Creating a successful estate plan requires you to focus on several inter-related goals that go beyond simply deciding how your estate will be distributed when you are gone. Although those goals will not be the same for everyone, there are some estate planning components that are common to most plans. Incapacity planning is one of those components. The living trust attorneys at Hedeker Law, Ltd. explain how a trust can fit into your incapacity planning component of your estate plan.
Why Is Incapacity Planning an Important Part of Estate Planning?
When you think about estate planning you probably focus first on the need to decide how your estate assets will be distributed in the event of your death. Death, however, is not the only thing that can wreak havoc on your estate and your loved ones. In fact, incapacity can be more difficult to handle and create even more confusion that death in the absence of an incapacity plan. One of the most common reasons given for the lack of an incapacity plan is the belief that one is not needed until later in life. This (faulty) line of thinking is predicated on the idea that incapacity only happens to the elderly as a result of things such as Alzheimer’s disease. The truth, however, is that you could become incapacitated long before you reach retirement age. One in five people can expect to suffer a period of disability lasting five months or more during their working years. You could become incapacitated as a result of a workplace accident, a motor vehicle collision, a debilitating illness, or a wide range of other causes.
The important thing to ask yourself is what would happen to your estate assets and your finances if you were to become incapacitated tomorrow? No one would be able to touch your assets without the proper legal authority. Even simple things such as maintenance and upkeep on your home could become a challenge if no one had the legal right to authorize the work. Furthermore, how would your bills be paid? If no one has the authority to access your financial accounts, the funds sitting in those accounts might as well not be there for all the good they would do. Don’t assume that a spouse will automatically be given access to your assets and accounts either. The fear of litigation leads to the “better safe than sorry” philosophy, resulting in a climate where even a spouse, parent, or adult child would likely be unable to access your assets.
How Can a Living Trust Help with My Incapacity Plan?
One of the most common incapacity planning tools is a revocable living trust. It is relatively easy to create as well as to modify and offers several advantages over other incapacity planning tools. When used as an incapacity planning tool, a revocable living trust lets you appoint yourself as the Trustee of the trust and appoint the person you would want to have control over your assets in the event of your incapacity as the Successor Trustee. Once the trust has been established you transfer assets into the trust. Because you are the Trustee, you continue to control and manage those assets as if the trust did not exist. Assets can be added to, or removed from, the trust easily. In the event of your incapacity, your chosen Successor Trustee takes over as Trustee automatically, giving him/her immediate control over the assets held in the trust. Because you create the trust, you can replace the Successor Trustee at any time with someone else in the event of a divorce, for example. Moreover, you can even decide ahead of time using the trust terms what will be required to prove your incapacity. For example, you might require two physicians to both agree before you can be declared to be incapacitated. Finally, should you period of incapacity end, you can easily be reinstated as the Trustee once again.
Contact Living Trust Attorneys
Please feel free to download our FREE estate planning worksheet. If you have questions or concerns regarding the incapacity planning or living trusts in Illinois, contact the experienced Illinois living trust attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.
Latest posts by Dean R. Hedeker (see all)
- Is Your Life Insurance an Untapped Asset? - August 20, 2019
- Estate Planning Concerns for Parents with Young Children - August 15, 2019
- Don’t Forget to Name a Successor Trustee - August 8, 2019