Zen and the Art of Sibling Rivalry
(Or more aptly titled, \”Probate War Stories That Will Scare You Into Estate Planning…I hope\”) My sister predeceased me. During our childhood, as the older sibling, I did what most older siblings did – tortured her because my parents tortured me. Okay. Torture is a misnomer, but childhood psychologists say that my actions seeking to control my younger sibling, were natural for the stage of our relationship. And in my evolving yet immature brain, it was only fair: There were only 2 of us, and I was the oldest. But it ended when I stayed small for my age and my younger sister grew large for her age, and she showed me who was really boss. After that, my sister and I rarely had a row. Maybe we had strong differences of opinions three times during the entire 46 years we were together. She was no saint (and neither was I), but there were lines we just didn’t cross. And maybe we were just lucky that way, or maybe I’m just dreaming because of the 4 in our tiny family, my sister was the first one to die. However, I would prefer to think that we were just lucky that way, like our cousins who were also sisters with parents who predeceased them. Because O-M-G… Siblings who will drain an estate dry because of control issues and parents who just knew the kids would get along fine. Death and money changes everything… Sibling POAs who absconded with the bulk of the fortune while a POA, leaving other siblings to wonder if the medical bills were that high. Pending death and money changes everything… Siblings who changed the Last Will and Testament in the hospital room, after the morphine drip increased and other siblings were taking care of the house. Like I said, pending death… Siblings who saw the Last Will and Testament before the other siblings, didn’t like what they saw, decided to keep the Will in a safe place, and upon death, when asked, “What will? There is no will.” Secret knowledge of disproportionate gifting changes everything… I recently listened to a panel of estate planning attorneys discuss the importance of transparency in gifting. I agree and disagree. Parents generally love their children and, before the parents die or become incapacitated, they rarely see the sibling ghoul that lurks within. So, being transparent about estate planning is an exercise in futility. However, disproportionate gifting, making only one a POA over financial matters, and the rationale behind these actions should be discussed with everyone in the room and…probably a Zen Master. Now, not all siblings are evil-doers. In my practice, I’ve witnessed wonderfully loving acts of generosity between siblings. But, the wars… Namu Myōhō Renge Kyō
Probate Horrors: Not All Fiction, Unfortunately
Probate is the court process generally required when a person with assets dies without a Last Will and Testament or some other testamentary mechanism in place that designates who should receive those assets. In Illinois, probate is lengthy – at least 14 months; costly – initial processing fees start at $850 and the average retainer is $2500; and assets are frozen for at least 6 months – so heirs cannot obtain their inheritance. So, in Illinois, unless there’s a possibility that an estate will face a protracted and costlier lawsuit, probate should be avoided. But sometimes, as much as we try, folks just don’t listen: The Other Heir Abe died without a Will, leaving his surviving spouse, Christine, and Brandy, the 3 year-old child borne of their marriage, as heirs. At the time of his death, Abe owned a small business, a home, and about $300,000 in a bank account. Christine was informed that because the bank account was the only asset with a designated beneficiary, the estate would require probate. Unbeknownst to Christine, Abe had another child, Donald, who he’d been supporting even before his marriage to Christine. Donald’s mother promised Abe that she would not confront Christine because the payments she received from Abe were 4 times as much as what she’d receive in child support. At the time of Abe’s death, Donald was 6 years of age. But then Abe died and so did all payments to Donald’s. At Abe’s death, his estate balance sheet and the probate distribution would resemble this: Estate AssetsHome, $250,000Business, $500,000Bank account, $300,000 (but this belonged to Christine)Total non-designated assets: $750,000 LiabilitiesBusiness creditors $250,000Tax Liabilities, $50,000Estate administration fees, $10,000Total Liabilities: $310,000 Distributions to HeirsChristine, 50%, $205,000Brandy, 25%, 102,500Donald, 25%, $102,500 Abe had always been concerned about Donald’s mother’s spending habits; so Abe paid many items, medical bills, clothing, and daycare directly on behalf of Donald. Now, because Donald was a minor and Abe did not plan for him in a Trust, Donald’s mother, the spendthrift, would likely be appointed Guardian of Donald’s estate with direct access to $102,500. Estate planning could have provided benefit for Donald, even without Christine and Brandy ever knowing. But… Abe didn’t plan. That DNA kit/Ancestry App Suppose that Donald was an adult and had just received results from a genealogical investigation, which illustrated that he and Abe were 99.9% son and father. He decides to search for Abe and learns that Abe just died. Christine refuses to meet with him; so Donald shows up in court… Hence, the reason why probate courts also have bailiffs. What if Donald was also a spendthrift or worse? Could he inherit?
New Laws Approaching Fast
Summer has ended for most families with children and we thought about this and other family dynamics in our most recent newsletter. However, the summer didn\’t stop Illinois Governor Pritzker from approving several laws that will affect families and businesses in the coming months. Here\’s a few that you may find interesting: The Illinois Trust Code, effective January 1, 2020, aligns Illinois with states that have adopted or established their own version of the Uniform Trust Code. Meaning for you: As you and your family move among the states, your estate plan may not need much revision. Assault or battery of an elderly person results in a loss of inheritance, effective January 1, 2020. Meaning for you: Nothing, we hope. Recreational cannabis will be legal in Illinois, effective January 1, 2020. Meaning for you: If you will partake or endeavor commercially, remember it is still against the law, federally, Uniform Partition of Heirs Property Act, effective January 1, 2020. Meaning for you: If you inherit property with someone else as a co-tenant and y\’all can\’t get along, the property can be sold without mutual agreement. Department of Public Health Powers and Duties Law amended to allow a feasibility study for a state repository for Healthcare Powers of Attorney and other medical Advanced Directives. Meaning for you: Unclear; these are your taxpayer dollars going to a study to determine if your medical information should be held by the State. Those are the headliners that we found relevant to our clients and associates. We\’ll be providing deeper analyses of these issues and others as the laws become effective and part of our society\’s fabric.
Was I Just Disinherited?
As an estate planning and estate administration attorney firm, we routinely get questions when an individual’s loved one has died and they believe they are owed an inheritance. Perhaps they heard their loved one mention a Last Will and Testament or a Revocable Trust or, worse, a loved one died and because the individual is the only reviving heir, they are confused when they can’t obtain a second mortgage. Leaving the latter situation for another time, below are a few common questions we are often asked. Q: How will I know if I\’m a beneficiary of my mother’s Will or Trust?A: The Executor or Trustee must contact you; it’s the law. Q: My grandmother died a year ago and had a Trust. My uncle, the Trustee, won’t tell me anything. Is there anything I can do?A: Your grandmother may have left everything to her children (your uncle and parent) equally and not per stirpes, in which case, you may not be entitled to know anything. However, if your parent, who was your grandmother’s child, predeceased your grandmother, you could seek to probate your grandmother’s estate. Q: My father died and his Trust left everything to my stepmother, and upon her death, me and my siblings will inherit. Can’t we get anything now?A: If the terms of the trust are validly provided as you stated, you can’t receive anything now. You may receive inheritance from life insurance or bank accounts whereby your were the designated beneficiary but that’s all. A marital Trust, which is what this may be, generally provides all income and complete discretionary distributions of all principal to the surviving spouse. In other words, your stepmother can spend up or sell all trust assets, leaving you and your siblings with nothing. Be nice to your stepmom. Q: My sibling mentioned her Trust before dying a month ago and we can\’t find it among her papers. What she me and our other brother do?A: If she had a lawyer, contact the lawyer. If she was a regular client at a bank, maybe she has a safe deposit box, which will require a Small Estate Affidavit to open; but it could be in there. If you can’t find anything in 90 days, click here to learn about probate. Feel free to contact us if you\’ve got a question.
The Illinois 10-Step Probate Program
[vc_row type=\”in_container\” full_screen_row_position=\”middle\” column_margin=\”default\” column_direction=\”default\” column_direction_tablet=\”default\” column_direction_phone=\”default\” scene_position=\”center\” text_color=\”dark\” text_align=\”left\” row_border_radius=\”none\” row_border_radius_applies=\”bg\” overflow=\”visible\” overlay_strength=\”0.3\” gradient_direction=\”left_to_right\” shape_divider_position=\”bottom\” bg_image_animation=\”none\”][vc_column column_padding=\”no-extra-padding\” column_padding_tablet=\”inherit\” column_padding_phone=\”inherit\” column_padding_position=\”all\” column_element_direction_desktop=\”default\” column_element_spacing=\”default\” desktop_text_alignment=\”default\” tablet_text_alignment=\”default\” phone_text_alignment=\”default\” background_color_opacity=\”1\” background_hover_color_opacity=\”1\” column_backdrop_filter=\”none\” column_shadow=\”none\” column_border_radius=\”none\” column_link_target=\”_self\” column_position=\”default\” gradient_direction=\”left_to_right\” overlay_strength=\”0.3\” width=\”1/1\” tablet_width_inherit=\”default\” animation_type=\”default\” bg_image_animation=\”none\” border_type=\”simple\” column_border_width=\”none\” column_border_style=\”solid\”][vc_column_text text_direction=\”default\”]In Illinois, if a loved one passes away without a will or a trust in place, he or she has died “intestate.” Depending on the size and assets of the estate, probate may or may not be needed. Probate is a court proceeding where the judge appoints an “administrator” to the estate. If a will did exist and was appropriately filed, then the judge would probably appoint the will’s “executor.” The only difference between an administrator and an executor is that one is appointed intestate and the other is designated by a will. The administrator is responsible for paying all just debts and taxes, responding to claims on the estate, and concluding the final affairs of the deceased that includes distributing the assets of the estate. Sounds simple, right? Well, in today’s world, probate can be anything but simple. And unlike New Jersey, where it’s quick and cheap, in Illinois probate is long and costly. For example, the first thing one has to do is to get into court, which requires completing a petition that nominates one person as the administrator. What if Jack’s evil twin, Jill, wants to b administrator, too? Hopefully, Jill knows the slayer statute would keep her from collecting if Jack were to meet an untimely demise. The next to do is provide a list of all the heirs to the judge and prove – with birth and death certificates, and divorce decrees – where the heirship line has been broken. What if Thelma’s mom had 2 husbands and 2 children, Thelma and Louise, but Thelma could only find one set of divorce papers – the set involving the divorce from Louise’s father? And that’s all she’s going to find because Thelma’s mom and her dad were in a common law marriage in Kansas before she moved to Illinois. Let’s say the heir hurdles have been successfully jumped and you’ve been named administrator of grandma’s estate. Next we must notify any heirs and creditors, whether known or unknown, that the estate has been opened. What if Grandma forgot to mention that she borrowed $10000 from Uncle Charlie last Christmas to pay for everyone’s gifts and Uncle Charlie accepted a promissory note with the house as collateral? What if there’s no house but you find that Grandma had 12 different accounts in 12 different financial institutions totaling more than $100,000? Get the petition ready and btw – Illinois does not allow pro se appearances in probate. It is because our families are different, mobile, and complex that trusts are often recommended for individuals in Illinois. However, so we have it on record, the following are steps for opening probate in Illinois: Petition the court Notify eligible potential administrators and obtain consent or waivers from them Pay an oath and bond on the estate\’s personal property Prove heirship Appear in court and receive letters of office Notify known and unknown heirs and creditors Take an inventory of the estate assets File the inventory with surety company and heirs’ fiduciaries, e.g., guardians or conservators Respond to creditor claims Distribute assets after 6 month creditor claim period has ended The entire process from opening to closing probate can take anywhere from 9-14 months and perhaps why the steps involved in establishing a trust should be considered the \”probate-anonymous\” program. [/vc_column_text][/vc_column][/vc_row]
Why There\’s a \”Trust\” in Trustee, Part 2
In Part 1 of this series, I discussed why one should be careful in selecting a trustee. Family members are often considered the most trustworthy with respect to family matters, so people typically select them as trustees. However, this endearing gesture can cause serious problems later: Trust assets could be inadvertently wiped out. A trustee is usually responsible for managing the trust assets. If the trust is significant, the trustee should either have the required financial investment background or the ability to wisely choose someone with the needed background to act as the trust investment advisor. If the trustee is not well informed about investment matters relevant to the trust assets and does not employ someone who is, then the trust funds could dissipate leaving the terms of the trust unfulfilled, and probably one or more displeased beneficiaries. This last point is particularly important if the trust isn’t large, but the beneficiaries depend on its income for health and educational support, for example. Valid claims could go unanswered; or a trust claim could be ignored. The trustee is responsible for responding to or initiating litigation on behalf of the trust. So if a long lost family member who would have been provided for had their whereabouts been known, emerges claiming they should receive under the trust, the trustee should properly address that claim. If the trustee is a family member, however, the problem becomes one of bias against that claim because a valid claim could dilute the current beneficiaries’ shares, possibly including the trustee’s share. Another problem is that it takes time to respond to these claims, time that a family member may not have. Equally important is a trust may have a claim that needs to be litigated. But, if the trustee does not recognize the claim issue, a potential financial award for the beneficiaries may go unnoticed. Co-trustees don’t always agree. While the grantor may have gotten along well with both individuals, when it comes time to make a distribution decision or another decision involving the trust, the co-trustees may not see eye-to-eye and both could have valid perspectives. This type of disagreement starts many long-term family arguments resulting in costly court battles. If nothing else, by choosing a corporate fiduciary, the family will be at peace with each other and at war with someone else. Trust administration responsibilities are time consuming and numerous. The following is an incomplete list of trustee duties: Distributing beneficiary shares Providing a regular accounting to beneficiaries Paying debts, taxes, fees and expenses associated with the trust administration Giving notice to guardians or legal representatives of beneficiaries who are minors or incapacitated Executing documents required for trust administration Settling claims against the trust, not just from possible beneficiaries but from estate creditors Buying insurance for trust assets Perhaps now you’re thinking that a Last Will and Testament may circumvent this “trustee” matter, but that\’s not necessarily true. A Will’s executor or “personal representative” often has the same responsibilities as a trustee. So, establishing a Will not only requires delegation to the executor some of the responsibilities above, but in Illinois, it also entails more costs and more time because of probate. Therefore, it is critical to resist the urge to select a family member as a trustee – or executor – without first giving the decision the thought and discussion it deserves.