Chicago Estate Planning Law Blog

Chicago Estate Planning: Marital Deduction Trust

EstateLaw — Wed, 08 Sep 2010 22:48:32 +0000

This allows the deductible gift to the surviving spouse to be made in trust so a trustee can manage the investments. The tax law provides that the gift, while not absolute, still qualifies for the marital deduction if the spouse must get all the income and has the power to say who gets the money remaining in the trust at his or her death. This is usually used together with a family or credit shelter trust which takes advantage of the credit to pass $3,500,000 tax free. Remember the spouse can get all the income from that trust too, but cannot have the power to say who gets the remaining assets of the family trust on his or her death. That power would cause the family trust assets to be in the surviving spouse’s taxable estate.

NOTE: There currently is no Federal or state estate tax or generation skipping tax. The gift tax is still in effect. Whether or not the estate and generation skipping taxes will be reinstated this year is not known. Many people expect that they will be reinstated, but what will happen is not known. What the rates and exemptions will be if the taxes are reinstated is also not known. Click here for more.

Contact Chicago estate tax lawyer Don Thompson for help with a marital deduction trust in Illinois.

Planning an Illinois Estate

EstateLaw — Wed, 01 Sep 2010 21:47:29 +0000

Persons with larger estates should review their estate plans at a set time each year. Estate plans are prepared on the basis of certain things. As these things change, so should the plan. Births, deaths, changes in marital status, changes in law, changes in residence, changes in wealth, changes in the composition and titling of one’s assets are all things which can require estate plan changes.

To learn further about planning your Chicago, IL estate contact Chicago estate planning lawyer Donald Thompson.

Charitable Lead Trust

EstateLaw — Thu, 26 Aug 2010 22:06:08 +0000

This is for persons who are charitably inclined and also want to make discounted gifts to their children or someone else. The gift to charity leads to an income tax deduction if the trust is structured properly. The remainder which is given to the kids is valued for gift tax purposes at its present value, which is less than the full value of the assets in the trust because of the prior charitable interest.

For further information about charitable trusts in Chicago contact IL trust attorney Don Thompson.

What is a ‘pay on death’ account?

EstateLaw — Wed, 18 Aug 2010 13:57:02 +0000

It’s exactly what it sounds like.

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.

For further information on pay on death accounts or to handle other matters related to your Illinois Estate contact Chicago Estate Planning Attorney Donald Thompson.

What is a Trustee?

EstateLaw — Thu, 12 Aug 2010 22:24:29 +0000

A trustee is someone who holds legal title to assets or property for the benefit of someone else. The trustee can be an individual or an entity such as a bank trust department. The trustee is responsible for managing the property and paying it out according to the terms of the trust. A trustee should be someone who has the requisite skill and time to manage the assets and investments. The trustee should also be trustworthy. It also helps if the trustee knows the beneficiaries. Professional trustees are often selected to act because of their ability to manage investments. Often an individual is appointed to act in conjunction with the professional to add insight into the beneficiaries.

Professional trustees charge for their services and this means the trust must be large enough to pay the fees.

Trustees are subject to the supervision of the courts and their duties can be enforced by legal action.

To learn more about estate planning in Illinois or to decide whether to use a professional trustee of someone you know contact Chicago estate planing attorney Don Thompson.

Estate Planning: Illinois Marital Tax Deductions

EstateLaw — Thu, 05 Aug 2010 21:45:20 +0000

All property passing to a spouse is deductible – whether by lifetime gift or at death. This means that while the value of these transfers is in the estate, it is also deductible. Whatever is given to a spouse is not taxable. If you give your spouse $10 million during life or at death there is no tax. But when the spouse dies later there is no marital deduction unless the spouse has remarried. At this time the spouse could give your property to his or her second spouse, unless you take steps to avoid it.

To learn more about marital tax deductions in Illinois contact Chicago wills, trusts and estate planning attorney Donald Thompson.

Illinois Estate Planning: Disability and Health Insurance

EstateLaw — Thu, 29 Jul 2010 22:57:30 +0000

Part of estate planning involves providing for the event of your illness or disability. In fact for most people the odds of becoming disabled and unable to work for at least a short period are higher than the odds of dying. Disability insurance provides a monthly income if that happens. And many more people incur high medical expenses at one time or another without becoming disabled. Both types of insurance are a desirable part of any estate plan.

Although things of this nature are never pleasant to think about and seemingly plan on, but there possibility is a reality and they should be taken care of when properly planning an estate in Chicago, IL. Contact Chicago Estate Planning and Wills lawyer to plan your estate.

Chicago Estate Planning: Income Splitting

EstateLaw — Tue, 20 Jul 2010 21:27:57 +0000

Today: Income splitting in Illinois

Sometimes it is possible to shift income within a family from someone in a higher tax bracket to someone in a lower bracket. This is difficult with children under 14 since their unearned income (except for the first $1600) is taxed at their parent’s tax rates. However, not all children are under 14. Basically income is split by giving property to children. Thereafter the income from it belongs to the children. Interests in family businesses or farms are ideal. Gifts of cash work too if available. Employing your children also is a good way to shift income to them. However, they must actually work and the pay cannot exceed a reasonable amount for what they do.

If this sounds like something that could work for you contact Chicago Estate Planning Attorney Don Thompson for further information.

A Run Down of IL Living Wills and Living Trusts

EstateLaw — Wed, 14 Jul 2010 05:09:03 +0000

Living Wills

These do not dispose of property. Instead they tell your doctor or hospital not to keep you alive artificially. They must be signed with witnesses and all the formality of wills. To be effective you must give them to your doctor and to whoever will have charge of your care. For instance, if you are going into a hospital give it a copy to be kept with your medical records.

Living Trusts

This is a trust created while someone is alive. It is usually a revocable trust – the person who creates it can revoke it or alter it. For this reason all income is taxed to the person who creates it and it is in that person’s taxable estate. The person creating it is usually the trustee and gets the income from the trust. When he or she dies the trust assets usually continue in trust with another named trustee for the benefit of the surviving spouse and children. Eventually the assets are paid out of the trust to the children at specified ages. These trusts are used —

1. To avoid probate.

2. To avoid creditors who cannot file claims against the trust assets. They can file only against the probate estate. This is good for people in risky occupations. However, the protection against creditors exists only after death.

3. To disinherit a spouse and get around his or her right to a statutory share of the probate estate regardless of what a will says.

4. For privacy. The trust assets do not go through probate court where an estimate of the value of the assets is part of the record and where an inventory of the probate assets may be filed and is a public record.

5. To avoid probate of out of state real estate. If you own real estate in another state the probate of your estate in that state is often required in addition to the state where you live. By holding title to that real estate in trust you avoid the probate. If you are trustee the title passes to a successor trustee on your death by terms of the trust and not by virtue of your will or the probate act of the state in question.

To learn more or to plan your Chicago, Illinois will and or trust contact Chicago Estate Planning Lawyer Don Thompson.

Estate Planning: Pre-Nuptial Agreements

EstateLaw — Tue, 06 Jul 2010 22:43:07 +0000

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 antenuptial agreement.

To learn more contact Chicago Estate Planning Attorney Don Thompson.