tools. As such, a Will frequently serves as the foundation of a more comprehensive estate plan; however, can a Will be your entire estate plan? The estate planning attorneys at Hedeker Law, Ltd. explain when a simple Will is enough and when you need more than just a Will.
Your Last Will and Testament
A Will is a legal document that allows the Testator (the creator of the Will) to make specific and/or general gifts of estate assets to beneficiaries. Those gifts will then be honored at the time of the Testator’s death. A well drafted Will can distribute the Testator’s entire estate, ensuring that the Testator does not leave behind an intestate estate. This is an important estate planning objective because when a decedent dies intestate, the Illinois intestate succession laws dictate what happens to the decedent’s estate assets, something you undoubtedly want to avoid. The Testator also names someone to be the Executor of the estate in a Will. The Executor is the individual who is responsible for overseeing the probate of the estate following the death of the Testator. Finally, a Will is the only opportunity you will have to officially nominate a Guardian for your minor children should a Guardian ever be needed.
When Is a Will Enough?
A Will accomplishes the most important, yet most basic, estate planning objectives. A Will has limits though. For someone who is relatively young, without a family of his/her own, and who has yet to acquire much in the way of assets, a Will can be enough. You will undoubtedly discover, however, that as both your estate assets and your family grow, you will also outgrow your Will. When you start to add additional goals to your estate plan, such as incapacity planning, asset protection, and probate avoidance, it is time to expand your estate plan.
When Do You Need More than Just a Will?
The only way to know with certainty that you have outgrown your current estate plan is to consult with your estate planning attorney; however, the following are common indications that a simple Will is no longer enough:
- Your assets have increased significantly in value. When your assets increase, the need to protect those assets from creditors, divorce, or an economic downturn increases as well. It may be time to include asset protection strategies in your plan.
- You marry and/or become a parent. Marriage and parenthood mean you now have additional beneficiaries and additional estate planning concerns. For example, because your minor children cannot inherit directly from your estate, you will need to set up a trust to protect your child’s inheritance.
- You need to plan for the possibility of your own incapacity. Once you have a family, you need to ensure they are provided for if you cannot provide for them. The terms of a Will only apply upon your death. To protect yourself and your family from the possibility of incapacity, you may want to add a revocable living trust to your estate plan.
- You start a business. A Will is not the best tool for transferring a small business. Instead, incorporate a business succession planning component into your estate plan.
- You want to plan for the high cost of long-term care. Unless you can afford to cover LTC expenses out of pocket, you will need to include Medicaid planning tools and strategies in your estate plan well ahead of time to ensure that you qualify for Medicaid if you need to down the road.
- Your estate’s value now potentially subjects it to gift and estate taxes. By planning ahead you can shelter a considerable amount of your wealth from taxation; however, it will take more than a simple Will to reduce your estate’s tax burden.
Contact Illinois Estate Planning Attorneys
Please join us for a FREE upcoming seminar. If you have questions or concerns regarding estate planning, contact the experienced estate planning attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.