In the United States, over half of all adults do not have an estate plan in place, despite understanding the importance of having a plan. When asked about why they have yet to create their estate plan, one of the most commonly given responses is that the entire concept is intimidating. This is understandable given the fact that most estate planning concepts and terms are not used outside of estate planning. In an effort to introduce you to some of those concepts and terms, the Lincolnshire estate planning lawyers at Hedeker Law, Ltd. put together the following five frequently asked questions and answers.
- What is a Last Will and Testament and what happens if I don’t have one when I die? A Last Will and Testament is a legal document that is used to express an individual’s wishes with regard to his/her estate assets and what should be done with them upon the Testator’s (creator of the Will) death. If a decedent left behind a valid Will, he/she is said to have died “testate.” When no valid Will was left behind by the decedent, the decedent is said to have died “intestate.” If you die intestate, the Illinois intestate succession laws will determine what happens to your estate assets and only close family members will inherit from your estate.
- What is probate and do all assets have to go through probate? When an individual dies, that person leaves behind an estate consisting of all assets owned by the decedent at the time of death. Probate is the legal process that ultimately leads to transferring those assets to the intended beneficiaries and/or heirs of the estate. One of the first things that must be done during the probate process is to determine which assets are probate assets and which assets are non-probate assets. Non-probate assets bypass the probate process and may be distributed to the intended beneficiary immediately. Common examples of non-probate assets include:
- Assets held in a trust
- Proceeds of a life insurance policy
- Certain types of jointly help property
- Assets held in an account with a “payable on death (POD)” or a “transfer on death (TOD)” designation
- Certain retirement, pension accounts
- What is a trust and do I need one? A trust is a relationship whereby property is held by one party for the benefit of another. Although trusts have evolved to the point where there is a specialized trust for almost any estate planning goal, all trust begin with the same elements, including:
- Settlor – the person who creates the trust. A Settlor may also be referred to as the Grantor or Maker of the trust.
- Trustee – an individual or entity that administers the trust terms as well as manages and invests the trust assets.
- Beneficiary – a beneficiary is the person, entity, or even family pet that receives the benefit of the trust assets.
- Terms – created by the Settlor and may be anything that is not illegal or unconscionable.
- Funding – almost anything of value can be used to a fund a trust, including cash, securities, and real property.
- What is Medicaid and why would I need it as a senior? Medicaid is a healthcare program that is predominantly funded by the United States federal government; however, the individual states have the option to supplement funding for the program. Although it is primarily funded by the federal government, Medicaid is administered by the individual states, meaning the eligibility guidelines and benefits offered will differ somewhat from one state to another. The need to qualify for Medicaid will most likely arise as a result of the need for LTC. When you enter your retirement years you will stand about a 50 percent chance of needing LTC at some point before the end of your life. With each passing year, that chance increases. The cost of that care may prompt you to turn to Medicaid. As of 2016, the average cost of a year in LTC across the United States was $80,000 and neither your basic healthcare insurance nor Medicare will cover LTC care expenses. Medicaid, however, will help if you qualify for benefits.
- Can’t I just use DIY estate planning documents? Aside from failing to plan altogether, the single biggest mistake people make when creating an estate plan is trying to save money and time going the DIY route. DIY estate planning documents you encounter on the internet will likely have significant errors that cause litigation during the probate of your estate. Ultimately, the time and money it costs to deal with the issues caused by your use of DIY documents far exceeds the time and money you saved by going the DIY route.
Contact Lincolnshire Estate Planning Lawyers
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns regarding estate planning, or would like to get started on your plan, contact the experienced Lincolnshire estate planning lawyers at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.