Popping the Question, Prenupts, and Powers of Attorney
Valentine’s Day is quickly approaching and thousands of individuals will be “popping the question” and getting the question popped at them. This is, at least what jewelers around the country have been spending all those advertising dollars on. It’s also what those individuals wanting to be “popped,” so to speak, are also hoping for, and my hopes are with you. In celebration of that bended knee, larger than life smile, and mother’s joyous tears, I offer a few points to ponder after the popping and before the party planning. The points are sobering but will help to provide years of “bubble and squeaky” happiness long after you’ve settled in with each other. If you’re not cohabiting, have “the money talk.” If you are living together and haven’t had the money talk, tsk..tsk… If you are cohabiting and have had it, good for you! and have the money talk again. If there is a large disparity of income or both of you are very affluent, consider a prenuptial agreement. It is commonplace in such scenarios so no one should feel offended if it is mentioned or requested. The basic rule is that both parties should retain their own attorneys to draft and review the document, which should be signed before the formal engagement celebration, if there is one. If you’re cohabiting obtain life insurance and powers of attorney. If you’re not living together but engaged, obtain these items before going on the honeymoon. If you’re on relatively equal financial footing economically and the families are smiling, when you return from the honeymoon, add a will to your estate plan. If even one close family member is frowning, turn that frown upside down by promising to leave him or her something in your will and then add an in terrorem clause. Better yet, have a trust prepared with a pour-over will attached and leave him or her whatever you like with or without the in terrorem clause. Love means planning a relationship founded on pragmatic principles as well as butterflies in the tummy.
The Issue of Issue, Deers, and ART
A couple of days ago, I read an article on alternative reproductive technology, “ART,” and posthumously born children. It reminded me of conversations and cases about heirs that I’d also recently encountered. The article, conversations, and readings affirmed for me that the question of who is an “heir” or “issue,” while initially may seem simple to answer, can be complex. Thirty years ago, the definition of “child” found in a will or trust may have been a few sentences. Today, that definition is – or should be – a few paragraphs. Consider the following: Jeremy and Jessica were in a loving, committed, cohabiting relationship for more than 10 years and were unmarried because they refused to institutionalize their relationship. Still they wanted to have a baby, but Jay was sterile. However, Jeremy’s best friend, Keith, agreed to b a sperm donor. Eventually, they found a clinic that would perform the procedure and Keith was asked to sign a consent form. One statement on the form provided that Keith waived all rights of parentage with respect to the child that would be born to Jeremy and Jessica using Keith’s sperm. He was to check that box if he agreed with this statement. Keith thought about his significant other, Karen. He and Karen were also in a long-term relationship and discussed marriage and children a few months ago. But no definitive plans were made. Keith was in his early 40s and very successful; if he and Karen didn’t work out, he reasoned that this could be his only chance at quasi-parenthood. He decided not to check the box and think about it more but he signed the form. Jessica underwent the procedure the day Keith signed the form. Then, the 3 left the clinic; Keith headed home to Karen. Unfortunately Keith never arrived home. He was killed when a deer darted out in front of his car and Keith swerved onto a patch of ice, careening him and his car into an oncoming semi-tractor trailer. Karen was more than distraught because she was going to tell Keith about the bundle of joy that was produced when she and Keith had far too much to drink a couple of months ago. Keith died without a will, so who will eventually inherit his estate? Illinois law provides that posthumously born children are children of the decedent. Consequently, if both ladies were successful giving birth, then both children would have been Keith\’s heirs. This also illustrates the importance of another provision now becoming a standard in wills and trusts – the genetic reproductive material provision. If Jessica chose to store Keith’s sperm until a day she was more fertile and Keith died before that day with a will that had a genetic reproductive material provision, then Jessica could have been precluded from using his sperm. Keith could have also changed the definition of children in his will to expressly disinherit any children born of ART except those born during the time he is in an intimate, cohabiting relationship with the mother of said child. Still, all this presupposes that Keith would not have wanted 2 daughters. The point? No one can predict who or what our family will be or look like, but when we make a decision about what part or all of that family may look like, we need to write it down in a legal instrument ASAP.
3 Ways A Will Is Not Cake (de Gateaux)
One primary reason many individuals in Illinois use a revocable living trust is to avoid the court process known as probate. Why do people want to avoid probate here? Well, probate is: Time consuming, requiring at least 7 months, typically 13 – 14 months, and sometimes longer to complete; Costly, at least $2,500 if there is no litigation, i.e., a claim made against the estate; and Public and so anyone in the public domain can view for himself or herself what a cheapskate the testator was or who got disinherited. However, even if your beneficiaries can wait a year, no claims will be lodged, $2500 is un morceau de gateaux, and no one gets disinherited, a few additional reasons make trusts more attractive than wills, especially with respect to gifting: You want to ensure your children or grandchildren have an opportunity to attend all 4 years of college and a good graduate program without financial aid angst. Trusts provisions known as “staggered mentoring” provisions and a separate educational subtrust help in this situation. If you and your spouse want to leave the family residence to your children, but you still want to maintain control of the residence during your lifetime, a QPRT (“qualified personal residence trust”) may do the trick. If you live in a state that does not match the federal estate tax regime, such as Illinois, and you want to leave more to the children by minimizing the amount of estate taxes your beneficiaries will have to pay both Uncles – Sam and Quinn, instead of the normal two-pot trust, a three-pot trust may work. As with most estate planning vehicles, trusts also have disadvantages in gifting, such as trust fees and administrative costs if the estate is very large. Additionally, unless the gift is given completely away, or you opt for an asset protection trust, it will be more difficult to use federal and state lifetime estate tax exemptions. Still, the advantages of having a trust, for many Illinois families, outweigh the disadvantages irrespective of the income bracket because every family is unique and minimizing taxes isn’t the only type of protection afforded by trusts. Disclaimer Woman Caveat: The materials provided in this blog, The Shark Free Zone, and throughout the website for The Law Offices of Max Elliott, Ltd. are for educational purposes only. By reading these materials, no attorney client relationship has been established. Additionally, because of the very complex nature of estate planning, one should not attempt to create or draft a trust on your own but seek the counsel of an estate planner. Finally, IRS Circular 230 Notice: \”To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code of 1986, as amended, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.\”
Don\’t Let JT Defeat Your Purpose
A piece I wrote a little while ago described the 3 tenancies of property ownership: Tenants in Common, Joint Tenancy with Right of Survivorship, and Tenancy by the Entirety. Occasionally, individuals of modest means will ask me about adding a non-spouse family member as a joint tenant to a bank account or to the title of their home. Typically, the individual is elderly, recognizing his or her mortality, or failing health. I applaud their queries because ensuring your financial affairs and making sure that funds are available to address illness or incapacity are in order as the golden years approach is critical. Yet, I caution against using joint tenancy with non-spouses* for the following reasons: Creditors. While the original owner’s credit may be stellar, the son, daughter, or niece may have outstanding debts. Joint tenancy allows creditors to attach liens to the property, thus defeating the purpose of having one’s financial affairs in order or being able to at least financially provide for one’s self in the event of illness or infirmity. Potential Probate. Just because property is in joint tenancy, at least in Illinois, doesn’t mean that probate is automatically avoided. If a gift wasn’t the rationale but a matter of convenience, as mentioned above was the premise and a will is in place, then per Illinois law, the property could have to pass through probate. Taxes. Unless the joint tenancy is between spouses, estate gift taxes may be triggered. Upon one tenant’s death, the estate tax is determined by the amount of contribution by the surviving tenant. If the surviving non-spouse tenant didn’t contribute to paying for the property, then the entire amount of the property is included in the decedent’s gross estate for estate tax purposes. So, we should think again about entering into joint tenancy agreements with non-spouse members, especially if any of the 3 reasons above may loom overhead. *If the surviving tenant is a spouse, then only half of the value of the property is included in the deceased spouse’s estate, reducing potential estate taxes by 50%.
4+ Million Reasons and a Kid
It\’s sometimes difficult to understand the federal and state (for my purposes, Illinois) estate tax regimes and how they may affect you and your family. So this post and next week\’s post will try to explain visually and very simply, what the implications may or may not be. And this visual is so simple that it serves a dual purpose – it illustrates why some things should be left to graphic designers and not clipart. This week shows what can happen through December 31 of this year. Next week, you\’ll get to see 2013. 7 Points to Ponder: If you\’ve a minor child, then doing it yourself (DIY) is a bad idea; If you\’ve real property, then the Small Estate Affidavit probably won\’t work in Illinois; If you\’ve more than $100K in personal and/or real property, then a DIY will likely end with your loved ones in court; A trust should generally always include a will but court shouldn\’t be part of the deal; If loved ones end up in court with a sizable estate on a dispute regarding the estate\’s value, then they may also end up with a tax bill; The typical cost to probate a will in Illinois (take it to court) starts at about $2500; If the trust is valid and the estate is under $5.12M, then both Uncles should walk away empty-handed.
6 Not-so-Legal Ways to Protect Your Family
It seems there\’s a week, day, or month to celebrate every relationship and, accordingly, the third week in October has been designated \”National Estate Planning Week.\” Why we, estate planners, have a week dedicated to our practice area may, at first glance, seem self-aggrandizing. Yet, estate planning isn’t about lawyers but estate planning is about how individuals can protect their loved ones. Lawyers and other professionals simply guide the way. So instead of calling this week “National Estate Planning Week” maybe we should call it “National Family Fortification Week,” hmmm… Then again, I was going to suggest “National Family Planning Week” but that, too, could have been very misleading. Well, as they say, “a rose by any other name…” Throughout The Lotus Rules (fka the Shark Free Zone) are pieces explaining why estate planning is for everyone and not only the 1 percenters, discussions on basic estate planning documents, analyses on historical and pending cases and legislation involving relationship rights, and scary stories about car crashes and funeral home terrorists. However, I think this is the first post on point for fortifying your family, so welcome. Take simple steps early. If you’re a working young adult with loved ones, then you need a plan to keep potential serious illness or untimely demise from causing your loved ones even more grief. Your plan could be as simple as Powers of Attorney and life, health, and disability insurances. Tell your loved ones that they are indeed loved: “Mom, I won’t let you mortgage the house to pay for my medical bills and, here’s the agent information for all of my insurances.” Tears will probably flow but they\’ll be happy, proud tears. Teach your children the important lessons about life and money early, e.g., age 6, exemplify for them that living a happy and productive life is the goal and money is one tool that can help them reach that goal. Tailor your goals for you and your family; you\’re unique. An estate plan isn’t a goal; it’s another tool. Still, some wrenches are better than others. The same thing applies with respect to estate plans. A good estate plan just doesn’t involve obtaining life insurance, throwing funds in a retirement account, and creating a will. Those are good steps, but before taking those steps consider who will be your trusted advisors. Who\’ll take the time to get to know you and your family, work the plan, helping guide you and your family along over the next few decades? Take your time. OK, so you didn’t start out when you should have and you haven’t taken any steps yet, but holy crap, someone very close to you just passed away and surviving are kids, a dog, a spouse and…you want to do something NOW! Don’t. Well, don’t make any rash decisions, interview a few attorneys, talk to a few friends, chat with a few financial planners, and after the pain of losing a loved one has lessened, then start building your team. It will likely save you tons of resources down the road. Trust your team. Because of the attorney-client privilege issue, loved ones are not typically part of the initial consultation, but sometimes, if they\’re the cornerstone of the family or if a family business is involved, perhaps they should be. Make the initial meeting a \”let\’s get acquainted\” team meeting loved ones and professional advisors can give each other the \”sniff test.\” Discuss the broad strokes: wanting to ensure that the family is protected, that everyone knows who the “team” is, and create a comfortable, collaborative environment. Then later you can meet or speak with the attorney one-on-one regarding specifics. Estate planning is a technical practice with many complex moving parts, but some fundamentals have nothing to do with instruments and everything to do with being a loving family member.
4 Occasions When a Will Won\’t Work
Recently, law students received the following hypothetical to answer: “Ms. Angel Booth has phoned you, Ms./Mr. Associate, and said, “Hi, this is Angel Booth and I want to set up a will because I want to completely disinherit my daughter.” What is your response?” After getting rid of the “deer-in-headlights” look, the students came up with a myriad of answers. Yet and unfortunately, this isn’t an uncommon scenario and for valid reasons. Furthermore, this occurs not just between parents and children, but between as many relationship pairings as you can think of. Still, this scenario goes to reason number 1. Using a will is a tenuous proposition at best if you’re trying to disinherit an heir. Admittedly, I’m being a tad hyperbolic, because it can work – after a lengthy court battle involving lawyers, doctors, and a ton o\’ family members. To disinherit an immediate heir, in Illinois, using a standalone will where the value of the estate is more than $100,000 in personal or real property will beg for a contest and bye-bye goes a large portion of the estate – in probate litigation. Mamma Mega Millions Marries Gorgeous. Yes, you’ve been smitten by the most gorgeous, decades younger, individual walking the planet. You’ve worked your petooty off as a single mother, put your children and your siblings through university, and now want to enjoy the million-dollar fruits of your labor with Gorgeous in the bounds of matrimony. You will probably be advised to have an airtight prenuptial agreement. You also want a will prepared, but a will that leaves most of those millions to Gorgeous will shout, “Probate Litigation!” and siblings, children, BFFs, third cousins, you name it will probably shout back with claims against the estate. Grandpa Disses Daughter-in-Law. So, while it can’t be proven that she murdered your dearly departed son, you, Grandpa, just don’t agree on anything with your daughter-in-law about your grandchildren. In your opinion, she isn’t parenting the way your loving son would have. Still, you’ve saved about $30,000 that you want the children, ages 7 and 8 to have upon your death. I previously wrote about the imprudence of leaving substantial financial gifts outright to minors. This is another example. In Illinois, if a minor receives a substantive gift, e.g., more than $10,000, the funds must be transferred into a restricted vehicle for the minor whereby the guardian or custodian is given control. Typically, the guardian or custodian is an adult member of the minor’s family, i.e., Dastardly Daughter-in-Law or a trust company. Thirty-thousand dollars isn’t usually sufficient for a trust company; thus, DDIL will likely gain control over the $30,000. Calling Dr. Cooper. Finally, setting aside seedy scenarios, let’s consider Dr. Amy Cooper. She has a thriving practice with three other doctors and has started accumulating a substantive portfolio. She doesn’t mind paying her fair share of taxes, but doesn’t want her beneficiaries to pay more than their fair share either. Leaving everything outright to her partner and children in a will, however, results in the very thing she doesn’t want.
4 Points to Ponder for Your Peace of Mind
The house is quiet. The treat you bought yourself is still in the fridge. You and your spouse have a dinner date in the middle of the week. Your cell phone is no longer a constant reminder of the triple life you lead: companion, professional, and parent. You’re a tad stiff in the morning, but nothing that a few asanas and a hot cup of coffee won’t cure. Plus, there’s nothing wrong with a little stiffness after the decades you’ve spent working out, right? Right. Your mind continually and comfortably drifts off to favorite travel destinations or that mid-week date during meetings you must attend in order to be a “sober second” when asked; and you’re getting asked less and less, thank goodness. Life is . . . pretty good. So, while you have some time on your hands, allow me to provide you with 4 points to ponder related to that pretty good life. Your children are out of the house for good, leading their own lives with their own families. Does this mean you have grandchildren to enjoy and then return to the fray? If so, have you thought about providing or helping to provide for their education? Your career has moved right along or your wok has become more and more tolerable. You’ve gone this far, so you’re in it for the long haul. Have you thought about what to do if, working near the end of the long haul, you are injured for a substantial length of time? Can you afford it? Do you have long term disability insurance or a strategy viable to ensure that you’ll still be able to assist with educating the little brutes or brutesses once they’re about to enter high school or university? The end of the long haul is clearly in sight. Accordingly, the previous point bears revisiting. Also, do you have a strategy for making it through the “Golden Years” comfortably? Do you know how you’re going to draw down your retirement funds so to maximize your money and minimize your taxes? People are living longer now so our resources must keep up. Will you be able to just sit on that old porch swing and smile? Family isn’t charity; it isn\’t a cause. Family is a wonderful responsibility and gift shared amongst its members. However, as those responsibilities, even to ourselves, wane and are fulfilled, how have we shown responsibility toward our community? Is there an organization, a group, a center whose work you admire and would like to try to help ensure the work and programming will continue? You see, estate planning isn’t just about planning for death. These 4 points to ponder prove it. How are you going to (1) help family, (2) help yourself heal peacefully, (3) protecting your porch swing, and (4) helping your community?
Why We Provide Wills for Heroes…
As serendipity would have it, my colleague, Stephen Hoffman, has recently posted a piece I wrote for him, leaving me with empty space, if I so choose, to fill with something a little different and something a little personal and I so choose: Congratulations to my \”brother,\” Kevin Bell, who retired today, with a full pension, from his position as a Detective for the Chicago Police Department. When Kevin received his first opportunity to request a patrol assignment, more than 20 years ago, he requested a patrol in the roughest, most gang-infested neighborhood on Chicago\’s south side. He knew that the African-American community needed to see and understand that all police weren\’t against them, but were sincerely patrolling to protect them. Kevin was shot at point blank range during that first assignment and survived because of his vest. He subsequently returned to the same assignment, undeterred. When we were out together for an evening of fun with friends and family, whatever side of the city we were on, if there was a disturbance, a person having difficulty, Kevin was there and helping out because he understood that, as a police officer for the City of Chicago, he was never really \”off duty.\” He was passed up for detective often; some say it was because of his ethnicity. Nevertheless, he stayed the course, undercover or in open blues, and was finally awarded his detective shield. Kevin has protected our streets – north and south, east and west – for decades. I pray that there is another officer, just as dedicated, moving up in the CPD ranks. But even if there is, I can\’t be as proud of him as I am today. An African-American man, with a private Catholic school background and a bachelor’s degree from a well-respected university, who consciously and intentionally decided to protect our streets, our homes, and our communities as his career instead of doing something more lucrative and safe, is a man who deserves, at the very least, a word of thanks from us all. Thank you, Detective Kevin Bell (Ret.), my cousin, my brother, my hero.
5 Key Blocks for the Build-A-Baby Life Stage
Helping new families through my practice is one of the great benefits of my job. It soothes my soul because I know the family will be protected sooner rather than later and we will all sleep better, though the infants rarely have a tough time sleeping soundly. However, becoming a new parent isn’t always easy. The gamete meeting sometimes just doesn’t take place as soon as we want it to; sometimes our gametes just don’t want to meet at all. On these occasions, Artificial Reproductive Technology (ART) can play a very important role. However, ART can be costly, financially and emotionally. I was on a panel with Lambda Legal a few months ago and an audience member referred to the financial program designed by his company to help parents with this issue as the “Build-A-Baby” program. This particular department helped couples design their financial planning so they could afford ART, which can cost thousands of dollars per month and when you factor in particular types of adoptions, the final costs can be hundreds of thousands of dollars. And, as mentioned, that’s just the financial burden. The emotional burden of waiting and hoping is equally heavy, if not heavier. As opposed to ART, either parent or both parents can take an alternative route and adopt. Still, just as with ART and as above sometimes including ART, adoption can be costly and is always emotionally burdensome. Consequently, it is critical that parents understand how they can protect each other and their families at the very beginning, even, sometimes, before the birth occurs. Another panel I was on recently described it as “Building Your Family Fortress.” The following are the cornerstones for today\’s family, whether you use ART, adopt, or your gametes meet the old-fashioned way: Obtain life insurance that will at least replace the primary wage-earner’s salary for 3-5 years. Have powers of attorney – healthcare and property (what some states refer to as including “advanced directives”) prepared for both parents. Free drafts of Illinois powers of attorney are available here. If you’re a same-sex couple, be sure if one of you is the biological parent, then the other adopts the child. The U.S. is still a patchwork of states, some recognizing your legal rights in a Civil Union or same-sex marriage, and others not. The same applies for straight couples who are not married and one parent is the biological parent. If you’re using ART with an unknown donor, the parent carrying the child should designate the other parent as a short-term guardian to go into effect at some point in time until the adoption is complete. Obtain valid wills, irrespective of the gender-orientation of your relationship because you need to ensure that the guardian of your child is who you want the guardian to be in the case of your death. For straight couples, it is critical that you name a successor guardian. Other blocks can also be used, but these 5 bricks represent the cornerstones of a solid fortress that will protect your family now and in the future.