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  • The Importance of Customized Estate Planning for LGBTQ+ Relationships - Part 1

    June is a time of celebration and reflection for the LGBTQ+ community as Pride Month shines a spotlight on the progress made in the fight for equal rights. While significant strides have been made, such as the legalization of same-gender marriage and increased recognition of LGBTQ+ families, there is still a large gap in estate planning for LGBTQ+ individuals that could leave your loved ones with a big mess. Estate planning laws are still written for hetero, cisgender individuals, and many lawyers aren’t well equipped to customize their estate plans to account for the unique family dynamics and wishes of LGBTQ+ clients. Sadly, if you have LGBTQ+ family members or are in a non-traditional family dynamic of any kind and don’t have a custom estate plan, the people you love most could find themselves accidentally disinherited from your estate or stuck in a lengthy and expensive court battle. To make sure your family is well-cared for no matter how the law defines you, keep reading to learn why customized estate planning is so crucial for LGBTQ+ and all non-traditional humans. Care for Your Family as You Define It The concept of family has expanded far beyond the confines of the traditional "nuclear family." Gratefully, we now celebrate the beautiful diversity of family structures, encompassing same-gender couples, unmarried partners, civil unions, polyamorous relationships, and an array of other unique family dynamics. However, when it comes to death or incapacity, the law still lags behind, often failing to accommodate non-traditional family units in ways that you would choose. If you die without an estate plan in place, the law will apply the state’s default estate plan to your unique situation. Under the law’s default plan, your possessions and money will pass to your next closest relatives by blood or marriage. If you aren’t legally married to your partner or partners, the people you love will be automatically disinherited in the event of your death. Likewise, if you have children that are unrelated to you genetically who you haven’t formally adopted, like a partner’s child or stepchild, those children will not receive anything from your estate after you die. Even if you’re married to the child’s parent, the law does not recognize a stepchild as a direct descendant and therefore doesn’t include them in its default plan. To make sure the people you love -- your chosen family - are taken care of, no matter how the law labels your family, it's important to create a custom estate plan that ensures your assets are distributed according to your wishes and that your partners, children, and chosen family members are protected and cared for if something happens to you, even if may not be recognized under default inheritance laws. Protect Your Financial and Health Care Rights If you ever wondered who would take care of you and your things if you become ill or incapacitated, your first thought is probably your partner. Right? After all, it seems like common sense that your partner of ten years (or 2 years, or 5 years, or 20!) should be the one to make healthcare decisions for you or pay your bills. But unfortunately, the law doesn’t operate based on what might seem like common sense when we look at our everyday lives and relationships. The law doesn’t assume that you’d want any particular person making decisions for you if you become incapacitated. Instead, your family members will need to go through a stressful court guardianship procedure to be granted decision-making power by a judge. If your family members can’t come to an agreement on who should be your decision-maker, the court may assign a professional guardian - a complete stranger - to make decisions for you instead! To avoid court involvement altogether, it’s vital to name your chosen decision-makers - your Powers of Attorney - long in advance of ever needing them. This is especially important if you want to choose a decision-maker who isn’t related to you by blood or if you want to make sure that any certain lifestyle choices or beliefs such as a special diet, style of dress, or hormone therapy are still carried out if you’re incapacitated. If you don’t put these wishes on paper and name someone you trust to uphold them, it’s likely a judge won’t appoint your chosen decision-maker. In this case, the person the judge chooses can make whatever decisions for you they feel is best, even if that means ignoring your chosen gender expression or identity. No one expects to become incapacitated due to an illness or injury, but sadly, it happens. Legally naming a decision maker in advance and talking about your wishes with them and your extended family helps safeguard your rights and ensures that your wishes for how you are cared for are honored while avoiding family conflict as much as possible. Work With a Lawyer Who Understands You Protecting your family and your wishes as an LGBTQ+ individual requires the guidance and expertise of a lawyer who understands your unique circumstances and desires for your family. That’s where we come in. While the law may still fall short in accommodating the diverse family structures and dynamics that exist today, we understand that every family is different, and we know how to craft a custom plan that not only protects your loved ones and ensures your wishes are honored, but also embodies the values, beliefs, and stories that make your family unique. If you want to make sure your LGBTQ+ family will be cared for and supported no matter what the future holds, schedule a free 15-minute discovery call at this link to learn more about how I serve LGBTQ+ families or e-mail Lauren at lauren@kaplanestatelaw.com. Then, check back next week when I cover part two of this blog. T

  • Protect Your Assets From The Anti-Hero: Safeguard Your Legacy Through Estate Planning

    "I have this dream my daughter-in-law kills me for the money. She thinks I left them in the will. The family gathers 'round and reads it and then someone screams out 'she's laughing up at us from hell'." You may not have thought anything of these Taylor Swift lyrics when you first heard them, but they actually allude to the importance of proper estate planning to safeguard your legacy from unexpected and unsettling scenarios. What am I referring to? The Slayer Rule. At first glance, the Slayer Rule sounds like something out of a Stephen King novel, evoking images of dark forces and sinister plots. However, it's an essential legal concept that serves as a shield, protecting your assets and preventing those who commit acts of violence from benefiting from your estate. So, let's explore how the Slayer Rule can help you ward off potential anti-heroes and ensure your legacy remains intact. Understanding the Slayer Rule The Slayer Rule acts as a formidable barrier, preventing individuals who unlawfully cause the death of another person from receiving any financial benefits from the deceased's estate. In the scenario where your daughter-in-law is found guilty of a Bad Reputation, the Slayer Rule stands strong, denying her any share of your hard-earned assets. But How Does It Work? To activate the Slayer Rule, specific criteria must be met. Typically, a criminal conviction or a finding of guilt is required. If your daughter-in-law were to be found guilty of your murder, the Slayer Rule would automatically come into effect, ensuring that she does not inherit a single penny. It's like a legal superhero that swoops in to protect your assets from falling into the wrong hands. Your Best Defense: Proper Estate Planning While the Slayer Rule provides crucial protection, relying solely on its existence would be unwise. To strengthen your defense and protect your legacy from potential anti-heroes, proactive estate planning is essential. Here are a few steps you can take: 1. Work with an Estate Planning Attorney: Prevent any "Bad Blood," and work with an attorney who will keep your family out of court and out of conflict. Partnering with an experienced estate planning attorney will ensure that your wishes are clearly and legally documented, incorporating specific provisions related to the Slayer Rule. 2. Draft a Comprehensive Estate Plan: A comprehensive estate plan covers all aspects of your assets, including your will, trusts, and other legal instruments. By leaving no Blank Space, you can establish a roadmap for the distribution of your assets that aligns with your values and intentions, while ensuring the Slayer Rule acts as a guardian to prevent any undeserving individuals from benefiting. 3. Regularly Review and Update Your Estate Plan: We know All Too Well that circumstances change, relationships shift, and new family members may enter the picture. To ensure that your estate plan remains relevant and effective, it's crucial to review and update it periodically. This way, you can adapt to life's twists and turns and keep your legacy protected. Taylor’s allusion to the Slayer Rule in her song lyrics, even if unintentionally, emphasizes the importance of proper estate planning in protecting your assets from potential anti-heroes. By understanding the Slayer Rule, working with an estate planning attorney, and regularly reviewing and updating your plan, you can ensure that your legacy remains intact and that your assets are distributed according to your wishes. Otherwise, You’re on Your Own, Kid. If you have questions about the Slayer Rule or if you are ready to get started with your comprehensive Estate Plan, Speak Now with Lauren at lauren@kaplanestatelaw.com or schedule online here.

  • Keep the Government and Lawsuit Happy Opportunists Away From Your Children’s Inheritance

    If you have a current estate plan, I'll bet you plan to leave your assets to your children outright and unprotected by age 35, or maybe a little later. Go take a look at your estate plan, and see what it does right now. And, if you don’t have an estate plan, and you have kids or other people you care about, contact us today and let’s get that handled for you. If you do have a plan and it distributes your assets outright to your kids -- even in stages, over time, some at 25, then half of what’s left at 30, and balance at 35 (or something along those lines), you’ve overlooked an incredibly valuable gift you can give your children (and the rest of your descendants for generations); a gift that only you can give them. And a gift that, once you’ve died and left them their inheritance outright, is lost and cannot be reclaimed. Leave your kids' inheritance protected from lawsuits, divorce, and estate taxes. While you may think to yourself, my kids’ inheritance doesn’t need to be protected. They aren’t going to get sued. You may be right, but you may also be overlooking one of the most common “lawsuits” that causes inheritances to be lost everyday, and that’s divorce. If you want to protect the money you are leaving to your children from their future divorces, even if you love their spouses nor or expect you will, in the future, you can easily do so using a protected trust. And, if your child is ever involved in a lawsuit, for example, a simple car accident, or if a business transaction goes bad, what you leave to your child can be protected from all future lawsuits or claims against them. The best part is that if your child has their own taxable estate when they die, your planning now could save your family 40 cents on every dollar (or more) handed down from one generation to the next. Save your family Up to 40 cents on every dollar -- currently -- at each generation. As of 2023, the current federal estate tax rate is 40% -- meaning that every dollar passed on over the estate tax exemption rate is taxed at 40%. And it has been as high as 55%. On top of that, many states have estate taxes as well, including Illinois. This all adds up fast, and can decimate your family’s financial legacy, over time For every million dollars you leave outright to your children, if your children have a taxable estate when they die, could result in your grandchildren receiving only $550,000, with $450,000 going to the government ... unnecessarily. So, if you want to know that everything you’ve worked so hard to create will stay in your family for generations to come and not be lost to outsiders, leaving your assets to your children protected in a trust we call a Lifetime Asset Protection Trust, instead of outright is the way to go. And, it can be easily built in to your existing estate plan or trust, you just need to ask us to help you get a Lifetime Asset Protection Trust added to your plan. But how will my kids get to use what I leave to them? Here’s the best part about leaving your assets to your children in a Lifetime Asset Protection Trust. Not only is what you leave protected, but your children control what you leave them when you decide they are ready. After your death, the assets you leave behind will pass to your children (and your grandchildren, great-grandchildren, and so on for successive generations) in a Trust that your child can control, as the Trustee of the Trust. You can decide when your child is mature enough to act as a Trustee. As the Trustee of the Trust, your child decides how what you’ve left is invested and what to do with the Trust assets. And your child will even be able to determine the amount of control vs. the amount of asset protection he or she wants based on his or her specific circumstances. Is this still important if I don’t have much money? If you only leave your children a small amount of money, this is still incredibly valuable for protection, if you are leaving assets that will be invested and grown, and not just spent right away on consumables. Some might say it’s even more important because your family has less to lose to taxes, lawsuits, and divorce each generation. And the impact of such losses is much greater. A mere $10,000 protected now can become millions for the people you love for generations to come. Imagine that you leave just $10,000 to your child in a Lifetime Asset Protection Trust, and instead of spending that $10,000 or losing it in a divorce, they invest that $10,000 in creating their own business inside their trust, and then grow that business into a million dollar or multi-million dollar venture because of how you chose to leave your child that $10,000 gift … and it’s fully protected for generations. Secure the future of your family today by speaking to us. We review estate plans and inherited funds with you, ensuring that all legalities are in place so generations can enjoy the benefits according to your wishes. Don't wait, get peace of mind now - contact us today at (312) 833-2199 or lauren@kaplanestatelaw.com to get started, or book an appointment now.

  • 10 Common Estate Planning Mistakes Your Family Can't Afford to Make - Part 2

    Because estate planning involves actively thinking about and planning for frightening topics like death, old age, and crippling disability, many people put it off or simply ignore it all together until it’s too late. Sadly, this unwillingness to face reality often creates serious hardship, expense, and trauma for those loved ones you leave behind. To complicate matters, the recent proliferation of online estate planning document services, such as LegalZoom®, Rocket Lawyer®, and Trustandwill.com, may have misled you into thinking that estate planning is a do-it-yourself (DIY) affair, which involves nothing more than filling out the right legal forms. However, proper estate planning entails far more than filling out legal forms. In fact, without a thorough understanding of how the legal process works upon your death or incapacity, along with knowing how it applies specifically to your family dynamics and the nature of your assets, you’ll likely make serious mistakes when creating a DIY will or trust. And the worst part is that these mistakes won’t be discovered until you are gone—and the very people you were trying to protect will be the ones cleaning up the mess. Estate planning is definitely not a one-size-fits-all endeavor. Even if you think your particular situation is simple, that turns out to almost never be the case. To demonstrate just how complicated estate planning can be, last week in part one, we highlighted the first five of 10 of the most common estate-planning mistakes, and here we wrap up the list with the remaining five mistakes. 06 | Not Updating Beneficiary Designations In addition to reviewing and updating your core estate planning documents like your will, trust, and power of attorney, it’s crucial that you also update the documentation for your other assets, especially those with beneficiary designations. Some of your most valuable assets, like 401(k)s, IRAs, and life insurance policies, do not transfer via a will or trust. Instead, these assets have beneficiary designations that allow you to name the person (or persons) you’d like to inherit the asset upon your death. Oftentimes, people forget to change their beneficiary designations to match their estate planning goals, which can lead to disaster. For example, if you get remarried and forget to update your 401(k), your ex-spouse from 20 years ago could end up inheriting your retirement savings. Additionally, some people assume that because they’ve named a specific heir as the beneficiary of their IRA in their will or trust that there’s no need to list the same person again as beneficiary in their IRA paperwork. Because of this, they leave the IRA beneficiary form blank or list “my estate” as the beneficiary. But this is a major mistake—and one that can lead to serious complications and expense for your loved ones. It makes no difference who is listed as the beneficiary in your will or trust; you must list the person you want to inherit the asset in the beneficiary designation, or your heirs will have to go to court to claim the asset. And you should never name a minor child as a beneficiary of your life insurance or retirement accounts, even as the secondary beneficiary. If a child inherits assets, the assets become subject to control of the court until they reach the age of 18, and then, the assets are distributed outright without any protection or direction. If you want a minor to inherit assets, you can create a special trust to hold the asset until the child comes of age, and name someone you trust to serve as a successor trustee to manage the assets until that time. At Kaplan Estate Law LLC, we can support you to choose the appropriate trust for this purpose to ensure your child gets the maximum benefit from their inheritance. 07 | Improper Execution You could have the best estate planning documents in the world, but if you fail to sign them, or sign them improperly, they will fail. This might seem trivial, but we see it all the time. A loved one dies, their family brings their estate planning documents to us, and we can’t help them because the documents were either not signed or were signed improperly. To be considered legally valid, certain estate planning documents like wills must be executed (i.e. signed, witnessed, and/or notarized) following very strict legal procedures. For example, many states require that you and every witness to your will must sign it in the presence of one another. If your DIY service doesn't mention that condition (or you don’t read the fine print) and you fail to follow this procedure, the document can end up worthless. 08 | Choosing the Wrong Executors or Trustees In addition to laws regarding execution, state laws are also very specific about who can serve in certain roles like executor, trustee, or financial power of attorney. In some states, for instance, the executor of your will must either be a family member or an in-law, and if not, the person you choose must live in the state. If your chosen executor doesn’t meet those requirements, he or she cannot serve. Moreover, some states require the person you name as your executor to get a bond, which is like an insurance policy before he or she can serve. Such bonds can be difficult to get for someone who has a less-than-stellar credit score. If your executor cannot get a bond, it would be up to the court to appoint your executor, which could end up being someone you would never want managing your assets or a third-party professional, who could drain your estate with costly fees. 09 | Unintended Conflict Between Family Members Family dynamics are—to put it lightly—quite complex. This is particularly true for blended families, where spouses have children from previous relationships. If you try to go it alone using a DIY document service, you won’t be able to consider all of the potential areas where conflict might arise among your family members and plan ahead to avoid such disputes. After all, even the best set of documents will be unable to anticipate and navigate these complex emotional matters—but we can. Every day we see families end up in lifelong conflict due to poor estate planning. Yet, we also see families brought closer together as a result of handling these matters the right way. When done right, the estate planning process is actually a major opportunity to build new connections within your family, and we are specifically trained to help you with that. 10 | Failing to Properly Name Guardians for Minor Children If you are a parent with children under the age of 18 at home, your number-one estate planning priority should be selecting and legally documenting both long and short-term guardians for your kids. Guardians are the people legally named to care for your children in the event something happens to you. If you’ve named guardians for your minor children in your will—even with the help of another lawyer—your kids could still be at risk of being taken into the care of strangers. For instance, if you’ve named guardians for your kids in your will, what would happen if you became incapacitated and were no longer able to care for them? Did you know that your will only becomes operative in the event of your death, and it would do nothing to protect your children in the event of your incapacity? Or perhaps the guardians you named in your will live far from your home, so it would take them several days to get there. If you haven’t made legally-binding arrangements for the immediate care of your children, it’s highly likely that they will be placed with the authorities until those guardians arrive. And does anyone even know where you will is located and how to access it? How can they prove they are your children’s legal guardians if they can’t even find your estate plan? These are just a few of the potential complications that can arise when naming legal guardians for your kids, whether in your will or as a stand-alone measure. And if just one of these contingencies were to occur, your children would more than likely be placed into the care of strangers. At Kaplan Estate Law LLC, we offer a comprehensive system known as the Kids Protection Plan, which is included with every estate plan we prepare for families with young children. If you have already named long-term guardians in your will or as a stand-alone measure, either on your own or with a lawyer, we can review your existing legal documents to see whether you have made any of the most common mistakes that could leave your kids at risk. From there, we will revise your plan and put the proper protections in place to ensure your children are fully protected. Life & Legacy Planning: Do Right By Those You Love Most The DIY approach might be a good idea if you’re looking to build a new deck for your backyard, but when it comes to estate planning, there are much better options. If you’ve yet to do any planning, contact us to schedule a Family Wealth Planning Session, which is the first step in our Life & Legacy Planning Process. During this meeting, we’ll take you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you die or if you become incapacitated. If, as a result of this process, we determine that you really do have a very simple situation and you want to create your own estate planning documents yourself online, we will support you to do that. However, if as a result of the process, you decide you would like us to create a plan for you, we’ll support you to find the optimal level of planning for a price that’s right for you. And if you’ve already created an estate plan—whether it’s a DIY job or one created with another lawyer’s help—contact us to schedule an Estate Plan Review & Check-Up. With our support, we will ensure your plan is not only properly drafted and updated, but that it has all of the protections in place to prevent your children from ever being placed in the care of strangers or anyone you’d never want raising them. In either case, working with us will empower you to feel 100% confident that you have the right combination of estate planning solutions to fit with your unique asset profile, family dynamics, and budget. At Kaplan Estate Law LLC, we see estate planning as far more than simply planning for your death and passing on your “estate” and assets to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning. Contact us today to get your plan started.

  • 10 Common Estate Planning Mistakes Your Family Can't Afford To Make - Part 1

    Because estate planning involves actively thinking about and planning for frightening topics like death, old age, and crippling disability, many people put it off or simply ignore it all together until it’s too late. Sadly, this unwillingness to face reality often creates serious hardship, expense, and trauma for those loved ones you leave behind. To complicate matters, the recent proliferation of online estate planning document services, such as LegalZoom®, Rocket Lawyer®, and Trustandwill.com, may have misled you into thinking that estate planning is a do-it-yourself (DIY) affair, which involves nothing more than filling out the right legal forms. However, proper estate planning entails far more than filling out legal forms. In fact, without a thorough understanding of how the legal process works upon your death or incapacity and applied specifically to your family dynamics and the nature of your assets, many people make serious mistakes when creating a DIY will or trust. And the worst part is that these mistakes won’t be discovered until you are gone—and the very people you were trying to protect will be the ones stuck cleaning up the mess. Estate planning is definitely not a one-size-fits-all endeavor. Even if you think your particular situation is simple, that turns out to almost never be the case. To demonstrate just how complicated estate planning can be, here are 10 of the most common estate planning mistakes, starting with the worst blunder of all: failing to create an estate plan. 01 | Leaving No Estate Plan at All If you die without an estate plan, the court will decide who inherits your assets, and this can lead to all sorts of problems. Who is entitled to your property is determined by our state’s intestate succession laws, which hinge largely upon whether you are married and if you have children. Spouses and children are given top priority, followed by your other closest living family members. If you are single with no children, your assets typically go to your parents and siblings, and then more distant relatives if you have no living parents or siblings. If no living relatives can be located, your assets go to the state. It’s important to note that state intestacy laws only apply to blood relatives, so unmarried partners and close friends would get nothing. If you want someone outside of your family to inherit your assets, having a plan is an absolute must. If you’re married with children and die with no plan, it might seem like things would go fairly smoothly, but that’s not always the case. If you’re married, but have children from a previous relationship, for example, the court could give everything to your spouse and leave your children with nothing. In another instance, you might be estranged from your kids or not trust them with money, but without a plan, state law controls who gets your assets, not you. Moreover, dying without a plan could also cause your surviving loved ones to get into an ugly court battle over who has the most right to your property. Or if you become incapacitated, your loved ones could even get into conflict around your medical care. You may think this would never happen to your loved ones, but we see families torn apart by it all the time, even when there’s not significant financial wealth involved. At Kaplan Estate Law, we will help you create a plan that handles your assets and your medical care in the exact manner you wish, taking into account all of your family dynamics, so your death or incapacity won’t be any more painful or expensive for your family than it needs to be. 02 | Thinking a Will Alone is Enough Lots of people believe that a will is the only estate planning tool they need. While a will is a fundamental part of nearly every adult’s estate plan, which can ensure that your assets go where you want them to go in the event of your death, using a will by itself comes with some serious limitations, including the following: Wills require your family to go through the court process known as probate, which can not only be lengthy and expensive, it’s also completely open to the public and frequently creates ugly conflicts among your loved ones. Wills don’t offer you any protection if become incapacitated by illness or injury and are unable to make your own medical, financial, and legal decisions. Wills don’t cover jointly owned assets or those with beneficiary designations, such as life insurance policies and 401(k) plans. Wills don’t provide any protection or guidance for when and how your heirs take control of their inheritance. Naming guardians for your minor children in your will can leave them vulnerable to being placed in the care of strangers. Given these facts, if your estate plan consists of a will alone, you are missing out on many valuable safeguards for your assets, while also guaranteeing your family will have to go to court if you become incapacitated or when you die. Fortunately, all of the above issues can be effectively managed using a trust. That said, as you’ll see below, trusts are by no means a cure-all —these documents come with their own unique drawbacks, especially if you try to prepare one on your own. 03 | Creating a Trust & Not Properly Funding It Many people now know that a trust can keep your family out of court, and you may think you can just go online to set up your own trust, or have a lawyer do it with you as a one-size-fits all solution. And while that might be true, particularly if you have very simple assets and few family members, even in that case, you are likely to overlook one of the most important parts of creating a trust: “funding” it. An unfunded trust is a trust that exists, but that doesn’t hold any of your assets because you didn’t retitle them properly, or because you acquired new assets after creating your trust. This is all too common, and if this is true for you, it will leave your family with a big mess, even though you have officially created your trust. Funding your trust properly is extremely important, because if any assets are not properly funded, the trust won’t work, and your family will have to go to court in order to take ownership of that property. And when you acquire new assets after your trust is created, you must make sure those assets are properly funded into your trust as well. At Kaplan Estate Law, we will not only make sure all of your assets are properly titled when you initially create your trust, but we will also ensure that any new assets you acquire over the course of your life are inventoried and properly funded to your trust. This keeps your assets from being lost, and prevents your family from being inadvertently forced into court because your plan was never fully completed. 04 | Not Leaving an Up-To-Date Inventory of Assets As mentioned above, even if you’ve properly funded your assets into your trust, your estate plan will be worthless if your heirs don’t know what you have or where to find it. In fact, there’s more than $58 billion dollars worth of lost assets in the U.S. Department of Unclaimed Property right now. And that’s all because someone died or became incapacitated without letting anyone know how to locate their assets. This is especially critical for digital assets like cryptocurrency, social media, email, and data stored in the cloud, because if you haven’t properly addressed these assets in your estate plan, there’s a good chance they will be lost forever if something happens to you. For all of these reasons, creating and maintaining a comprehensive inventory of all of your assets is a standard part of every estate plan we create. With our support, you can rest assured that your family will know exactly what assets you own and how to locate them should anything happen to you. 05 | Failing to Regularly Review & Update Your Estate Plan In addition to keeping an updated asset inventory, it’s vital that you regularly review and update all of your planning documents. Far too often people prepare a will or trust , then put it into a drawer or on a shelf, and forget about it. Yet, an estate plan is not a one-and-done deal. As time passes, your life circumstances change, the laws change, and your assets change, you must update your plan to reflect these changes—that is, if you want your plan to actually work for your loved ones and keep them out of court and conflict. We recommend reviewing your plan annually to make sure its terms are up to date. And be sure to immediately update your plan following major life events like divorce, births, deaths, and inheritances. We actually have built-in processes to make sure this happens—be sure to ask us about them. Beyond sheer necessity, an annual life review can be a beautiful ritual that puts you at ease, and helps you to set the course of your life and keeps your life on course, knowing that you’ve got your affairs in order, all handled, and completely updated each year. Next week, in part two, we’ll wrap up our list of the 10 most common estate-planning mistakes. Until then, if you are ready to get your estate planning handled and taken care of the right way with ease and affordability, start by contacting us for a Family Wealth Planning Session. Your Family Wealth Planning Session is custom-designed to your assets, your family, your wishes, and to educate you on the best way to reach your objectives for the people you love most. If you'd like to learn more, click here to schedule a free 15 minute Initial Consult or contact Lauren at lauren@kaplanestatelaw.com.

  • Probate: What It Is & How To Avoid It - Part 2

    Unless you’ve created an estate plan that works to keep your family out of court, when you die (or become incapacitated) many of your assets must go through probate before those assets can be distributed to your heirs. Like most court proceedings, probate can be time-consuming, costly, and open to the public, and because of this, avoiding probate—and keeping your family out of court—is often a central goal of estate planning. To spare your loved one’s the time, cost, and stress inherent to probate, last week in part one of this series, we explained how the probate process works and what it would entail for your loved ones. Here in part two, we’ll discuss the major drawbacks of probate for your family, and outline the different ways you can help them avoid probate with wise planning. WHAT’S AT STAKE FOR YOUR FAMILY Probate court proceedings can take months, and sometimes even years, to complete. In the immediate aftermath of your death, that’s the last thing you likely want your loved ones to have to endure. And the cost of their time and emotional strain are just the start of the potentially devastating consequences your family could face if you don’t plan ahead. Without easy and immediate access to your assets, your family could face serious financial hardship at a time when they need the most support. Not only that, but to help them navigate the legal proceedings, your loved ones will almost certainly need to hire a lawyer, which can result in hefty attorney’s fees and the real risk of them hiring a lawyer who is uncommunicative, which only creates more stress for them. All of that is on top of the court costs, executor’s compensation, and all of the various other administrative expenses related to probate. By the time all of those costs have been paid, your estate could be totally wiped out, or at the very least, seriously depleted. Another drawback of probate is the fact that it’s a public process. Whether you have a will or not, all of the proceedings that take place during probate become part of the public record. This means that anyone who’s interested can learn about the contents of your estate, who your beneficiaries are, and what they will inherit, which can set them up as potential targets for scammers and frauds. Probate also has the potential to create conflict among your loved ones. This is particularly true if you have disinherited someone or plan to leave significantly more money to one relative than the others, in which case, a family member may contest your will. And even if those contests don’t succeed, such court fights will only increase the time, expense, and strife your family has to endure. HOW TO AVOID PROBATE Before we discuss the more advanced ways you can use estate planning to allow your loved ones to avoid probate, it’s important to point out that not all of your assets will have to go through the probate process—and that’s true even if you don’t have any estate plan at all. Assets That Do Not Require Probate Certain assets, such as those with beneficiary designations like 401(k)s, IRAs, and the proceeds from life insurance policies, will pass directly to the individuals or organizations you designated as your beneficiary, without the need for any additional planning. The following are some of the most common assets that use beneficiary designations and therefore, bypass probate: Retirement accounts, IRAs, 401(k)s, and pensions Life insurance or annuity proceeds Payable-on-death (POD) bank accounts Transfer-on-death (TOD) property, such as bonds, stocks, vehicles, and real estate Outside of assets with beneficiary designations, other assets that do not go through probate include assets with a right of survivorship, such as property held in joint tenancy, tenancy by the entirety, and community property with the right of survivorship. These assets automatically pass to the surviving co-owner(s) when you die, without the need for probate. However, it’s critical to note here that if you name your “estate'' as the beneficiary of any of these assets, those assets will go through probate before being distributed. The same goes if you overlook a beneficiary designation, or if you die at the same time as a joint property owner—each of those assets will also go through probate, even though they have beneficiary designations. In addition, we generally recommend that you do not rely on beneficiary designations to handle the distribution of your assets. These designations give you little to no control over how your assets are distributed, and they can result in negative outcomes you did not intend, especially if you have a blended family with children from a prior marriage or if you have no children at all. Although there are several different types of assets that automatically bypass probate, the majority of your assets will require slightly more advanced levels of planning to ensure your loved ones can immediately access them, without the need for any court proceedings in the event something happens to you. The primary estate planning tool for this purpose are trusts. AVOIDING PROBATE WITH A REVOCABLE LIVING TRUST Trusts are a popular estate planning tool for avoiding probate. Although there are a variety of different types of trust, the most commonly used trust for probate avoidance is a revocable living trust, also called a “living trust.” A trust is basically a legal agreement between the “grantor” (the person who puts assets into the trust) and the “trustee” (the person who agrees to manage those assets) to hold title to assets for the benefit of the “beneficiary.” With a revocable living trust, this agreement is typically made between you as the grantor and you as the trustee for the benefit of you as the beneficiary. You act as your own trustee during your lifetime, and then you name someone as a “successor trustee” to take over management of the trust when you die or in the event of your incapacity. It might seem odd to make an agreement with yourself to hold title to assets for yourself in order to benefit yourself. Yet by doing so, you remove those assets from the court’s jurisdiction in the event of your incapacity or when you die. Instead, those assets transfer to your successor trustee, without any court intervention required. At that point, your successor trustee is responsible for managing the trust assets and eventually distributing them to your beneficiaries, according to the terms you spell out in the trust agreement. This is how a trust avoids probate, saving your family significant time, money, and headache. The Key Benefits of a Living Trust Unlike a will, if your trust is properly set up and maintained, your loved ones won’t have to go to court to inherit your assets. Instead, your successor trustee can immediately transfer the assets held by the trust to your loved ones upon your death or in the event of your incapacity. And since you can include specific instructions in a trust’s terms for how and when the assets held by the trust are distributed to a beneficiary, a trust can offer greater control over how your assets are distributed compared to a will. For example, you could stipulate that the assets can only be distributed upon certain life events, such as the completion of college or marriage, or when the beneficiary reaches a certain age. In this way, you can help prevent your beneficiaries from blowing through their inheritance and offer incentives for them to demonstrate responsible behavior. And as long as the assets are held in trust, they’re protected from the beneficiaries’ creditors, lawsuits, and divorce—which is something else wills don’t provide. Finally, trusts remain private and are not part of the public record. So, with a properly funded trust, the entire process of transferring ownership of your assets can happen in the privacy of our office, not a courtroom, and on your family’s time. Transferring Assets into a Living Trust For a trust to function properly, it’s not enough to simply list the assets you want the trust to cover. When you create your trust, you must also transfer the legal title of any assets you want to be held by the trust from your name into the name of the trust. Retitling assets in this way is known as “funding” a trust. Funding your trust properly is extremely important, because if any assets are not properly funded to the trust, the trust won’t work, and your family will have to go to court in order to take ownership of that property, even if you have a trust. In light of this, it’s critical to work with us to ensure your trust works as intended. While many lawyers will create a trust for you, few will ensure your assets are properly inventoried and funded into your trust, and then ensure the inventory of your assets is kept up-to-date as your life and assets change over time. We will not only make sure all of your assets are properly titled when you initially create your trust, but we will also ensure that any new assets you acquire over the course of your life are inventoried and properly funded to your trust. This will keep your assets from being lost, as well as prevent your family from being inadvertently forced into court because your plan was never fully completed. LIVING TRUSTS, TAXES, CREDITORS, & LAWSUITS When you create a revocable living trust, you are free to change the trust’s terms or even completely terminate the trust at any point during your lifetime. Because you retain control over the assets held by a living trust during your lifetime, those assets are still considered part of your estate for estate tax purposes. Similarly, assets held in a living trust are not protected from your creditors or lawsuits during your lifetime. This is an important and often misunderstood point. Again, a revocable living trust does not protect your assets from creditors or lawsuits, and it has no impact on your income taxes. However, as mentioned earlier, as long as the assets are held by a living trust or a Lifetime Asset Protection Trust, those assets can be protected from your beneficiaries’ creditors, lawsuits, and even divorce settlements. Be sure to ask us about the different trust-based estate planning options we offer to find one that’s best suited for your particular situation. The primary benefit of a living trust is to pass your assets to your loved ones without any need for court or government intervention, and to ensure your assets pass in the way you want to the people you want. LIFE & LEGACY PLANNING: DO RIGHT BY THOSE YOU LOVE MOST Although a living trust can be an ideal way to pass your wealth and assets to your loved ones, each family’s circumstances are different. This is why us, your local Personal Family Lawyer® will not create any documents until we know what you actually need and what will be the most affordable solution for you and your family—both now and in the future—based on your family dynamics, assets, and desires. The best way for you to determine which estate planning strategies are best suited for your situation is to meet with us for a Family Wealth Planning Session, which is the first step in our Life & Legacy Planning Process. During this process, we’ll take you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you die or if you become incapacitated. Sitting down with us will empower you to feel 100% confident that you have the right combination of estate planning solutions to fit with your unique asset profile, family dynamics, and budget. We see estate planning as far more than simply planning for your death and passing on your “estate” and assets to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning. Contact us today to get started at (312) 833-2199 or lauren@kaplanestatelaw.com.

  • What Your Last Will & Testament Will (And Will Not) Do — Part 2

    Last week, in part one, we looked at the different things having a will in place allows you to do. Here, in part two, we detail all of the things that your will does not do, along with identifying the specific estate planning tools and strategies that you should have in place to make up for the potential blind spots that exist in an estate plan that consists of only a will. If you have yet to create your will, or you haven’t reviewed your existing will recently, contact us to get this vital first step in your estate planning handled right away. WHAT A WILL WON’T DO While a will is a necessary part of most estate plans, your will is typically a very small part of a comprehensive estate plan. To demonstrate, here are the things you should not expect your will to accomplish: 01 | KEEP YOUR FAMILY OUT OF COURT Following your death, in order for assets in your will to be transferred to your beneficiaries, the will must pass through the court process known as probate. During probate, the court oversees the will’s administration, ensuring your assets are distributed according to your wishes, with automatic supervision to handle any disputes. Like most court proceedings, probate can be time-consuming, costly, and open to the public. Moreover, during probate, there’s also the chance that one of your family members might contest your will, especially if you have disinherited someone or plan to leave significantly more money to one relative than the others. Even if those contests don’t succeed, such court fights will only increase the time, expense, and strife your family has to endure. Bottom line: If your estate plan consists of a will alone, you are almost guaranteeing your family will have to go to court if you become incapacitated or when you die. Fortunately, it’s easy to ensure your loved ones can avoid probate using different types of trusts, which we will discuss in further detail. 02 | PASS ON CERTAIN TYPES OF ASSETS Since a will only covers assets solely owned in your name, there are several types of assets that your will has no effect on, including the following: Assets with a right of survivorship: Property held in joint tenancy, tenancy by the entirety, and property with the right of survivorship, bypass your will. These types of assets automatically pass to the surviving co-owner(s) when you die. Assets with a designated beneficiary: When you die, assets with a designated beneficiary pass directly to the individual, organization, or institution you designated as beneficiary, without the need for any additional planning. Common assets with beneficiary designations include retirement accounts, IRAs, 401(k)s, and pensions; life insurance or annuity proceeds; payable-on-death bank accounts; and transfer-on-death property, such as bonds, stocks, vehicles, and real estate. Assets held in a trust: Assets held by a trust automatically pass to the named beneficiary upon your death or incapacity, so these assets cannot be passed in your will. This includes assets held by both revocable living trusts and irrevocable trusts. 03 | PASS OWNERSHIP OF A PET AND MONEY FOR ITS CARE Because animals are considered personal property under the law, you cannot name a pet as a beneficiary in your will. If you do, whatever money you leave it would go to your residuary beneficiary, who would have no obligation to care for your pet. It’s also not a good idea to use your will to leave your pet and money for its care to a future caregiver. That’s because the person you name as beneficiary would have no legal obligation to use the funds to care for your pet. In fact, this person could legally keep all of the money and drop off your pet at a shelter. 04 | LEAVE FUNDS FOR THE CARE OF A PERSON WITH SPECIAL NEEDS There are a number of unique considerations that must be taken into account when planning for the care of an individual with special needs. In fact, you can easily disqualify someone with special needs for much-needed government benefits if you do not use the proper planning strategies. For this reason, a will should never be used to pass on money for the care of a person with special needs. If you want to provide for the care of your child or another loved one with special needs, you must create a special needs trust. However, such trusts are complicated, and the laws governing them can vary greatly between states. 05 | REDUCE ESTATE TAXES If your family has significant wealth, you may wish to use estate planning to reduce your estate tax liability. However a will is not the best vehicle for this purpose. To reduce or postpone your estate taxes, your best option is to set up special types of trusts. 06 | PROTECT YOU FROM INCAPACITY Because a will only goes into effect when you die, it offers no protection if you become incapacitated and are no longer able to make decisions about your financial, legal, and healthcare needs. If you do become incapacitated, your family will have to petition the court to appoint a guardian to handle your affairs, which can be costly, time-consuming, and traumatic for your loved ones. And there’s always the possibility that the court could appoint a relative as a guardian that you’d never want making such critical decisions on your behalf. Or the court might select a professional guardian, putting a total stranger in control of your life, which leaves you open to potential fraud and abuse by crooked guardians. However, using a trust, you can include provisions that appoint someone of your choosing—not the court’s—to handle your assets if you are unable to do so. When combined with a well-prepared medical power of attorney and living will, a trust can keep your family out of court and out of conflict in the event of your incapacity, while ensuring your wishes regarding your medical treatment and end-of-life care are carried out exactly as you intended. GET PROFESSIONAL SUPPORT WITH YOUR ESTATE PLANNING Although creating a will may seem fairly simple, you should always consult with an experienced estate planning lawyer like us to ensure the document is properly created, executed, and maintained. And as we’ve seen here, there are many scenarios in which a will will not be the right estate planning solution, nor would a will keep your family and assets out of court. Meet with us for a Family Wealth Planning Session, which is the first step in our Life & Legacy Planning process. During this process, we’ll walk you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you die or if you become incapacitated. From there, we’ll work together to put in place the right combination of estate planning solutions to fit with your asset profile, family dynamics, budget, as well as your overall goals and desires. We see estate planning as far more than simply planning for your death and passing on your “estate” and assets to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning. Contact us today to schedule your visit to ensure that your loved ones will be protected and provided for no matter what happens to you.

  • What Your Last Will & Testament Will (And Will Not) Do—Part 1

    If you have already prepared your will, congratulations—too few Americans have taken this key first step in the estate planning process. In fact, a 2022 Wills and Estate Planning Study, from caring.com found that only 33% of Americans have created their will. Yet, while having a will is important—and all adults over age 18 should have this document in place—for all but a few people, creating a will is just one small part of an effective estate plan that works to keep your loved ones out of court and out of conflict. With this in mind, here we look at exactly what having a will in place will—and will not—do for you and your loved ones in terms of estate planning. If you have yet to create your will, or you haven’t reviewed your existing will recently, contact us, your Personal Family Lawyer® to get this vital first step in your estate planning handled right away. What A Will Does A will is a legal document that outlines your final wishes in regards to how your assets are distributed to your surviving family members. Here are some of the things having a will in place allows you to do: 1. Choose how assets are divided upon your death: A will's primary purpose is to allow you to designate how you want your assets divided among your surviving loved ones upon your death. If you die without a will, state law governs how your assets are distributed, which may or may not be in line with your wishes. However, as we’ll discuss more below, a will only allows you to provide for the distribution of certain types of assets—namely, a will only covers assets owned solely in your name. Other types of assets, such as those with a beneficiary designation and assets co-owned by you with others, are not affected by your will. 2. Name an executor: In your will, you can name the person, or persons, you want to serve as your executor, sometimes called a “personal representative.” Following your death, your executor is responsible for wrapping up your final affairs. This includes numerous responsibilities, including filing your will with the local probate court, locating and managing all of your assets, paying off any debts you have outstanding, filing and paying your final income taxes, and finally, distributing your remaining assets to your named beneficiaries. 3. Name guardians for your minor children: If you are the parent of minor children, it is possible to name legal guardians for them in your will. However, naming guardians for your children in your will alone is seriously risky, and doing so may even leave your kids vulnerable to being taken into the care of strangers if something happens to you. Fortunately, whether you’ve named guardians for your kids in your will or have yet to take any action at all, you’ve come to the right place. At Kaplan Estate Law LLC, we offer a comprehensive system known as the Kids Protection Plan®, which is included with every estate plan we prepare for families with young children. If you have already named long-term guardians in your will—either on your own or with a lawyer—we can review your existing legal documents to see whether you have made any of the six common mistakes that could leave your kids at risk. From there, we will revise your plan to ensure your children are fully protected. 4. Serve as a backup for a living trust: Because it can be difficult to transfer the legal title to every single one of your assets into a revocable living trust before your death, most trusts are combined with what’s known as a “pour-over” will. This type of will serves as a backup to a living trust, so all assets not held by the trust upon your death are transferred, or “poured,” into your trust through the probate process. A Small—But Important—First Step As you can see here, having a will in place only gives you a limited amount of power over the distribution of certain assets, but that doesn’t mean you should go without one. Without a will, you would have no say in who inherits your assets when you die, and everything you own could even go to the state. But worse than that, your surviving loved ones will be the ones who have to clean up the mess you’ve left behind. And they will have to handle all of this while grieving your death. Instead, you should see your will as an important first step in the estate planning process—one that works best when integrated with a variety of other legal vehicles, such as trusts, powers of attorney, and advance healthcare directives. Next week, in part two, we’ll detail all of the things that your will does not do, and then we’ll outline the different estate planning tools that you should have in place to make up for these potential blind spots in your estate plan. Until then, if you need to get your estate planning started or you would like us to review your existing estate plan (even one created by another lawyer) to see if you are missing anything, contact attorney Lauren Kaplan at lauren@kaplanestatelaw.com or (312) 833-2199. Or, if you are ready to get started, schedule a meeting here.

  • Estate Planning Before You Travel: Why It's Critically Important

    Vacations can be the perfect opportunity to relax, disconnect from work and responsibilities, and enjoy your spouse, partner, kids’ or friend’s company. But before you head off on your next getaway, there’s something else you should consider doing that might not sound quite as fun—creating an estate plan. While it may not sound like the most thrilling way to spend a day, here are some reasons why you need to think about your estate plans before you travel. An estate plan ensures any medical decisions needed while away from home will be handled according to your wishes, and with as much ease as possible, no matter what the rules are where something happens. If you fall ill or become injured and can’t make medical decisions for yourself, your estate plan will ensure that decisions will be made by the person you choose, and with your indicated desires for your care at the forefront. Without an estate plan in place, your family or friends could have a heavy lift to get you back home, locate your assets, keep your bills paid, and even ensure your children get taken care of by the right people in the right way. Lastly, an estate plan ensures that any debts or liabilities are taken care of properly in case something happens while on vacation. This can help prevent creditors from trying to collect from surviving family members after the fact — something no one wants to deal with during such a difficult time. Yes, Even Married Couples Need an Estate Plan You might think that because you are married, you don’t need an estate plan. Or you might even think your Will is enough and would just handle everything. But that’s generally not the case. Even if you are married, you still need medical powers of attorney, making it clear that you want your spouse making medical decisions for you, or even potentially adding in additional decision-makers. You still want a Living Will to give clarity on how you want medical decisions made for you. Finally, if you have dependent children, you want to ensure you’ve made it as easy as possible for their care needs to be continued by the people you want, in the way you want. Without a plan in place, decisions around their care could be tied up for months, including access to the financial assets their caregivers would need to ensure they have what they need along the way. The Benefits of Working With an Attorney While you can create an estate plan without legal assistance, there are serious risks to the people you love, if your plan is not completed, not updated after it’s been done once, or not completed properly. The only real guarantee for the people you love to have as much ease as possible, is if you work with an experienced attorney specializing in estate planning, and particularly Life & Legacy Planning. At Kaplan Estate Law LLC, we understand what needs to go into a thorough and complete estate plan — as well as the potential pitfalls or issues that could arise due to your unique personal and family dynamics — so you can rest assured knowing everything is being taken care of properly before you embark on your trip. We can advise you on other important documents such as Wills, Trusts, powers of attorney (POA), health care directives (HCD), and guardianship paperwork (for minor children) so you can make informed decisions based on what you want to have happen if you become incapacitated or die . All these items should be considered when creating an effective estate plan — especially when one or both parties will be traveling outside their home country at any point. Don't Let a Lack of Planning Dampen Your Vacation Spirits! Taking a few simple, yet critically important, steps now can save you and your family considerable headaches down the road if anything were ever to happen while on the road—not only do we want you to enjoy each moment spent together, but we want peace of mind knowing that whatever comes your way is handled according to your wishes! We can help put a plan together now so that you don’t forget about this important task before packing up for your next adventure. Making sure all your affairs are in order will ensure nothing stands in the way between you and enjoying time together! For more information, contact attorney Lauren Kaplan at (312) 833-2199 or lauren@kaplanestatelaw.com. Or, if you're ready to get started, schedule a meeting here.

  • Estate Planning Checkup: Is Your Estate Plan Up-To-Date?

    At Kaplan Estate Law LLC, one of our primary goals is to educate you on the vital importance of not only preparing an estate plan, but also keeping your plan up-to-date. While you almost surely understand the importance of creating an estate plan, you may not know that keeping your plan current is every bit as important as creating a plan to begin with. In fact, outside of not creating any estate plan at all, outdated estate plans are one of the most common estate planning mistakes we encounter. We’ll get called by the loved ones of someone who has become incapacitated or died with a plan that no longer works because it was not properly updated. Unfortunately, once something happens, it’s too late to adjust your plan, and the loved ones you leave behind will be stuck with the mess you’ve left, or they could end up in a costly and traumatic court process that can drag out for months or even years. Estate planning is an ongoing process, not a one-and-done type of deal. To ensure your plan works properly, it should continuously evolve along with your life circumstances and other changing conditions. Regardless of who you are, your life will inevitably change: families change, assets change, laws change, and goals change. In the absence of any major life events, we recommend reviewing your estate plan annually. However, there are several common life events that require you to immediately update your plan—that is, if you want it to actually work and keep your family out of court and out of conflict. To this end, if any of the following events occur in your life, contact us, your Personal Family Lawyer® right away to amend your estate plan. LIFE EVENTS THAT NECESSITATE AN IMMEDIATE REVIEW OF YOUR ESTATE PLAN 1) You Get Married. 2) You Get Divorced. 3) You Give Birth Or Adopt. 4) You Have A Minor Child Reach Adulthood. 5) A Loved One Dies. 6) You Get Seriously Ill Or Injured. 7) You Move To A New State. 8) Your Assets Or Liabilities Change Significantly. 9) You Buy Or Sell A Business 10) The Federal Estate-Tax Exemption Or Your State’s Estate-Tax Exemption Changes Significantly. OUR SYSTEMS KEEP YOUR PLAN UPDATED—FOR LIFE Keeping your estate plan updated is so important that we’ve created proprietary systems designed to ensure your plan is revisited consistently, so you don’t need to worry about overlooking anything, as your family, the law, and your assets change over time. Be sure to ask us about these systems during our meeting. Furthermore, because your plan is designed to protect and provide for your loved ones in the event of your death or incapacity, us, as your local Personal Family Lawyer® isn’t just here to serve you—we’re here to serve your entire family. Over the years, we’ll take the time to get to know your family members and include them in the planning process, so everyone affected by your plan is well-aware of what your latest planning strategies are and why you made the choices you did, along with knowing exactly what they need to do if something happens to you. And if you are the parent of minor children, we will put safeguards in place to ensure that your kids are never placed into the care of strangers, even temporarily. LIFE & LEGACY PLANNING As a Personal Family Lawyer® firm, our estate planning services go far beyond simply creating documents and then never seeing you again. In fact, we will develop a relationship with you and your family that lasts not only for your lifetime, but for the lifetime of your children and their children, if that’s your wish. Unlike traditional estate plans, a Life & Legacy Plan is designed to grow and change with you. Us, as your local Personal Family Lawyer® makes that possible. We aren’t just a one-time document creator; we are your trusted, lifelong counsel and guide, who works with you to ensure your family stays out of court and out of conflict and grows even closer as a result of the legacy you’re creating. Ultimately, we’ve discovered that estate planning is about far more than planning for your death and passing on your “estate” to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today. And this is why we call our services Life & Legacy Planning. Call us, your Personal Family Lawyer® to get your plan started today. This article is a service of Lauren Kaplan, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today at (312( 833-2199 to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

  • Trusts & Taxes: What You Need to Know

    People often come to us curious — or confused — about the role trusts play in saving on taxes. Given how frequently this issue comes up, here we’re going to explain the tax implications associated with different types of trusts in order to clarify this issue. Of course, if you need further clarification about trusts, taxes, or any other issue related to estate planning, meet with us for additional guidance. TWO TYPES OF TRUSTS There are two primary types of trusts — revocable living trusts and irrevocable trusts — and each one comes with different tax consequences. REVOCABLE LIVING TRUST A revocable living trust, also known simply as a living trust, is by far the most commonly used form of trust in estate planning. And as long as you are living, there is absolutely no tax impact of creating a living trust. A living trust uses your Social Security Number as its tax identifier, and this type of trust is not a separate entity from you for tax purposes. However, a living trust is a separate entity from you for the purpose of avoiding the court process called probate, and this is where the confusion regarding taxes often comes from. But before we explain the tax implications of a living trust, let's first describe how a living trust works. A living trust is simply an agreement between a person known as the grantor, who gives assets to a person or entity known as a trustee, to hold those assets for the benefit of a beneficiary(s). In the case of a revocable living trust, the reason there are no tax consequences is because you can revoke the trust agreement or take the assets back from the trustee at any time, for any reason. In fact, as long as you are living, you can change the terms of the trust, change the trustee, change the beneficiaries, or terminate the trust altogether. However, upon your death, a revocable living trust becomes irrevocable, and this is when tax consequences come into play. Following your death, the trustee you’ve named will step in and take over management of the trust assets, and one of the first things that your trustee will do is to apply for a tax ID number for the trust. At this point, the trust becomes a taxable entity, and any income earned inside of the trust that is not distributed in that year would be subject to income taxes, at the taxable rates of the trust (or at the tax rates of the beneficiaries, if income is distributed to the beneficiaries). IRREVOCABLE TRUSTS An irrevocable trust is created when you make a gift to a trustee to hold assets for the benefit of the beneficiary, and you cannot take back the gift you've made to that individual. When you create an irrevocable trust, either during your lifetime, or at death through a testamentary trust (a trust that arises at the time of your death through your will), or through a revocable living trust creating during your lifetime, the trust is a separate tax-paying entity, and it is either subject to income tax on the earnings of the trust at the rates of the trust or at the rates of the beneficiaries. Unlike a revocable living trust, an irrevocable trust is (as the name implies) irrevocable. This means that the trust’s terms cannot be changed, and the trust cannot be terminated once it’s been executed. When you transfer assets into an irrevocable trust, you relinquish all ownership of those assets, and your chosen trustee takes total control of the assets transferred into the name of the trust. Because you no longer own the assets held by the trust, those assets are no longer considered part of your estate, and as long as the trust has been properly maintained, the assets held by the trust are also protected from lawsuits, creditors, divorce, serious illness and accidents, and even bankruptcy. However, as mentioned earlier, irrevocable trusts also come with tax consequences. As of 2022, the income earned by an irrevocable trust is taxed at the highest individual tax bracket of 37% as soon as the undistributed taxable income reaches more than $13,450. To avoid this high tax rate, in some cases, an irrevocable trust can be prepared so that the tax consequences pass through to the beneficiary and are taxed at his or her rates, which are typically much lower. We often set up a trust in this way when creating a Lifetime Asset Protection Trust for a beneficiary. When set up like this, the trust can provide the beneficiary with protection from common life events, such as serious debt, divorce, debilitating illness, crippling accidents, lawsuits, and bankruptcy, without being taxed at such a high rate on such little income. If you have a trust set up, and would like us to review its income tax consequences for your loved ones upon your death, meet with us, your local Personal Family Lawyer. THE ESTATE TAX: WHAT IT IS & WHO PAYS IT The estate tax is a tax on the value of a person’s assets at the time of their death. Upon your death, if the total value of your estate is above a certain threshold amount, known as the federal estate tax exemption, the IRS requires your estate to pay a tax, known as the estate tax, before any assets can be passed to your beneficiaries. As of 2023, the federal estate tax exemption is $12.92 million for individuals ($25.84 million for married couples). Simply put, if you die in 2023, and your assets are worth $12.92 million or less, your estate won't owe any federal estate tax. However, if your estate is worth more than $12.92 million, the amount of your assets that are greater than $12.92 million will be taxed at a whopping 40% tax rate. In Illinois, the estate tax is exemption is $4 million, which means that if you die in 2023 and your assets are worth more than $4 million, the amount of your assets that are greater than $4 million will be taxes by the state at a rate of 40%. You can reduce your estate tax liability—or even eliminate it all together—by using various estate planning strategies. Most of these strategies are fairly complex and involve the use of irrevocable trusts, but such strategies are without question worth it, if you can save your family such a massive tax bill. To learn how to save your family from such a major tax burden, meet with schedule a meeting with us to discuss your options. THE FUTURE ESTATE TAX The current $12.92 million estate tax exemption is set to expire on Jan. 1, 2026, and return to its previous level of $5 million, which when adjusted for inflation is expected to be around $6.03 million. Here’s one thing we know for sure: We don’t know what the estate tax exemption will be at the time of your death, and we also don’t know what the value of your assets will be at the time of your death. Because of this, when you plan with us, we will ensure that we put in place planning strategies to protect your estate from estate taxes, regardless of the amount of the estate tax exemption or the size of your assets. WE’RE HERE FOR YOU If you are trying to decide whether a revocable living trust, irrevocable trust, Lifetime Asset Protection Trust, or some other estate planning vehicle is the right solution for you and your family, meet with us, as your Personal Family Lawyer. We will support you in making that decision, so your estate can provide the maximum benefit for the people you love most, while paying the least amount of taxes possible. Call us today to schedule your visit. This article is a service of Lauren Kaplan, Personal Family Lawyer. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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