A-B Trust

The terms of an A & B trust provide that after the death of the person who created the trust the assets will be split between two sub-trusts, the A Trust and the B Trust. The A Trust benefits the surviving spouse. The B Trust supposedly benefits the children. A formula is set forth in the trust to determine how the assets are split.

The reason for this device is to minimize estate taxes by placing the amount upon which there is no tax in the B or children's trust.  This trust is structured so that when the surviving spouse subsequently dies the children's trust is not in his or her taxable estate. Everything else goes to the A Trust which is structured so as to qualify for the marital deduction. The A Trust will be in the surviving spouse's estate when he or she dies later.

By using this type of trust parents can pass double the tax free amount to their children. If the first to die merely left everything to the surviving spouse then only one tax free amount would pass to the children on the death of the surviving spouse. Everything else would be subject to tax.

Naturally this type of device is useful only for taxable estates. And it          works only if the assets are split between both spouses so that the first to die has the tax free amount to pass to the children's trust.

The surviving spouse can be the income beneficiary of the children's          trust.

The A Trust is often called a marital trust and the B Trust is often called          a family trust.                    

When the surviving spouse's rights to the A Trust are limited to income and the executor of the estate is given an option to elect how much of the trust will be used for the marital deduction, it is called a Q-Tip Trust.

For more information, contact the Law Offices of Donald Thompson.

Illinois Estate Litigation

Common estate litigation involves disputes over the validity of a will or the meaning of a valid will. There are also disputes over who the heirs or legatees are or over who owns property claimed by the estate. Litigation where an interested party charges the executor or administrator with wrongdoing is also common.

There are also suits by estates to recover amounts owed or for wrongful death. Similarly there are suits against estates for amounts owed or for property damage or personal injuries.

The only common denominator is the expense. Litigation is very expensive. Unfortunately litigation involving family members is often not rational and the costs escalate way out of proportion to the amount involved. One way to avoid family litigation is to consult everyone about everything and to act only when there is some kind of consensus.

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Citations to Recover or Discover Property

The representative (administrator or executor) of an estate can sue in any court for property taken from the decedent. A summary procedure is also provided for in a supplemental proceeding before the same probate court handling the estate.

The representative can file a petition for a citation either to discover property or to recover it.

The court orders the citation to issue commanding the person to  whom it is directed to appear and respond and the citation is served on the respondent by the Sheriff just like any  other lawsuit. Any interested party can also bring a citation against the representative.

Illinois Abatement

ABATEMENT

When an estate is not large enough to pay all the expenses, taxes and gifts in a will then there are rules to determine which payments will decrease or "abate". Generally residuary bequests abate first. These are gifts of "everything else" or "the balance of my estate". Then general legacies abate pro rata and then specific legacies abate pro rata.

Illinois Land Trusts

An Illinois land trust is not a real trust. In a real trust a trustee takes title to assets and exercises all the rights of an owner over the assets. The trustee is responsible for managing and maintaining the assets. In a land trust this is not the case.

The land trustee takes and holds title to land and does nothing else. The beneficiary or beneficiaries of the trust exercise all the other aspects of ownership. The land trust is created by deeding land to the trustee. The deed is usually called a deed in trust. The former owner and the trustee enter into an agreement usually called a land trust agreement. The trustee is usually a bank with trust powers and the bank's standard forms are used. The trustee charges a fee to set up the trust and also a yearly fee.

Antenuptial Agreement / Prenup

This is a written agreement entered before a marriage that usually deals with what happens to the parties' assets and income in the event of divorce or death. For instance, it can specify what a surviving spouse gets on the death of the other spouse. It can increase or decrease inheritance rights.

To be enforceable each party should have separate legal counsel, each party should make full disclosure of all income, assets and other material facts, and no duress should be involved. This is also called a pre-nuptial agreement.

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Pay on Death Accounts

There are a variety of bank accounts which pass on death to a named survivor. During the life of the owner of the account the survivor has no rights. That is, the survivor cannot withdraw funds from the account like a joint tenant could.

A will does not affect these accounts. They pass to the person designated in the bank records regardless of any will or probate court action. Whether or not such an account has been created depends on the agreement with the bank. Sometimes these accounts are called "Pay on death" accounts. Sometimes they are called "Totten Trusts". Sometimes the account ownership designation merely says "X in trust for Y", although there is no trust agreement.   

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Pet Trust Act

Trusts for pets are now enforceable in Illinois. Before recent legislation providing for this such trusts were problematic in that the beneficiary (the pet) could not sue to enforce the trust and no one else had a right to after the grantor's death.  Visit Chicago Wills, Estates &Trusts for more information.

Uniform Transfers to Minors Act

Minors do not have legal capacity to contract or deal with assets. They have no capacity to sue or be sued. For this reason minors do not usually hold title to property in their own name. Instead title to a minor's assets is usually held by a guardian or property is given to a trustee to hold for the benefit of the minor. Guardianships and trusts are expensive and for that reason, among others, are not suitable for smaller amounts of money or other property. For this reason Illinois and most other states have statutes similar to the Uniform Transfer To Minors Act.

In Illinois the Act allows a transfer to be made to a custodian for the benefit of the minor. The Act specifies the consequences of the transfer and the rights and duties of the parties. There are no documentation requirements beyond the form of the transfer itself. There are particular requirements for different kinds of property, but generally the document of transfer must state that the transfer is being made to a named custodian to hold for a named minor and the document must state the transfer is being made under the Illinois Uniform Transfers to Minors Act.

The transfer can be made to any adult or a trust company except in certain cases such as a transfer from a trust or estate where the adult must be a member of the minor's family. The transferor can be the custodian.

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About Chicago Estate Planning Lawyer Don Thompson

Chicago Estate Planning attorney Donald M. Thompson is licensed to practice law by the Supreme Court of Illinois, U. S. District Court in Chicago, U. S. Circuit Court of Appeals for the 7th Circuit, and the U.S. Tax Court. He is a member of the Federal Trial Bar. He is a 1966 graduate of the University of Chicago Law School where he was in the top quarter of his class and received the Mandel Legal Aid Award. He was assistant professor of law at I.I.T.-Chicago-Kent College of Law from 1966 to 1970 teaching tax and property subjects.

He is a member of the Chicago, Illinois State, American and 7th Federal Circuit bar associations. He serves on the Chicago Bar Association's tax, trust probate, securities law and corporation law committees and is past chairman of the corporation law and legal education committees.

He is a member of the Chicago Bar Association's estate planning, probate, corporation and tax referral panels. He is an Arbitrator for the National Association of Securities Dealers and the Circuit Court of Cook County.