Estate planning is an essential process for ensuring that your assets, healthcare decisions, and loved ones are cared for in case of incapacity or death. While often associated with the wealthy, estate planning is important for individuals of all income levels. In Illinois, well-crafted estate planning can avoid legal complications, reduce tax burdens, minimize stress and potential arguments, and ensure you are protected, and your wishes are honored.
The goal of this article is to help you understand what Estate Planning is, what documents can be utilized to create a holistic and comprehensive plan, and why it’s important to have an Estate Plan regardless of your income level or family situation.
What is Estate Planning?
Estate planning involves creating a strategy for managing your assets, healthcare, and personal affairs in case of incapacity or death. It goes beyond a Last Will & Testament, including documents that address various scenarios. Working with an attorney to formalize your wishes ensures that your loved ones are supported and minimizes the potential for conflicts, legal disputes, and unnecessary costs.
An Estate Plan is how you retain control when you’re incapacitated or if you were to pass away. When you make these wishes known by creating an Estate Plan, it helps minimize family conflicts during emotionally fraught times, ensures your loved ones are cared for, minimizes taxes, minimizes legal disputes, and avoids unnecessary legal delays and costs. Without an Estate Plan declaring your wishes, the State of Illinois will determine how everything will be handled according to its laws, which may not align with your wishes.
Having an Estate Plan provides you with peace of mind that you will be cared for and financially protected during your lifetime, while also knowing your hard-earned assets and your loved ones will be taken care of according to your wishes after you pass. For help with creating or updating your planning in Illinois, contact Baumert LLC at our office in Hinsdale.
What Documents Are Involved & Why Are They Important?
- Last Will & Testament
A Last Will & Testament (or “Will”) dictates how your affairs are handled after your death, ensuring your final wishes are followed and preventing confusion or legal disputes among your loved ones. It names an Executor to manage your estate, a guardian for minor children, and specifies who inherits your assets or receives gifts. Without a Will, Illinois law decides these matters, which may not align with your wishes.
Key things to know: A Will only takes effect upon death and can be changed or replaced at any time. Having a Will does not avoid Probate entirely; Every Will in Illinois is filed with the Probate Court upon death, so what is in your Will becomes public record. Whether your estate will require going through the formal Probate Court process is determined by the value of all assets. If your estate exceeds $100,000 in total value, it will go through formal Probate. If less, it may be handled informally through a Small Estate Affidavit. To avoid Probate and ensure privacy, a Trust can be used, holding assets outside your name and not counting toward the $100,000 threshold.
- Health Care Power of Attorney
A Health Care Power of Attorney form designates someone to make medical decisions for you if you’re unable to do so. It ensures your care aligns with your wishes, preventing delays or costly court intervention. Without it, family members may struggle to make decisions on your behalf and court intervention may be required.
While often overlooked for young adults, this document is crucial when a child turns 18, as parents lose the legal right to make decisions. In emergencies, parents may not be able to step in without court approval. This underscores why a Health Care Power of Attorney is essential for everyone, regardless of age or income.
- Living Will [Advanced Directives to the Health Care Power of Attorney]
A Living Will is an addition to your Health Care Power of Attorney, outlining your medical treatment preferences if you’re diagnosed with a terminal condition or become permanently unconscious, reliant on life-sustaining treatment [such as ventilators / feeding tubes / etc.], and are unable to communicate. It specifies whether your loved ones should prioritize your quality of life (e.g., withdrawing life-sustaining treatment) or quantity of life (e.g., maintaining life support).
While optional, a Living Will is highly recommended to avoid leaving your loved ones guessing and potentially facing legal disputes. It ensures your wishes are respected, minimizes conflicts, and relieves your family of making difficult decisions during an emotional time.
- HIPAA Authorization
A HIPAA Authorization allows you to specify who can access your medical records and communicate with healthcare providers if you’re incapacitated. This ensures loved ones can stay informed about your condition. Without it, family members must rely on your Health Care Power of Attorney for updates.
This is especially important for young adults, as parents lose legal access to their child’s medical information once they turn 18. Also in blended families, it may not be ideal for one person to control access to all medical information. A HIPAA Authorization is a key part of a comprehensive estate planning for all ages and situations.
- Property Power of Attorney
A Property Power of Attorney (or Durable Power of Attorney) designates someone to manage your financial and asset decisions if you’re unable to do so. It ensures that your finances have a clear transition for management, which is especially important when your funds are needed to provide for your care while incapacitated, if you own a business, or if some of your assets are active market investments. Without it, your loved ones may require court intervention and face delays and extra costs to access your finances.
This document is often overlooked by young adults or those in good health. Once a child turns 18, parents lose the legal right to manage their child’s finances. Estate planning is important at all stages of life to avoid delays, legal costs, and complications in worst-case scenarios. This is a vital part of a complete estate planning for any person but is especially critical for those with business interests or active investments.
- Revocable Living Trust
A Trust is an agreement that allows you to manage and control assets during your lifetime, with specific rules for their distribution after your death. As Trustee of your Revocable Living Trust, you retain full control – adding or removing assets and even revoking the Trust as you see fit. The Trust outlines the distribution of assets, who will manage them (Successor Trustee), and any special conditions for beneficiaries, such as age, special needs, or added protections from divorce or bankruptcy. Trust.
Key benefits of a Revocable Living Trust include: 1) privacy, 2) probate avoidance, saving time and costs, and 3) flexibility in managing distributions. Trusts can save time, money, and headaches.
However, creating a Trust is only part of the process; to fully benefit, you must “fund” the Trust by retitling assets in its name, such as your home and bank accounts. Which assets are key and appropriate to “fund” your Trust depends on your specific circumstances and often involves instructing other designation methods as well [i.e. executing beneficiary designations; payable-on-death /transfer-on-death instruments]. This step ensures that your assets will be managed according to your Trust’s instructions and avoids probate.
Baumert Law – Your Trusted Estate Planning Chicago
A well-crafted Estate Plan reflects the realities of your life, gives you control, peace of mind, and protection for you and your loved ones while minimizing taxes and costs. By understanding the documents and Illinois laws involved, you can ensure your financial, health care, and personal wishes are known and respected when you’re unable to make decisions. Without a comprehensive Estate Plan, you risk added stress, delays, and costs, especially if court involvement is required. Investing in your Estate Plan brings both short- and long-term benefits for you and your loved ones.
Baumert LLC offers a holistic approach to ensure your wishes are upheld at every stage of life. If you don’t have an Estate Plan or haven’t reviewed it in over three years, consult an experienced estate planning Chicago attorney to ensure your plan is up to date with Illinois law and your current needs. For assistance, don’t hesitate to contact Baumert LLC at (630) 308-8375 or office@baumertlaw.com.
Legal Disclaimer: The information in this article has been prepared by business law and family law experts at Baumert Law for informational purposes only. The information in this article shall not be construed as an offer to represent you, nor is it intended to create any attorney-client relationship, nor constitute legal advice. We hope that you find the information informative and useful, and we would be delighted to speak with you to answer any questions you may have about our firm. If you have any questions or would like to inquire about assistance with estate planning, contact Baumert LLC by phone at (630) 308-8375 or by email at office@baumertlaw.com.
