Categories

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.

Call Don Thompson at 312-782-0844 for Chicago Estate Planning.

This is a trust created by someone (grantor) who transfers assets to the trust. It is irrevocable. The trust exists for a set term of years. At the end of the term of years someone else (such as a child) gets the trust assets.

This person is called the remainderman and gets the remainder. During the term of the trust the grantor retains the right to an annuity payment. When the trust is created the remainder interest is treated as a gift.

The present value of the annuity payments is deducted from the total value of the trust assets to determine the value of the gift.

For instance, $1,000,000 could be transferred to a 2 year trust by a father with the remainder payable to his daughter. Valuation is made under IRS tables in which the rate of return is assumed.

Contact Chicago estate planning attorney Donald Thompson today. Call 312-782-0844.

This refers to preventing creditors from getting your assets. There are no magic techniques. A variety of techniques are used which may include:

    1. Transferring your assets to your spouse – or someone else who is cooperative. There is an unlimited gift tax exemption for transfers to a spouse.

    2. Tenancy by the Entireties. This is a type of joint tenancy between married people for their residence. The creditors of one spouse cannot levy on the residence as they can when it is owned in an ordinary joint tenancy.

    3. Putting your assets into a form exempt from execution by judgment creditors. A good example is a retirement plan or IRA (in Illinois.) Another exempt asset is life insurance payable to a spouse or dependant, including the cash value. (Creditors can levy on distributions from these plans or insurance).

    4. Putting your assets in limited partnerships or LLC’s created under the laws of a few states where the creditors can get only a charging order (a right to get distributions from the entity) rather than an order to sell the ownership interest. You can get the money out in salary – not distributions on the ownership interest.

    5. Trusts in general. An irrevocable trust (for someone else’s benefit) puts assets in it (but not distributions) beyond the claim of your creditors. A revocable trust that provides how its assets are distributed after your death protects the assets from your (not the beneficiary’s) creditor’s claims after your death – but not before.

    6. Spendthrift trusts. These are trusts that do not allow a creditor of a beneficiary to attach the beneficiary’s interests. They are valid, but only if the beneficiary is someone other than the creator of the trust.

    7. Domestic irrevocable asset protection trusts are now permissible in several states. In effect they are spendthrift trusts for the benefit of the creator of the trust. They basically provide that a creditor of the grantor cannot get the trust assets. Illinois has no such law. To have the law of one of these other states apply to a trust set up by an Illinois resident that state must have a substantial relationship to the trust such as a trustee being in that state and/or location of the assets there. Since domestic asset protection trusts are new, certain questions, such as what state’s laws will apply, are not yet settled.

    8. Foreign asset protection trusts. Some countries don’t grant "full faith and credit" to a foreign judgment. A creditor having a U.S. judgment cannot enforce it in those countries. The creditor must institute a new law suit there. This alone discourages creditors. If a creditor does sue the trust assets can be distributed to another trust in another country with similar laws before the creditor gets judgment.

    9. Limited liability entities. These are corporations, limited liability companies, limited partnerships and limited liability partnerships. If these are set up and operated properly creditors of the business can only get the business assets. They cannot go outside the business and collect from assets of the owners. Note that creditors of the owners can get the owner’s interests in the corporation or partnership and to some degree, the limited partnership and limited liability company.

    10. Keeping ownership of assets used by a business outside the business. The creditors of a business can get its assets. They cannot get assets it leases. For this reason owners of assets like real estate used by businesses they own often do not put the real estate in the entity owning the business. They lease it to the entity. This goes for any valuable asset and often includes equipment or other things used by the business. If the asset is of a type which can generate claims, then the asset can be owned by another limited liability entity.

    11. Separating risks. If two businesses are conducted or a single business is conducted in separate locations each can be owned by a separate limited liability entity. That way if one goes under the assets of the other will not be exposed.

Donald Thompson is an expert in Illinois Asset protection. Call 312-782-0844 today to arrange meeting.

The primary differences between ways of conducting business are in liability of the owners for debts of the business and in the tax treatment of the owners. There are other differences, but for the owners and operators of businesses these are the primary consideration. For operating businesses the usual choices depending on the number of owners, are a sole proprietorship, a general partnership, a corporation, a S corporation or a limited liability company.

LLPs are generally used only by certain professional practices where the partners must be liable for their own malpractice and that of those they supervise. LLPs allow a partner to escape liability for the malpractice of other partners or partnership employees not supervised by the partner in question.

LPs are not too often used these days except as family limited partnerships which are used for giving assets to younger family members at discounted values in order to minimize gift and estate taxes. They also are sometimes used as an asset protection vehicle.

As for the other entities, one of the primary considerations is whether or not the owners of the business are liable for the debts of the business. Sole proprietors and partners in general partnerships are. Why do people conduct business this way? Because they are the simplest forms of business.

The tax considerations are more complex, but generally an owner would like to be taxed as a sole proprietor or as a partner in a general partnership. A regular corporation pays tax on its own income and when it pays dividends to its shareholders they pay tax on the dividends. There is double taxation of the same income. This is not the case with other types of entities. There are other tax considerations which are more complex, but generally sole proprietor and partnership tax treatment is more favorable.

The LLC is taxed like a partnership, or a sole proprietorship if there is only one owner. (It can elect to be taxed as a corporation). The LLC limits the liability of its owners. It has some other attractive features as well. However, it is not usually the best choice for a small business because it is more expensive than a S corporation to set up and maintain.

The S corporation is a corporation formed like any other corporation under state law which files an election form with IRS. This eliminates the double taxation. Because of this and lower costs than an LLC, it is often the most suitable entity for small businesses. However, in many ways its tax treatment differs from the partnership tax treatment an LLC can have. For this reason depreciable assets, such as real estate, should not be in an S corporation. The S corporation is also limited to 100 owners, none of whom can be non-resident aliens and it cannot have certain trusts and estates as owners. Few small businesses have to deal with those types of owners though.

Ignoring cost, the LLC is the preferable entity, except in one instance. If an owner renders 500 or more hours of service to the entity, or in some other circumstances, all distributions are subject to self-employment taxes on distributions and the employment taxes which do apply are only on the wages of the owners – not other amounts paid to them.

There are many other considerations which apply to the choice of entity and there are many particular situations in which what is said above is inapplicable.
Source

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.

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.

Contact Donald M. Thompson, Chicago’s Premier Probate Lawyer.

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.

Be Sure to contact Chicago Probate Lawyer Don Thompson.

Estate of Bantsolas v. Bantsolas, 377 Ill.App.3d 684, 316 Ill.Dec. 203, 878 N.E.2d 1227 (1st Dist., 2007). Where the documentation for a land trust requires that amendments are not effective until delivered to the trustee, an amendment made before death by a decedent is effective if delivered before death, even though not accepted by the trustee until after death. The party challenging the amendment has the burden of proving it was not delivered before death.

Estate Of Klehm, 363 Ill.App.3d 373, 299 Ill.Dec. 825, 842 N.E.2d 1177 (1st Dist., 2006). A lawyer cannot represent the executor of an estate in litigation adverse to a former client’s interest in a matter substantially related to the former representation under Rule 1.9 of the Rules of Professional Conduct. this rule is not violated in a citation proceeding when the lawyer for the executor has formerly represented the respondents in a real estate loan transaction and has previously represented the executor of another estate of which the respondents were the beneficiaries. The citation proceeding involved transfers of assets from the decedent to the respondents and the lawyer was not inolved in those transactions.

In re Estate of Wright, 377 Ill.App.3d 800, 317 Ill.Dec.194, 881 N.E.2d 362 (2nd dist., 2007). An attorney who represented a decedent in a transaction where money was transferred from her to her son cannot later represent the son in challenging a trust amendment she made later treating the transfer as a loan to be repaid or deducted from the son’s share of the trust. Under Rule of Professional Conduct 1.9 an attorney who has formerly represented a client shall not represent another person in the same or a substantailly related matter where the first client’s interests are materially adverse to the second clident’s interests.

Ranger v. Ranger, 379 Ill.App.3d 752, 318 Ill.Dec.519, 883 N.E.2d 750 (4th Dist., 2008). Where a trust contains conflicting provisions as to the distribution of property (such as 1,at the death of the grantor or 2, at the death of the life beneficiary) the grantor’s intent will be determined from construing the trust as a whole and each provision should be viewed in light of all the other parts.

In re Estate of Eric Cage, 381 Ill.App.3d 110, 319 Ill.Dec.206, 885 N.E.2d 477 (1st dist., 2008). The minor would have if an adult and the guardian may nominate him or herself.

LaSalle National Bank v. Willis, 378 Ill.App.3d 307, 317 Ill.Dec.83, 880 N.E.2d 1075 (1st Dist., 2007). Absent a specific statutory provision therefor, a claim for punitive damages does not survive the death of a decedent.

In re Estate of Ellis, 381 Ill.App.3d 427, 320 Ill.Dec. 323, 887 N.E.2d 467 (1st Dist., 2008). the requirement that will contests be filed within six months from admission of the will to probate applies to a claim for tortious interference with an expectancy where it is alleged that the decedent was improperly influenced to execute a will.

Knight v. Comm. of Internal Revenue, 128 S.Ct.782 (2008). Investment advisory fees paid by a trust can be deducted only to the extent they exceed 2% of adjusted gross income.

Struck .v Cook County Public Guardian, 2007 WL 4145845 (7th Cir., No. 07-2420, 11/26/07). Federal courts will not ordinarily hear probate matters involving questions arising in a guardianship proceeding.

Probate is required only for property of the decedent which passes by the terms of a will or the laws of inheritance. If the decedent had no property at the time of death or his or her property passes to people designated to receive it in the property documents there is no estate to probate. For instance, if the decedent put all his or her property in trust for his or her own benefit the decedent would not have title to the property. The trustee would. Such a trust will commonly designate who gets the property after the decedent dies. Property held in joint tenancy passes to the survivor by the terms of the instrument creating the joint tenancy. No probate is required.

If Probate is Required, Call 312-782-0844 to Talk with a Professional.

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.

Contact Chicago Probate Attorney Don Thompson Today.

Contract

Diary attorney approval date and closing date

Order title commitment

Survey

Deed

Bill of sale

Affidavit of title

Schedule of leases

Assignment of leases

Assignment of contracts

Estoppel letters

Utility letters

Payoff letter for mortgage

Condo letter

Right of first refusal

Assessments

Water bill

Certificate of insurance

Closing statement

Power of attorney

Grantor/grantee affidavit

City transfer tax declaration

County transfer tax declaration

State transfer tax declaration

Water certificate (not needed for condo)

Zoning certificate

Affidavit of heirship

Death certificate

Commission statement

Personal information affidavit

Joint tenancy affidavit

ALTA statement

Seller’s Social Security number and FEINs

Photo I.D.

Keys

Termite inspection

General inspection

Mortgage contingency
   

Attorney approval contingency

Lead paint disclosure

RIPTA disclosure

Environmental phase I

Soil test

Structural tests

Utility readings and name changes

Move-in letters and elevator reservation

Move-out arrangements and payments

Tax bill

Seller identification

Letter of direction to land trustee

Trustee’s deed

Trustee’s ALTA

Trustee’s pay proceeds letter

Mortgage

Note

Mortgage disclosures

How will buyer take title

Buyer’s and seller’s marital status

Tenant leases

Tenant estoppel letters

Financial statements of seller

Tax returns of seller

Buyer’s insurance and certificate

Condo association insurance and certificate

Condo association minutes and financial statements and statements of contemplated work and assessments

Financing statement search

Tax lien and judgment search of seller

Corporate records of seller

Waiver of homestead rights

Determine costs including broker commissions

Check closing time and date with clients, lawyers, lender, brokers and title company and make appointment and confirm with lawyers, lender, brokers and clients

Get releases for all mortgages, liens and other matters of record.

Builder’s warranty for new construction

Contact Chicago Estate planning attorney Don Thompson today.