Plainfield Estate Planning Lawyer: Estate Planning Strategies that Provide Peace of Mind

 Posted on March 24, 2023 in Estate Planning

Regardless of age, it is essential to think ahead regarding estate planning. In addition, it is crucial to ensure that your affairs are in order in the case of your passing or incapacity. There are several aspects to effective estate planning, including A living trust, a pour-over will, property/healthcare power of attorney, and designated beneficiaries. This article will cover the basics of effective estate planning in Plainfield, Illinois. 

Living Trust

A living trust, also called a revocable living trust, is an essential document in estate planning. A living trust is like a will in that it states where your assets will be distributed after your passing; however, it provides far more benefits to you than a will. By drafting a living trust, your beneficiaries will avoid probate court. A probate court is a type of court that distributes your assets after your passing; it is legally required if you decide to draft a will. Probate can be extremely lengthy, costly, and overall unpleasant. A living trust will also administer your assets immediately upon your death/incapacity, making it very timely. A living trust also protects your assets against creditor claims meaning your loved ones will receive the exact amount you intended. Unlike a will, a living trust not only takes effect upon one's passing but will also be put into effect in the case of one’s incapacity. A living trust can be referred to as "revocable" because one may change their mind about certain aspects of the trust and amend it in their lifetime. 

Pour-over-will

A pour-over will is included in a living trust. It is similar to a last will; however, it is intended to "catch" any assets/property you did not include in your trust during your lifetime. This ensures that none of your assets will have to go through probate, even if they were not initially included in your trust. For example, a person may have a bank account titled under their name instead of their trust. This would be included in their pour-over will, which would "catch" the bank account upon their death and ensure that it is included in the trust. 

Power of Attorney for Property & Healthcare

Two powers of attorney are critical to an effective estate plan. The first is a power of attorney for property. A POA for the property is a designated agent of one's choosing who will control one's finances, property, etc., upon incapacity or death. The second is a power of attorney for healthcare. A POA for healthcare is also a designated agent of one's choosing who will be in charge of medical decisions when one cannot make their own. A POA for healthcare is vital as you would want decisions made in your best interest if you cannot speak for yourself. Both documents may be as restrictive or as open-ended as you would like. This means that you may expressly state what you would like done with your medical or financial decisions, or you may allow your designated agent to make whatever decision they deem appropriate.  

Designated beneficiaries

A designated beneficiary is a person or entity named in financial accounts or legal documents to inherit specific assets. Typically, designated beneficiaries are expected for financial accounts, including but not limited to Life insurance policies, retirement accounts, bank accounts, and annuities. A benefit of designated beneficiaries is avoiding probate court, allowing for a smoother transition upon death. However, by itself, designated beneficiaries have some weaknesses. Some of these weaknesses include the following: 

1. It needs to update designated beneficiary designations after a divorce, birth, adoption, marriage, etc. 
2. The rigid structure may limit the options for inheritance or force a person into accepting a designated beneficiary that could be better for their situation.
3. No contingency beneficiaries meaning if the primary beneficiary predeceases the individual account holder, there may be no contingent beneficiary to pass the individual’s estate to another person.
4. The account holder has limited control over the ability to restrict their inheritance.
5. Potential for more disputes over the rightful owner of an asset or account. 

When a designated beneficiary is combined with the previously stated documents, it can be advantageous; however, designated beneficiaries include many weaknesses, so it is essential to consider combining it with a living trust, pour-over will, and POAs to maximize the effectiveness of your estate plan. 

Plainfield Estate Planning Attorneys that Provide Peace of Mind

Drafting the previously stated documents can be intricate and extensive. Mistakes can easily be made that may elongate the process even more. At Peace of Mind Asset Protection, we employ attorneys who are thoroughly experienced in the estate planning process and have drafted many living trusts in the past. Our attorneys are also very well acquainted with real estate law, meaning they have more knowledge of property concerns involved with your estate planning than other estate planning attorneys. If you are ready to begin your estate planning process, you may contact us at 630-882-2467.