When you hear “estate planning,” you probably first think of a will. Estate planning actually encompasses a wide range of financial, medical, and business issues. Wills are just one of many tools that we use to help resolve these issues and enforce your wishes when you are unable to make them known. Below are some of the most common legal issues that are addressed in estate planning. To discuss your specific situation with a Chicago estate planning lawyer, contact Malman Law directly.
A will is one of the most common tools used in estate administration. It usually deals with the disposition of your property after your death. A will can make specific grants of particular pieces of property, or it can make general provisions for ownership or cash gifts. A will can also nominate a person to serve as the administrator of your estate. This person will be responsible for settling your debts and distributing your property in accordance with your wishes. This person will also have to answer to the probate court and can be removed from the position if he or she abuses the authority of an estate administrator.
A trust can also be used instead of, or in addition to, a will. A trust is a legal entity in which a grantor places specified property in the care of a trustee. The trustee must manage these assets for specified beneficiaries, and distribute them in accordance with the grantor’s written instructions.
A trust can be used to avoid the time and expense of probate administration. If your assets are already in a trust, or if they automatically enter into a trust upon your death, then the trustee has the authority to manage these assets without the authority of the probate court. A trust can also offer certain tax benefits. Your estate planning attorney will help you determine if your goals are best met by using a will, a trust, or both.
Estate planning can also address circumstances before your death. In many cases, a patient may become incapacitated, but not actually die. Incapacity can result from a medical condition (such as being in a coma) or a mental condition (such as suffering from Alzheimer’s). You can plan for these circumstances by executing a power of attorney while you are competent to do so.
A power of attorney grants the authority to make decisions on your behalf. The power can cover financial decisions, medical decisions, or both. It is usually advisable to clearly state exactly what authority you grant to your proxy. It is also advisable to make your wishes known so that your proxy knows what decisions you would have made if you were able to do so. This can be done in a document such as a living will (which specifies the medical procedures you do and do not want to have performed in the event you are incapacitated).
A medical power of attorney is usually valid for as long as you are incapacitated. If you regain the ability to make decisions (for example, by waking up from a coma), the power of attorney will no longer apply. But in circumstances where the incapacity is likely to persist (such as dementia cases), the power of attorney can apply more broadly, and it may be difficult to prove that you are actually competent to make decisions about your own health care. This is why it is important to select someone you trust to act as your attorney in fact.
Transferring property through a will can subject it to probate taxes at the time your estate is administered. These tax obligations might be mitigated (though usually not removed entirely) by the use of a trust. But a trust is not right in every situation. It is important to consult with an experienced estate planning lawyer to discuss your specific estate and tax goals. You can meet your goals with appropriate estate planning, but you must use the right estate planning tools for your situation.
If you have an ownership interest in a business, this too, can pass to your estate. It is important to plan for this transfer in order to allow continued business operations after your passing. A person who has knowledge of the business should be selected to vote in your stead or make management decisions. Meanwhile, your financial interests (such as stocks or profit-sharing) should be clearly allocated in valid estate planning documents.
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