A Will is a written statement directing who will wrap up your financial affairs, and who will receive your money and other property, when you pass. Property and possessions left in your name at the time of your death are referred to as your estate. With respect to Wills, the ones named in the document who will receive your property upon your death are called “legatees.” They may or may not also be your legal heirs.
The person named in your will to be in charge of your estate when you die is called the executor. The job of the executor is to investigate what you own at the time of your death, make a list of all of your property, collect all of your property, care for your property until it is sold or passed on to the people you have selected to inherit it, pay your bills, file your tax returns, and finish up any other financial business required of your estate after your death.
Once your finances are wrapped up, the remaining money or other property can be distributed to the legatees named in your will. Money and property held in joint tenancy ownership, such as a bank account or house, automatically is given to the surviving co-owners upon the death of one owner. Property held in trust, or in a payable on death account, automatically goes to the named beneficiary upon the death of the owner. Life insurance proceeds automatically go to the named beneficiary on the death of the insured person. These types of property are not affected by your Will.
FAQs Regarding Wills
What Does a Will Accomplish?
A carefully crafted Will is your most reliable guarantee that distribution of your assets is conducted according to your wishes. In addition, your Will:
- Enables you, if your family includes minor children, to specify who will assume responsibility for their upbringing as well as the manner in which you wish them to be raised
- Presents the most dependable way of communicating any special intentions you have
- Provides the best means of indicating who should receive items and “keepsakes” that hold sentimental value
What Happens if I Die Without Having a Will?
Not having a Will means that you:
- Surrender to the state all important decisions affecting the well-being and future security of your heirs
- Are at risk of having your property divided in a way that’s not to your liking
- Forego opportunities to reduce taxes through trust arrangements
When Should I Review My Existing Will?
Your Will may be changed as often as you wish. If the change you desire is relatively simple, an amendment to the document, known as a codicil, is executed with the assistance of an attorney. If you decide to write a new will altogether, the new document should specifically revoke all prior Wills. Remember that revoking a will automatically revokes its codicils, but revoking a codicil does not necessarily revoke a will. In addition, you should review your will once every 5 years or when any of the following occurs:
- A change in marital status
- The birth of a child
- A change in your state of residence
- A significant change in the value or character of your assets
- A change in intended beneficiaries
- The death of a beneficiary
- The death of a guardian, trustee, or personal representative named in your Will
- A change in tax laws affecting federal estate tax deductions and calculations
Types of Trusts
Trusts are legal agreements in which assets are placed under the legal control of a person known as a trustee, with instructions for when and how these assets should be distributed to beneficiaries. The most common types of trusts are known as living trusts since they are created while the trust maker (also known as the "grantor") is still alive. Living trusts are typically revocable, and a grantor is allowed to modify the terms of the trust. While a trust may specify that assets will be distributed to beneficiaries after the grantor's death, distributions can be made at any time. In some cases, the grantor may also be a beneficiary, and assets may be used to provide for their own needs as they near the end of their life.
Living trusts offer a number of benefits, and they provide a great deal of flexibility and control regarding when assets will be distributed to beneficiaries and how they will be used. In addition, they can help the asset distribution process proceed easily and smoothly since, unlike a will, it will not be necessary to go through the probate process when carrying out the terms of a trust. Trusts also offer privacy; while wills are filed as part of the public record, a trust's terms will be kept confidential.
Illinois law recognizes several different kinds of trusts because each family has different needs and goals. In addition to living trusts, there are a variety of other forms that trusts can take, including:
- Irrevocable Trusts - The terms of these trusts cannot be modified after they are created. While this will require a grantor to give up control of their assets, it can provide protection against creditors, help reduce taxes, and ensure that assets are used correctly to provide for beneficiaries' needs.
- Special Needs Trusts - If a person wishes to provide financial assistance for a loved one with a disability or other special needs, giving them money directly could make them ineligible for public benefits or other forms of assistance. By using a trust, a grantor can provide a beneficiary with funds or other assets and ensure that they can still receive public aid.
- Charitable Trusts - When donating money or assets to a charitable organization, a trust can be used to ensure that these donations are made at the right time and in the right form. Charitable remainder trusts will allow the grantor or other beneficiaries to receive distributions for a certain period of time, after which the remaining assets will be donated to charity. Charitable lead trusts, on the other hand, may specify that regular distributions will be made to a charity for a certain amount of time, after which the remaining assets will be distributed to other beneficiaries.
- Testamentary Trust: A testamentary trust takes effect when the maker dies. Minor trusts are a popular option because they allow a trustee to manage the assets until the children reach a certain age or achieve a certain milestone in life.
- Living Trust: An irrevocable living trust may help your heirs avoid certain estate taxes, while a revocable trust can be modified at almost any time for almost any purpose.
- Land Trust: A land trust transfers the title of real property while helping to ensure privacy and a smooth transition when multiple owners are involved.
Both will and trusts can help manage your assets and shield them from creditors, while allowing a smooth line of ownership succession. A comprehensive estate plan gives you and your family additional peace of mind. For a confidential consultation, contact Capraro Law today for a free consultation.
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