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When spouses (or anyone else) together create one trust it is called a joint trust. These trusts are common in community property states, but are not widely used in Illinois because of the adverse estate and gift tax consequences that may result. Recently the tax rules have been eased in some private letter rulings and there are also many non-taxable estates so the use of joint trusts is increasing. There are still many technical pitfalls and separate trusts are usually advisable.

These should not be confused with joint wills. When both spouses share one will it is called a joint will. Joint wills, for a variety of reasons, should not be used.

If you wish to give parts of your body to others after your death, you will is not a good place to do it. Your will won’t ordinarily be procured and read until well after organ transplants must be made.

However, gifts of organs can be made by will and the gift is effective whether or not the will is admitted to probate and even if the will is later successfully challenged, to the extent the gift was actually carried out.

Organ gifts can be made as part of the issuance of drivers licenses. They can also be made by separate document executed before 2 witnesses like a will. Read more at Chicago Estate Planning Lawyers.

The state dictates who gets your property and who will be the administrator (manager) of your estate and who will be guardian of your children if your spouse has already died and who will be your guardian if you are disabled.

If you die without a will survived by a spouse and children, the spouse gets one-half and the children get the rest. There are no exceptions.

Guardianships are expensive and time consuming and if money or property is involved court approval is needed for everything.

All your property must be collected and sold unless all the beneficiaries agree to keep it. The family business or farm must be sold.

There is no provision for professional management of your estate.

There will be probate of your estate if it exceeds $50,000. This is court determination of who is entitled to your property and supervision of its collection and distribution.

Taxes may be a lot higher. Read More at Wills and Trusts Chicago.

Living Wills 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.

For more information on estate planning in Illinois, visit Wills & Trusts Chicago.

Estate Planning starts with an analysis of —

• Your assets
• Your liabilities
• Your present and future needs and desires
• The present and future needs and desires of your family and relatives
• Your and their future prospects.

Estate planning consists of planning and structuring your assets to meet those needs and desires. Some of the considerations are –

• Determining who is to get your assets
• Naming the executor of your will
• Naming the trustee of any trusts you may create
• Naming the guardian of your children, if both you and your spouse die
• Naming someone who will care for you and your assets if you are disabled.

Wealth building

• Providing for your children’s education
• Providing insurance coverage for illness, disability or death
• Providing for investment and management of your assets after your death
• Tax planning to reduce income and estate taxes
• Avoiding probate.

Contact the Law Offices of Donald Thompson for further information on Illinois Estate Planning Law.

• It is expensive. 
• It takes time. 
• It is public. An estimate of the value of your assets is filed and an inventory of property may be filed 
• It provides a forum for creditors to get paid. 
• It allows a spouse to claim a statutory share of the estate. 

On the other hand –

• It is often just as or more expensive to arrange your affairs to avoid probate and it often does not work. Also many of the expensive things which must be done after death must be done whether or not there is probate.
• Probate allows creditor claims to be barred. If proper notice is given claims are barred unless they are filed within a certain time. Creditors can also attack arrangements meant to avoid probate if they were also meant to avoid creditors. 

Whether or not it is desirable to avoid probate is something which must be determined in each individual case. Many people believe that avoidance of probate avoids estate taxes. That is not so and should not be a consideration.

How can you avoid probate? By not having any assets which require a will or the law to say who gets them when you die. If they pass to someone named in some document other than a will or the statutes you avoid probate. Among devices which will do this are –

• Trusts 
• Joint Tenancies 
• Beneficiary designations 
• Pay on death accounts. 

In smaller estates use of the last three items is often very effective. But if any substantial amount of assets exist in your sole name without any beneficiary designation there will still be probate. If you are going to avoid probate you must make these arrangements for all your property. You must also arrange to have all property you acquire in the future subject to such arrangements.

The same can be said of living trusts which are a very popular way of avoiding probate. There will still be probate if only some of your assets are transferred to the trust. All your property must be transferred to the trust to avoid probate. Just signing the trust document is not enough.

A variety of steps can be taken to protect assets from creditors. One simple step is to transfer your assets to your spouse. This assumes you have a healthy marriage and that your spouse’s creditors are not a problem. It may also interfere with planning to avoid estate taxes. Other devices which are sometimes used are:

Statutory exemptions from enforcement of judgments. By statute a creditor cannot reach certain assets. In most states creditors cannot get your residence if the equity in it is below a certain level. In Illinois this is $7500 for a single person or $15,000 for married persons. In some states the amount of the exemption is unlimited. Under the bankruptcy laws the assets protected by state law are also exempt assets in bankruptcy.

Retirement vehicles. In most states pension, profit sharing and other retirement the entity are at risk, not your other assets outside the entity. This does not work when you do the act creating certain liabilities yourself, such as when you are driving the company truck which runs someone over. It also does not work for certain professionals like doctors or lawyers with respect to their malpractice liability. It does work with respect to contract liability, so long as you sign in the entity’s name and do not personally guaranty the contract. It also does not work against liability generated outside the business. The creditors can get your interest in the business and then liquidate it.

Limited liability companies and limited partnerships. If you own an interest in such a company under some states’ laws your creditors cannot get your interest in the entity. They can only get a charging order which allows them to get distributions which might otherwise go to you, if there are any.

Tenancy by the entirety. This is a type of joint tenancy between spouses in a residence. The creditors of only one of the spouses cannot get the property.

Bearer stock. In some countries corporate stock can be issued only to the bearer. No records of ownership are kept. If your creditors can’t find your assets they can’t get them. However, creditors can require you to tell them under oath what you own so use of this device involves potentially breaking the law. You can be sentenced to jail for contempt of court if your answers are shown to be false.

Foreign asset protection trusts. These are trusts set up, usually, in certain foreign jurisdictions where it is difficult to enforce U.S. judgments. In the time it takes the creditor to get anywhere you can move the assets to another country with similar laws. These arrangements are very expensive and at least one U. S. court has ordered the trust owner who lives here to produce the assets or go to jail.

Living Trusts. After death your creditors cannot get the trust assets.

If you are going to use these devices you must do so before you have lawsuits or judgments against you. Transfer of your assets for less than the full value is a fraudulent conveyance and void if you made the transfer to avoid a creditor. Some of these devices also have a waiting requirement before they become effective.

Welcome to the Chicago Estate Planning Law Blog. This estate planning blog is brought to you by the Law Offices of Donald Thompson. Mr. Thompson is an estate planning attorney located in downtown Chicago. Visit the Wills, Trusts and Estate Planning website for more information.