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Estate Planning

4 Estate Planning Facts Everyone Should Know

By January 30, 2013No Comments

1.    You have an estate and a plan even if you’ve not done anything.

Photo: M. Enserink-Netherlands

Photo: M. Enserink-Netherlands

The answer to how this is possible is found in the definition of “estate” and the law – at least for the state of Illinois.

Your estate is everything you own – tangible and intangible. It includes retirement benefits, debts owed to you, your bicycle, your bodily tissues and organs, whatever may be in your bank accounts, and whatever remains of your coming paycheck after obligations are paid.

Probate assets of those who die without a plan or a will in Illinois will be distributed according to the laws of intestacy per the Illinois Probate Act of 1975 as amended. Accordingly, debts, your bike, your bank accounts, and your paycheck will go to who the laws of intestacy and the court decides. So, regardless of what you possess and your actions, you have an estate plan.

2.    Your estate plan, even the one you don’t know about, is in effect during your lifetime.

Documents you sign at medical and dental treatment facilities before being treated, and even some sporting events, typically involve you implicitly designating your “next of kin” to act on your behalf if you became incapacitated. Sometimes, this isn’t who you think it is. Since you’re going to sign these forms anyway, wouldn’t you rather make an actual decision before the dental cleaning?

3.    Family and friends fight over stuff and the fight can become war.  

Love is love until death and then it becomes war.  Folks will fight about could be grandma’s old cookie jar, gold coins, or memorial arrangements. Nevertheless, once a battle ensues, the only real winners are the litigators; they get most of the cookies. Considerations for this fact include: apathy for one’s family;  family harmony; good karma; and increasing the wealth of trial attorneys.*

4.    The most important decision you can make in estate planning is not what to give away or who to give it to, but who will manage it or give it away for you.

Even if you don’t interact with a certain individual regularly, they protect the cookie jar. These individuals, called “fiduciaries,” include personal bankers, financial planners and advisors, accountants, lawyers, trustees, agents under powers of attorney, guardians, and executors or personal representatives.

A large part of guardianship and estate litigation involves the “breach of fiduciary duty,” where the fiduciary has dipped his or her hand into the cookie jar. Sometimes the fiduciary is a family member; sometimes a long-time, trusted friend and advisor; and sometimes not such a long-time friend but is still trusted. Thus, even if you’re not at the point of naming an executor, perhaps you should carefully consider who is going to step into your shoes and manage your finances if you become seriously ill or just go for an annual check-up; then designate someone…in writing.

A thoughtful and appropriate designee may prevent abuse, breach, litigation, and possibly war.

* Some of my dearest friends are trial attorneys.

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