Protection For Couples & Individuals

How Private Is Your Estate Plan?

You know how important it is to have a Will, right? You probably hear it all the time. It is true that a Will is usually included in a good estate plan. But, it is even more important that you do not have only a Will.

A Will is simply a set of instructions for the court to follow during probate. The critical piece of information to take away from that statement is that probating a Will is a court process. Like most court activities, probate is public. Your Last Will and Testament will become a public record.

What does that mean for you and your family? It means that anyone can find out to whom you gave money and property in your will. It means that your beneficiaries may receive telephone calls and letters with suggestions on how to spend their inheritance.

The distribution of your assets does not have to be a public affair.

What Happens If Your Partner Changes Their Mind?

If you own property with your spouse, partner, or someone else, you may have discussed with them about what will happen to the property after both of you die. However it is accomplished, whether through a joint tenancy or mutual wills, the first person to die is relying on the survivor to keep their word about the disposition of the property.

Sometimes, though, the promise isn't kept. It could be for any of a number of reasons. Perhaps your partner remarries. Perhaps circumstances in your partner's life change. Perhaps your partner never intended to honor the promise but made it just to make you happy.

Imagine You are married and have several grown children. You and your wife have agreed that the last of you to die will leave all of your assets to your children. Then something happens – it could be a heart attack, or a car accident, it doesn't matter – and you die. All of your property passes to your wife.

Your wife lives alone for a time. Eventually, though, she meets someone, and they get married. Over time, her property – your property – becomes intermingled with that of her new husband.

Years later, your wife passes away too. Your wife always planned to leave your joint property to your children when she died. But, your children get very little. Most of your wife's assets now belong to her new husband because they were kept in joint accounts. Your wife's will had also been changed to leave almost all of the rest to her new husband.

It is only natural to want your spouse to be provided for if you die. At the same time, you have greater goals for your assets – passing it on to your children, grandchildren, or a favorite charity. With proper planning, you can accomplish both goals – providing for your spouse and seeing that your legacy is fulfilled.

Who Will Manage Your Property?

Too many people procrastinate when it comes to estate planning. Even worse, when they finally get around to it they typically plan for death but do very little planning for incapacity. What often gets overlooked is that incapacity can be just as serious, if not more so.

Imagine You are happily married. You have a successful career, your home is paid off, and you have put away a lot of money for retirement. In other words, life is good.

But then something devastating happens. Your husband (wife or partner) is hit by a car while riding his bicycle. His injuries are life-threatening, and he is rushed to the hospital. Thankfully, the doctors are able to save his life. Your husband doesn't wake up after surgery, though, and is lying unconscious in the hospital intensive care unit. The days turn into weeks, and the weeks turn into months.

The bills also start to arrive – intensive care isn't cheap. Maybe you don't have medical insurance. Maybe you have hit your insurance benefit limit. Maybe your insurance doesn't cover the procedures that have been necessary. Whatever the reason, you're being asked to pay for it now. You also need to pay the regular bills, and even that is becoming more difficult without your husband's earnings.

You don't want to pull money out of your retirement accounts because you would have to pay a penalty. You would like to sell your home, or perhaps take out a mortgage, to help pay the bills. But, you can't. You and your husband own your home as joint tenants. That means both of you will have to sign the mortgage papers or the deed.

There is a way out of that situation, but it involves going to court. You would have to petition the court to be granted a conservatorship to manage the assets. Going to court to get the conservatorship takes time and money, both of which are often in short supply when a conservatorship is needed most.

The incapacitated person also suffers when the court imposes a conservatorship. A conservatorship means loss of control because it is a court that decides who will manage their assets.

With the right documents in place, though, you can designate a person would be able to manage your property on your behalf if you ever become incapacitated. You get to decide who that person is, not the court. It also means the assets can be managed immediately and with no extra expense.

Will Your Health Care Wishes Be Honored?

You have probably heard of the case of Terri Schiavo. Less than two months after her 25th birthday, Terri collapsed at home. She suffered brain damage from the accident and became dependent upon a feeding tube. Terri's husband, Michael, battled with Terri's family in court for seven years to try and have Terri's feeding tube removed. A court had to decide whether Terri would have wanted to continue the life prolonging measures in her current state.

The same kind of battles between family members happen almost every day in hospitals across the country – just with fewer television cameras. Don't force your family members to agree among themselves about your medical care. It shouldn't be up to your family what medical treatment you receive – it should be up to you.

You can take the decision out of your family's hands by deciding, in advance, what life-preserving treatment you do, or do not, want to receive. You can also designate someone to make medical decisions for you, if you are unable to make the decisions for yourself.

It's time to take control of your medical care.

How Much Will Your Estate Pay In Taxes?

You have probably heard of the estate tax. In case you haven't, you need to know that part of your estate may be taxed at almost 50%. Most people seem to think that the estate tax won't apply to them. But, many of those people will be wrong for two main reasons:

• With a few exceptions, your entire estate – everything you own – is subject to the estate tax. People often underestimate the value of their estate. Your estate includes not just your accounts (checking, savings, investment), but also your house, your possessions, and the proceeds of your life insurance. When was the last time you sat down and put on a value on every single thing that you owned? You might be surprised at the result.
• So much attention is paid to the Federal Estate Tax. The attention is warranted, because no one knows right now what will happen to the Federal Estate Tax after 2010. What many people don't know is that Illinois also has an estate tax. In fact, the recent changes to the Federal Estate Tax have often meant more money paid under state estate taxes.

Estate taxes are complicated. If it's even a possibility that the value of your assets is at least $1 million, you owe it to yourself, and to your family, to find out about the ways you can avoid paying estate taxes.

Who Will Take Care Of Your Pet?

To many people, their pet is just like a member of the family. And, just like a member of your family, it is natural to want your pet to be well-cared for after you die. Traditionally, it was risky to set aside money for your pet's care because the person to whom you gave the money wasn't required to use it on your pet.

All that changed in 2005 when Illinois joined the handful of states allowing a trust to be set up to benefit a pet. You can now leave a gift for the care of your pet, safe in the knowledge that your wishes will be honored.

One Final Note

You have finished reading about some of the risks faced by couples and individuals. You shouldn't stop with this page, though. The other Planning and Protection pages describe risks that you, or someone you know, may also face.