1.   What is probate?

Probate is the legal process through which the court sees that, when you die, your debts are paid and your assets are distributed according to your will. If you don't have a valid will, your assets are distributed according to state law.

2.  What's so bad about probate?

Actually, it isn't always so bad. It may even be desired.

Probate can sometimes be expensive. Legal/executor fees and other costs must be paid before your assets can be fully distributed to your heirs. If you own property in other states, your family could face multiple probates, each one according to the laws in that state. Because these costs can vary widely, be sure to get an estimate. It also takes some time, usually nine months to two years, but often longer.

3.   Doesn’t joint ownership avoid probate?

Not really – it usually just postpones it. With most jointly owned assets, when one owner dies, full ownership does transfer to the surviving owner without probate. But if that owner dies without adding a new joint owner, or if both owners die at the same time, the asset must be probated before it can go to the heirs.

It is usually a bad idea to add a joint owner other than a spouse. When you add a co-owner, you could easily lose control of the asset or account. Your chances of being named in a lawsuit and of losing the asset to a creditor are increased. There could also be a gift tax due on such a transfer. Since a will does not control most jointly owned assets, you could disinherit your family.

With some assets, especially real estate, all owners must sign to sell or refinance. So if a co-owner becomes incapacitated, you could find yourself with a new “co-owner” – the court—even if the ill owner is your spouse.

 4.   I have a will. Why would I want a living trust? 

Contrary to what you’ve probably heard, a Will may not be the best plan for you and your family – primarily because a will does not avoid probate when you die.  A will must be verified by the probate court before it can be enforced.

Also, because a will can only go into effect after you die, it provides no protection if you become physically or mentally incapacitated. So the court could easily take control of your assets before you die – a concern of millions of older Americans and their families.

Fortunately, there is a simple and proven alternative to a will – the revocable living trust. It avoids probate and lets you keep control of your assets while you are living – even if you become incapacitated – and after you die.

5. What is a living trust? 

A living trust is a legal document that, just like a will, contains your         instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust avoids probate at death, can control all of your assets, and  prevents the court from controlling your assets at incapacity.

6.  How does a living trust avoid probate and prevent court                     control  of  assets at incapacity? 

When you set up a living trust, you transfer assets from your name to the name of your trust, which you control – such as from “Tom and Sue Bossman, husband and wife” to “Tom and Sue Bossman, trustees under trust dated (date of trust).” 

Legally you no longer own anything (don’t panic: everything now belongs to your trust), so there is nothing for the courts to control when you die or become incapacitated. The concept is very simple, but this is what keeps you and your family out of the courts.

7. Do I lose control of the assets in my trust? 

Absolutely not. You keep full control. As trustee of your trust, you can do  anything you could do before – buy/sell assets, change or even cancel your trust (that’s why it’s called a revocable living trust). You even file the same tax returns. Nothing changes but the names on the titles.

8. If something happens to me, who has control? 

If you and your spouse are co-trustees, either can act and have instant control if one becomes incapacitated or dies. If something happens to both of you, or if you are the only trustee, your handpicked successor trustee will step in. If a corporate trustee is already your trustee or co-trustee, they will continue to manage your trust for you.

9. What does a successor trustee do? 

If you become incapacitated, your successor trustee looks after your care and  manages your financial affairs for as long as needed, using your assets to pay your expenses. If you recover, you automatically resume control. When you die, your successor trustee pays your debts and distributes your assets. All this is done quickly and privately, according to instructions in your trust, without court interference.

 10.  Does my trust end when I die? 

Unlike a will, a trust doesn’t have to die with you. Assets can stay in your trust, managed by the person or corporate trustee you have chosen – until your beneficiaries (including minor children) reach the age(s) you want them to inherit, or to provide for a loved one with special needs. Best of all, if assets remain in a Trust after your death, the Trust can be structured to protect those assets from the creditors and spouses of your beneficiaries.
  
11.  How can a living trust save on estate taxes? 

If you die in 2006 and the net value of your estate (assets less debts) is more than $2 million, federal estate taxes (approximately 45%) must be paid. If you are married, your living trust can include a provision that will let you and your spouse leave up to $4 million estate tax-free to your loved ones, saving over $900,000.00 in taxes!

12.   Is a living trust expensive?

Actually, a simple Trust will cost about the same as Probate. If you add the costs involved with  incapacity, it can actually be less expensivce than probate. How much you pay will depend on how complicated your plan is. Be sure to get an estimate BEFORE you hire an attorney to set up your Trust.

13. Should I have an attorney do my trust?

Yes, but you need the right attorney. A local attorney who has considerable experience in living trusts will be able to give you valuable guidance and peace of mind that your trust is prepared properly. 
  

 14.  Is a “living will” the same as a living trust?

No. A living trust is for financial affairs. A living will is for medical affairs. It lets others know how you feel about life support in terminal situations.

  
15.  Are living trusts new? 

No, they’ve been used successfully for hundreds of years.

16. Who should have a living trust?

Age, marital status and wealth don’t really matter. If you own titled assets and want your loved ones (spouse, children or parents) to avoid court interference at your death or incapacity, consider a living trust. You may also want to encourage other family members to have one so you won’t have to deal with the courts at their incapacities or deaths.

17. What if I die without a Will or Trust?

Dying "intestate" means dying without a valid Will. You didn't make a Will before you died, or your Will doesn't meet the requirements of Illinois law, so it can't be used. That's intestacy. If you die intestate, your probate property will be distributed pursuant to Illinois law, and will pass to your heirs (closest relatives). Who are your closest relatives? That depends on your family situation, and the intestacy law covers pretty much every possibility. For the typical family (husband and wife plus kids), upon the death of the first spouse, half of his or her probate property will pass to the surviving spouse, and half will pass to the kids. In this situation, as in many others, what the intestacy law requires may not be what you would've wanted.

18. Will A Trust protect my assets from lawsuits or other creditors?

If you create a trust for your own benefit, you have established a “self-settled trust”. If the trust instrument contains provisions that prevent your creditors from reaching your interest in trust assets, the trust is known as a “self-settled spendthrift trust” (or, more commonly, an “asset protection trust”).

For many hundreds of years, the provisions of self-settled spendthrift trusts designed to protect trust assets from creditors of the settlor/beneficiary were ineffective. Alaska, Delaware, Nevada and a few other states allow you to establish a Self Settled Spendthrift Trust. Please call us for an appointment if you are interested in this benefit.

19. Are there other ways to protect my assets from lawsuits, divorce and other creditors?

YES! We are familiar with a variety of LEGAL ways to shield assets from creditors For example, the biggest mistake my married clients make is failing to own their home in "Tenancy by the Entirety". Illinois Law allows this form of ownership of real estate to preserve the marital home from creditors. Check your deed and give us a call for more information on how you can legally protect your assets.

CALL AND SCHEDULE AN APPOINTMENT TODAY.      630.773.2400