5 Tips for Parents Young, Old, or Otherwise
One thing I love about my practice is serving new parents who GET IT. They understand how critical it is to ensure their children are provided for if something happens to one or both of them. They realize that children are vulnerable and depend on Mom & Dad, Mom & Mom, Dad & Dad, Mom, Dad, or Nana to keep them safe, healthy, sheltered, and learned. New parents know that just because they don’t have a lot of material wealth doesn’t mean that they can’t protect their young ones somehow. So hats off to all you parents out there who GET IT. For those of you who are contemplating parenthood, or who just started the voyage of sleepless nights and stinky diapers, or just witnessed the most glorious sparkle that can only be found in your child’s eye when he or she “DID IT!” whatever “IT!” was, I offer 5 tips, particularly from the Land of Lincoln: If you have minor child you need a will. Someone is going to have to step into your shoes and take care of your child if you and/or your spouse or partner dies. With a will, you can designate a person who will be recognized by the State of Illinois as a legal guardian, as long as they meet the criteria. Illinois has 2 types of guardianship because the state recognizes that caring for children requires more than one skill set (validating what mothers have been trying to point out for decades). A guardian of the person makes the value-driven decisions that affect the child, e.g., education, healthcare, and shelter. A guardian of the estate makes the financial decisions for the child and is critical when a minor inherits a rather large sum of money, such as life insurance. Speaking of life insurance, let’s separate fact from fiction. The notion that life insurance isn’t taxed isn’t accurate. Life insurance isn’t typically taxed as income. BUT life insurance is included within your estate for estate tax purposes. So make sure you have good counsel when staring at the twinkle in the broker’s eye as you think about buying that million-dollar policy. Also, while we’re on the topic of life, you don’t have to die to begin protecting your family. I wrote about this in an earlier piece and I speak about it often. Powers of attorney allow individuals you trust to step into your shoes and manage your financial affairs and make healthcare decisions for you when you are temporarily unable to. These powers are typically shared between spouses and understood to be held by each spouse in a reciprocal manner, but what if you are Civil Union partners or a single parent? What if your spouse is on sabbatical at Machu Picchu? Special needs requires special considerations. If you have a child who is disabled or requires special assistance, you must take care to ensure that the income you provide via your will or trust doesn’t result in your child becoming ineligible for needed government benefits. So, again, seek prudent and experienced counsel. As I said earlier, I adore new parents who GET IT. However, whether you’re a new parent, old parent, grandparent, aunt, uncle, or you just love kids, be sure the ones you care about are protected. For LSSG
DOMA Forces Same-Sex Couples to Commit Fraud
In June of this year, 2011, Illinois enacted the Civil Union Act, which provides that all the rights, benefits, and obligations of Illinois spouses are also attributed to Illinois Civil Union partners. A little more than a month later, on July 24, New York enacted the New York Marriage Equality Act, legally recognizing same-sex marriages. Other states continue this progressive and important march toward ending love discrimination while other states remain firmly entrenched in their discriminatory public policies against the LGBT community. Differences between states and discriminatory laws and policies will continue and remain in force until DOMA is repealed. So, it’s important that members of the LGBT community who are partnered in civil unions or are same-sex spouses, their loved ones, and professionals servicing them understand the implications of their status, based on DOMA. President Bill Clinton enacted DOMA (the “Defense of Marriage Act”) in the wee hours of one morning in 1996. The law stipulates that the U.S. federal government only recognizes marriage as between one man and one woman as husband and wife and “spouse” means a person of the opposite sex with respect to his or her husband or wife. Consequently, any spousal benefits derived through the federal government, and there are approximately 1,138 of them, are unavailable to civil union partners or same-sex spouses, despite state laws. Yes; Illinois provides that civil union partners are afforded all the rights, benefits, and obligations of spouses but despite that language the federal government, through DOMA, tells same-sex couples “not in my backyard.” Tax benefits are one backyard where same-sex couples experience discrimination because of DOMA. For example, the divorce settlement between heterosexual couples is tax-free. However, for same-sex couples, the payee ex-spouse or ex-partner must generally pay taxes on any divorce settlement received. More importantly, as an annual fiscal household matter, same-sex couples must file income tax forms that are fraudulent on one hand because the forms don’t reflect the true nature of the relationship, requiring individuals to state that they are “single,” when they are legally married or partnered. State income tax in Illinois is coupled with federal income tax, so even if a couple’s union is afforded the same “benefits” per Illinois law, that couple cannot take the marital tax benefit on either the state or the federal income tax form. Finally, if it’s not enough that same-sex couples are discriminated against in tax treatment with respect to income and divorce, same-sex couples also face the insult with respect to death. To illustrate: Debbie and Janet entered into a legal civil union on June 5, 2011. On July 12, Janet passed away, leaving an estate valued at one million dollars to Debbie. If Debbie were married to “John” and not a civil union partner of “Janet,” Debbie would take the estate tax free. However, Debbie was partnered with Janet and, thus, will have to pay approximately $350,000 in estate taxes. A case similar to these facts, Windsor v. United States, is why the current administration stopped defending DOMA. It is a discriminatory law promulgated by a country that is supposed to consider all people equal in the eyes of the law. How can a law that requires individuals to falsely claim who they are be constitutional?
With This Estate Plan, You May Take My Coat
Individuals sometimes ask me, why, if they are not millionaires, do they need an estate plan, ending with something akin to, “I’m not rich; I don’t have anything.” My response is usually the typical T&E (Trusts and Estates) mantra, “You don’t need to be ‘rich” to need an estate plan.” Furthermore, the converse is generally true – the smaller estates need equal, if not more, protection. Moreover, non-millionaire employees are “richer” than they think. Like an IRS person once said, “Stop thinking it’s your money.” So, if you\’ve been steadily employed, don’t think that the federal government sees you as a pauper, irrespective of your current financial woes. Acknowledging that these are horrendous economic times citizens worldwide, I must say that millions are also fortunate. They are employed; have retirement or profit-sharing plans; have life insurance; and they have a house, which may be worth less than what they paid for but they still own a home. My “Who Killed Kenny” winter down coat is worth less than what was paid for it but, considering January in Chicago, it would take a permanent move to my favorite desert oasis to get me to sell that coat. Pardon my slight digression, though I think you got the point: It may feel like you’re managing paycheck-to-paycheck, but even so, you may find solace in the midst of this economic maelstrom. Consider your retirement plan. It may have taken a beating over the summer, like most of our financial accounts. However, you may still be able to use your plan to your advantage in the long-term and/or to your loved ones advantage. The 2 most popular retirement accounts are 401(k)s and Individual Retirement Accounts (IRAs). A 401(k) is typically a qualified plan where your employer matches your contributions. Teachers often have 403(b) accounts that operate in basically the same way as a 401(k). While 401(k) contributions are tax deductible, generally any income earned is taxed on withdrawal. Additionally, once you reach 70 ½, you must make a required minimum distribution (RMD). With a 401(k), your spouse is presumed to be the beneficiary, so if you designate other beneficiaries in your will, your spouse must waive their right to the distribution in order for the other beneficiaries to take. Also, because 401(k) plans are governed by federal law, civil union partners cannot be designated spousal beneficiaries of 401(k) plans. IRAs provide a little more flexibility than 401(k)s, because there is no RMD at any age and withdrawals from Roth IRAs are not taxed. However, the maximum contribution is significantly lower than that of a 401(k) and an IRA account may not even be available if you also have a 401(k). Still, unlike a 401(k), with an IRA, there is no presumption of a spousal beneficiary, so who you names as beneficiary, even if it is your civil union partner or same-gender spouse, is the beneficiary. If that person passes away, then the beneficiary will be the person named next or if there’s no contingent, the distribution will follow the state’s testamentary code. Equally important, you can provide for your grandchildren by creating IRAs for them, so that the distribution that would be made to your children is instead rolled over into accounts for your grandchildren. So before you think you’re “not rich,” consider your retirement plan. Basic it may be, but if properly implemented, it could provide you with comfort like my \”Who Killed Kenny\” coat on those cold, January, Chicago days.
Who Takes the Eggs? ART and Estate Planning Considerations
As technology’s digits crawl through the nooks and crannies of our physical world and cyberspace, the legal consequences and questions emerging keep even us non-IP lawyers quite busy. Considering assisted reproductive technology (\”ART\”), family law was the premier practice area for getting caught in ART\’s web. Few lawyers realized the effects ART would have on estate planning and, even as the effects became clear, only a fraction of states passed laws providing legal guidance. Fortunately, Illinois is a state that considered ART in its laws and included laws for in vitro fertilization in the Parentage Act. Additionally, the Probate Act states that children born after a parent’s death (“posthumous” children) are to be considered having been born during the parent’s lifetime. So, what does all this technolegalese mean? Well, in terms of inheritance and/or estate planning laws, it means conversations should be had between Illinois spouses if conception is a challenge or an impossibility for one or both spouses.* The conversations are necessary because of 2 vital estate planning tools often used by couples, Health Care Powers of Attorney (“HCPOA”) and Property Powers of Attorney (“PPOA”), which can also provide instruction for ART cases. Yes, lawyers love acronyms. In Illinois, a posthumous child born via ART typically emerges in 1 of 3 ways: Use of frozen sperm; Use of a frozen embryo; or Use of a frozen egg. Furthermore, obtaining frozen sperm or eggs may not only occur after incapacity but also may occur after death, which is when estate planning mechanisms are triggered. When creating an estate plan, couples usually consider a bunch of “what ifs,” e.g., “what if I become disabled while we’re still in the “prime” of our lives and haven’t had kids yet?” A HCPOA is a tool that requires making those decisions but, consequently, eases the fears associated with the “what ifs.” Accordingly, when considering ART, a HCPOA could, for example, authorize the implantation of frozen sperm or eggs. Of course, other considerations would naturally follow, such as, how one abled-parent and one disabled parent would raise a child. Still, ART combined with the law creates a reasonable and protected possibility for having a family, when that likelihood, outside of adoption, didn’t exist before. Another equally interesting issue relates to the PPOA. But, you say, “That’s about property.” Yes, it is. In a 1993 California decision, Hecht v. Superior Court, which is used by several states, the Court determined that frozen genetic reproductive material, such as sperm and eggs, is property for the purpose of leaving a gift in a will (aka “devise”). Here, you might think the conversation would be easy – women can leave their eggs to their partners; but, not so fast. What if the eggs are frozen, then the relationship is legally dissolved, the donor spouse remarries, and then passes away? Who gets the eggs if the second spouse doesn’t want any (more) kids? She could disclaim them and pass them to her descendants or siblings; that would be interesting. The future brothers and sisters of the former partner? Should the reproductive material be destroyed? Who do you think should get the eggs? * The term “spouses” and \”partners\” are interchanged in this context because the terms are synonymous in Illinois law.
What the Illinois Civil Union Act Means . . . to Many
I apologize because today’s blog was supposed to be about why caution in choosing a trustee is important. However, recently I’ve received a number of questions regarding the affects of the Illinois Civil Union Act. Now that the fact that people are free to join who they want in the legal status of a loving union has sunk in some, questions and issues are surfacing. Individuals, not just from the LGBT community, but from other corners of humanity are interested and want to know more. Additionally, a business boom has started, which I think is a good thing, but I’m going to address a few questions first. Q: My boyfriend and I live together [heterosexual couple] and are considering a civil union now and getting married later, how are civil unions dissolved? A: Civil unions are dissolved just like a divorce, so it’s probably not worth it for heterosexual couples to enter into a civil union and then get divorced in order to get married. Q: What are the practical implications for LGBT couples? A: LGBT couples in Illinois, and states that recognize civil unions as legally equivalent to marriages, have all the benefits and obligations of married couples in state. Because the federal government does not recognize civil unions, (see Defense of Marriage Act, a.k.a., DOMA, which archaically defines marriage as a union between a man and a woman) a multitude of benefits – about 1,138 if an LGBT couple resides in Illinois – are provided through the federal government and, as a result, are not available to partners in a civil union. Likewise, if an LGBT couple travels to a state that doesn’t recognize the union, benefits that are available in Illinois, such as a spousal share through our intestacy code or rights to visit a partner in intensive care, would not be available in that state. Q: What couples benefit the most from the Civil Union Act? A: Elderly couples on Medicare who had to live independently from each other because living as a couple would jeopardize their benefits, can now be together as a civil union and maintain their benefits for the very reason partners of most civil unions can’t enjoy federal benefits – their union isn’t recognized by the federal government. Q: What about domestic partnerships in Illinois? A: The Illinois domestic partnership registry is no longer open and domestic partners are encouraged to obtain a Civil Union certificate. Now, a bunch of businesses are booming (well … seeing a significant increase of revenues; I couldn\’t resist the alliteration): The Civil Union Act has brought divorce lawyers an entire new market. But let’s hope that particular fruit of this tree for my colleagues won’t ripen for a while. Civil Union ceremonies require flowers, catering, music, officiants – all the things that weddings would – at least for those partners who want that type of celebration. (For some reason the baby shower of an episode of the Real Housewives of Atlanta springs to mind.) So the hospitality industry is very happy with the new law. P.S. I can recommend a great officiant if you need one – she may even toss in a Celtic hymn if she really likes you! Computer programmers and organizational gurus are enjoying themselves as well because systems and forms have to be replaced or upgraded. So, the Illinois Civil Union Act has ultimately placed a lot of smiles on citizen’s faces. Now, if Congress would just repeal DOMA. Thanks for allowing the digression. Part 2 of \”Why There\’s a Trust in \”Trustee\” will be available next week.