Having a solid estate plan means you can be reasonably sure that your wishes for end-of-life care and distributing your estate after your death will be followed. A well-designed plan can also make decisions easier for your loved ones.
Make a Will
A will is one of the most important documents you can have. This is where you outline provisions for:
- Distributing your assets
- Caring for your minor children
- Naming an executor to administer your estate
You can also include other provisions, such as specifying how to settle your debts.
If you die intestate, without a will, state statutes will determine how to handle your estate. In Illinois, this usually means your spouse gets at least half and your children split the remainder. Otherwise, your estate is divided among your nearest living relatives.
Minimize Probate Assets
Having a will does not avoid probate. The probate process verifies that your will is valid. There are ways you can ensure that many assets avoid probate, however. These include:
- Designating beneficiaries for financial accounts such as IRAs or annuities so ownership transfers automatically.
- Distributing assets while you're alive so they're not part of your estate when you die. Be aware that this could have gift tax consequences for your estate.
In Illinois, if your estate is under $100,000 and if it does not include real estate, state statutes allow your heirs to file a small estate affidavit to claim your estate without probate.
Arrange for Handling Your Finances
If you become unable to do things yourself such as manage investments or transfer money, you'll need someone you trust to do these things for you. You can accomplish this by granting that person, called your agent, a financial power of attorney. This document outlines what types of transactions your agent can undertake and under what conditions the power becomes effective.
Make Your Health Care Wishes Known
If you're incapacitated by a serious illness or an accident, you might not be able to communicate what medical treatments you want or don't want. You can declare your wishes with two important documents:
- A living will outlines when or if you want life prolonging interventions withheld or removed.
- A power of attorney for health care gives someone you trust the authority to access your medical records and make decisions about any medical care your doctor may recommend.
Make Plans for Other Aspects of Your Life
What other areas of your life do you want to protect?
- Pets: Illinois law allows you to set up a pet trust to pay for your furry family members' care for the rest of their lives.
- Your business: Having a plan for succession or sale of your share of the business will help it survive without you.
You may also want to evaluate whether you have enough life insurance and whether your heirs will need to worry about estate taxes.
Ensure Your Plan is Legally Binding
You can create all the right documents, but if they're not properly executed, they will not be valid. It's a good idea to talk with an Illinois estate planning lawyer to make sure your plans meet your needs and follow state and federal law.
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