Estate Planning to Avoid Adult Guardianships

 Posted on November 21, 2022 in Estate Planning

What is an Adult Guardianship?

If a judge determines that an adult (over 18 years of age) cannot make basic life decisions or manage their own property or money, they have the power to place them under an adult guardianship. Under an adult guardianship, another person (that meets the legal requirements to be a guardian) is assigned to take care of the adult and act in their best interests. Common causes of adult guardianships include Alzheimer’s disease (or other mental decline due to aging), certain mental illnesses, developmental disabilities that the adult has had since birth or childhood, and certain physical disabilities. 

In Illinois there are two different types of adult guardianships. A person designated as the guardian can be assigned just one or both, depending on the circumstances. First, there is a guardianship of the person. A guardianship of the person allows the assigned guardian to make decisions regarding all personal care, for example, making medical decisions for treatment plans. The second type of guardianship is a guardianship of the estate. This guardianship gives the guardian control over the adult’s finances and property.

Once a judge determines that an adult guardianship is necessary, there is a little the adult can do to stop it, even if they do not feel it is needed. However, with a good estate plan, you can prevent the court from making decisions regarding your personal care and finances for you, in the event that you become incapacitated and are unable to make your own decisions. Two ways estate planning can help to avoid being placed in an adult guardianship is by creating a power of attorney and a living trust.

What is a Power of Attorney (POA)?

A power of attorney (commonly referred to as a POA) allows a legal adult (called the principal) to name a specific person (called the agent) to handle their financial, business, and real estate related affairs for them if they are unable to do so themselves. For example, a principal can give their POA the power to deposit checks, pay bills, transfer real estate, manage finances, and open and close financial accounts on behalf of the principal. Simply put, designating a POA allows you to have control over who will make the important decisions for you if you cannot make them yourself, avoiding the costly expenses that come with the court placing you in an adult guardianship and assigning a person of their choosing to make those decisions. 

What is a Living Trust?

A living trust is created by a person called the grantor. The grantor selects a specific person to be named as trustee of the trust and selects a person or people to be named beneficiaries of the trust. The trustee has the power to manage assets in the trust when the grantor is unable to do so themselves. Generally, a person will name themselves as trustee of the living trust so that they are able to manage the trust assets themselves as they see fit. In these situations, the grantor would also name a successor trustee. The successor trustee would take control of the trust when the grantor is unable to themselves. A living trust can be “revocable,” meaning the grantor has the power to change the trust during their lifetime or it can be “irrevocable,” meaning they cannot be changed after they are executed. The most common type of trust is a revocable trust, but both types have their own benefits, including avoiding certain taxes and avoiding probate court. 

What is the Purpose of a Living Trust?

In short, a living trust is designed for incapacity planning. Meaning, should you become legally incapacitated during your life, and you are unable to express your wishes yourself, your living trust will quickly and efficiently do so for you. Your living trust will have a provision that grants power to the successor trustee, making for a much smoother transition for your successor trustee to gain control of the trust assets, saving both time and money. 

What is the Difference Between a Living Trust and a Will?

A last will and testament are a written, legal document that expresses a person’s wishes as to how their property (known as their estate) should be distributed after they pass. A last will and testament also designate a person (known as the executor) to manage the estate until it is fully distributed. When the creator of the will dies, the will must then go through a time-consuming and often costly process called probate court.

What is Probate Court?

Probate is the legal process that a person’s estate must go through when they die either with a last will and testament or when they have no legal estate planning documents stating how they wish their estate to be distributed (this is called intestate). Probate court oversees the transfer of the estate’s property to the deceased person’s heirs, according to state law. When a deceased person does have a will, the court must first authenticate the will and then authorize the executor of the will to pay any leftover expenses from the estate and then distribute remaining estate property according to the terms of the will.

Even if a person has a valid will, probate court is often time-consuming and costly because of court costs and attorney’s fees. Attorney’s fees for a probate case vary drastically depending on a number of factors including the state in which the deceased person was living when they died (this is the state that controls the estate) and the size of the estate in question. However, the average amount for attorney’s fees in probate cases in Illinois is generally anywhere from $2,500-$5,000. This amount does not include court costs, filing fees, or other fees associated with the court itself, which also vary depending on the above listed factors. Therefore, sometimes it is not cost-effective to hire a probate lawyer to probate a will, because the costs of a probate proceeding outweigh the benefits to the estate.

To summarize, a living trust is a more simple and efficient method of incapacity planning, while a will is designed more for after-death distribution planning and thus a will produces the need for a probate proceeding.

Experienced Estate Planning and Guardianship Attorneys in Naperville, Yorkville and Nearby Areas

Estate planning is strongly recommended for everyone. Without a proper plan in place, the process of settling a person’s estate after they die can be emotional, costly, and overwhelming for the loved ones that are tasked with doing so. Planning ahead of time can help protect beneficiaries of your property, reduce the amount of taxes taken by the IRS when transferring assets, and helps to eliminate family disputes that can arise during the distribution of an estate. Hiring effective and experienced estate planning counsel is critical so that you know you are making the best decision for yourself and your family and that it is being done properly, according to the law. At Peace of Mind Asset Protection, LLC, we have the proper knowledge and experience to assist with the best estate planning option for you. Contact us today at 630-780-1034.

Source:

www.illinoislegalaid.org