Join Everyday Law and Jeff O’Kelley of Lesser Lutrey Pasquesi and Howe, as we discuss the basic elements of wills and trusts!
Jeff O’Kelley is an estate and trusts attorney with Lesser Lutrey Pasquesi & Howe, LLC. He can be reached at (847) 295-8800 and the firm website is www.llphlegal.com. O’Kelley discussed the importance of having an estate plan which includes not only wills and trusts but powers of attorney, which are plans for incapacity.
No one likes to think about death or wills but the fact is everyone eventually dies and if you don’t have an estate plan (will and/or trust), the state of Illinois has a statutory plan in place for people who die intestate (without a will). That statutory plan may not have been the plan you would have picked. For instance, if you die without a will, the Court will choose an administrator to administer your estate and that may not be the person you would have chosen as executor of your will. Moreover, without a will that could excuse a bond, a bond would have to be posted in administering an intestate estate, and bonds costs money. Additionally, in Illinois, an intestate estate allots half of the estate to a spouse and the remaining half to the children. Again, this division is not necessarily the plan the deceased might have chosen. As an aside, people with minor children need a will to name a guardian for their children, in the event of the parent’s death.
A will in Illinois must have 2 witnesses and be notarized (no video wills). A will appoints an executor who will administer your estate and a guardian, if needed, for minor children. A will is not the governing document of the estate but must be approved by the Court. The executor will take the will along with a petition and a list of heirs to Court and ask the judge to approve the will. If approved, the Court will issue letters of office that allows the executor to act on the behalf of the estate. The executor opens the estate, administers the estate (pays debts, distributes property) and closes the estate. The probate process can be lengthy as well as costly.
A trust is an estate plan that avoids the cost and time factors of probate. Additionally, a trust, unlike a will, does not have to be filed with the court, and can be kept private. A trust involves more work in the planning stages but allows a quicker transfer of property than does a will. A trust transfers the ownership of assets from a person(grantor) to the trust for the benefit of another. The grantor can be the trustee and the trust can be for the grantor/trustee’s benefit during the life of the grantor/trustee. A successor trustee will step into the shoes of the grantor/trustee when the grantor dies. Even if a trust is the preferred estate plan, a will (pour-over will) is also created as part of an estate plan in case an asset was not placed in the trust at the time of the trust’s creation. Take note that neither a will nor a trust will allow anyone to avoid taxes, if owed. A probated will, however, cuts off claims of known creditors after 2 years and unknown creditors after 6 months (after news publication). Cutting off claims is not a feature of a trust.
Wills and trusts are instruments that coincide with the death of a person, but powers of attorney are documents that are effective while the person is still alive, but incapacitated. There are 2 types of powers of attorney; health care and property. These documents are created to help avoid the need for guardianship. Guardianship is a procedure to obtain the Court’s permission to take care of another person and their property (guardianship of the person and guardianship of the state). As with intestacy, obtaining guardianship can be an expensive process and requires ongoing court supervision. Having powers of attorney in place can avoid the need for guardianship.