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A good estate plan is a gift that you give to yourself and to your loved ones. It is the gift of comfort to you during your lifetime, knowing that you have a plan in place to take care of how your assets will pass to the people most important to you after you pass away. An estate plan is also a gift to those close to you. By providing a legally binding, clear, and well-made plan for your final wishes, you provide your loved ones with ease (simplicity?), clarity, and financial support at a time when they need it most.
It’s common knowledge that estate planning is key to ensuring that your assets are protected and distributed according to your wishes after you pass away. However, many people make common mistakes that can have significant consequences for their estates and their loved ones. In Illinois, understanding these mistakes and avoiding them is important to creating an effective estate plan that meets your needs. In this article, we’ll explore the top five estate planning mistakes to avoid in Illinois and provide guidance on how to prevent them.
While it may be tempting to create your estate plan using online templates or DIY kits, this approach can lead to costly mistakes and legal challenges down the road. Estate planning is a complex area of law that requires careful consideration of various factors. It’s not just about whether a legal document is done right, but also if it is the right fit for you. Working with a skilled attorney will help you get quality documents best suited for you. In attempting to create your own estate plan, your documents may not do what you mean them to do or you may unintentionally and unknowingly create an issue that would only be revealed after you have passed.
Very often, DYI estate planning has problems that cost families much more in time and money after the DIY planner’s death than an attorney-prepared estate plan would have cost the DIY planner during their lifetime. Working with an experienced DuPage County estate planning lawyer will help ensure your estate plan is comprehensive, legally sound, and tailored to your needs and goals.
Beneficiary designations are useful tools in directing the distribution of your asset(s) after you pass away in the manner you choose, without the need for a probate court case. Naming a beneficiary ensures that the named beneficiary inherits the asset upon your death. Beneficiary designations may be your primary estate planning vehicle or a component in a broader will or trust-based estate plan. Failing to designate beneficiaries on your retirement accounts, life insurance policies, and other assets can potentially lead to unintended consequences, as can naming beneficiaries without an adequate understanding of the shortcomings of a beneficiary-designation-driven approach to estate planning.
Where there is no will and no beneficiary designation to determine how an asset is distributed upon your passing, the intestate law of Illinois controls, which has specific provisions regarding who inherits your estate. Should you pass away without beneficiary designations for your assets, one or more of those assets may end up passing to an unintended beneficiary. In the event you wish to differ from the inheritance structure provided by Illinois law, designating a beneficiary is the way for you to control who inherits instead of Illinois law.
Even if you wish to follow the intestate inheritance structure, designating a beneficiary can still save time and money in the long run by avoiding the need for any court involvement with that asset. Additional consideration must be given before naming a minor child, a person with a disability, or a person with money troubles as a beneficiary. Further, when completing a beneficiary form, you should understand what happens if a beneficiary predeceases you and make sure that the form reflects your wishes. Working with an estate planning attorney will help guide you successfully through this process.
Along with initially naming a beneficiary, it is also important to periodically check your assets with beneficiary designations to ensure the designations still reflect your wishes. Not updating beneficiary designations after significant life events can result in assets being distributed to unintended beneficiaries. Review and update beneficiary designations regularly to ensure they align with your estate planning goals.
Understanding the benefits of wills and trusts as estate planning tools is important for any individual who wishes to ensure their estate will be passed according to their wishes. Part of understanding those benefits comes from the knowledge of what happens when you pass away without a will (or even a trust, which is considered the more advanced tool). As described above, without a will or trust, your assets would be distributed according to Illinois intestate law, which provides for who inherits your estate in all scenarios (i.e., when you pass with a spouse and no kids, with no spouse and no kids, with kids and no spouse).
This inheritance structure may not align with your wishes. A will or trust allows you to specify how you want your assets distributed outright, with clarity as to your wishes. It gives you the control and the peace of mind to know that your estate will pass how you intend it to. A will also allows you to appoint a guardian for any minor children, providing even further peace of mind for anyone with kids who want to ensure their care.
In addition to a will, a trust is a useful estate planning tool that gives the testator (the trust creator) full control of your estate in a more private way. Where a will must be filed with the county where you reside when you pass, a trust is a private document that can control the distribution of your assets according to your wishes. A trust can also provide additional benefits, such as avoiding probate and long-term planning governing who will receive what financial benefits, how, and when. Trusts are a specialized tool that can be highly customized to your specific wishes for your estate, but also must be drafted carefully to ensure they comply not only with your wishes but applicable state and federal laws.
An estate planning attorney can assist you in navigating the process of executing a will and/or trust so you can make sure your wishes are set forth clearly and in writing prior to your passing.
Life is constantly changing and your estate plan needs to keep up. Though many estate plans are long-lasting documents that will serve you well for many years, it is imperative to review your estate plan as circumstances change. A perfectly made estate plan tailored to your needs at one phase of life may no longer serve your needs at a different phase of life. Failing to update your estate plan after significant life events, such as marriage, divorce, birth of a child, or death of a beneficiary can lead to disastrous and unintended consequences. Regularly review your estate plan as it relates to your current assets, beneficiary, and family dynamics with the help of a qualified DuPage County estate planning lawyer to ensure it remains up to date and reflects your wishes. Stay ahead of life’s twists and turns with a proactive approach to your estate plan.
A good estate plan is not just a plan for who will inherit from you, it should also be a plan for who and how you will be cared for if there comes a time in life when you are no longer able to make decisions for yourself. Important considerations include who would manage your healthcare and your finances and how would you fund the cost of long-term care? Incorporating long-term care planning strategies, such as purchasing long-term care insurance or creating a Medicaid asset protection trust, are important factors to consider. Consulting with an estate planning attorney for long-term care planning can empower you to take control of your future now.
Avoiding these common estate planning mistakes can help ensure that your wishes are carried out effectively and your loved ones are protected. By working with our knowledgeable DuPage County estate planning lawyers, you can create a customized estate plan that provides peace of mind for you and your family both now and in the future.
Contact our DuPage County estate planning lawyer at SBK Law Group at 630-427-4407 to receive your complimentary consultation. Our firm provides personalized guidance to safeguard your assets and champion your interests. Trust SBK Law Group to lead you through the estate planning process.
