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Do You Need a Will and Trust in Your Estate Plan?Your estate plan can contain several documents, including a will and a trust. Both wills and trusts serve the same primary purpose of ensuring that your assets are transferred to the people you intend after your death. Yet, having a will is not the same as having a trust. Should you create both a will and a trust, or is having only one of the two enough? Wills and trusts each have their own strengths and weaknesses in an estate plan, and it may be appropriate to have both depending on your circumstances.

What Are the Differences?

A last will and testament is a document that indicates your wishes following your death, such as:

  • Naming who will inherit each of your assets
  • Appointing someone as the guardian of your children
  • Giving instructions for your funeral

A will does not activate until after you have died. All assets that you include in your will must go through probate court, which can delay distribution to your beneficiaries and incur court and legal fees.

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Why Power of Attorney Is Vital to Your Estate PlanYour estate plan mostly concerns instructions for what to do following your death, but there are parts of the plan that can apply while you are still alive. You may lose the ability to make sound decisions for yourself if you are suffering from a cognitive illness such as dementia or are incapacitated due to a health emergency. Who will consent to medical treatment that may help you but also carries risks? Who will manage your properties, including making sure that your bills are paid? You can assign the power of attorney as part of your estate plan to determine who is allowed to make these decisions.

What Is the Power of Attorney?

The power of attorney is a legal document that names a person or persons who will have the authority to make decisions on your behalf if you are incapacitated. There are two types of power of attorney in Illinois:

  • The property power of attorney is the authority to make financial decisions.
  • The health care power of attorney is the authority to make health-related decisions.

You can place limits or add instructions to your power of attorney if you do not want another person to have complete discretion when making decisions while you are incapacitated. For instance, a “do not resuscitate” order could instruct whether you should be removed from life support if you are unlikely to regain consciousness. You can also choose which transactions someone is allowed to make for you.

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What Information Do You Need When Making an Estate Plan?It is difficult to say when the right time is for you to create an estate plan because you cannot predict when you will need it. However, you should consider having a will or trust in place if you have valuable assets or people who are financially dependent upon you. An up-to-date estate plan could save your family time and cost on the probate process in the event of your death. If you have not created an estate plan before, you may not know everything you need to make a trust or will. Here is a helpful list of what you should bring to your meeting with your estate planning lawyer:

  1. Records of Your Major Assets: Your attorney needs a list of the assets you wish to distribute to your beneficiaries in your estate plan. Properties such as your home, other real estate, vehicles, bank accounts, and investments are typically the most important items in your plan. You should bring any deeds, contracts, or receipts that relate to those properties. You may also have luxury items or family heirlooms that you want to distribute. You can include any possession you own, though it is probably unnecessary to list every appliance or trinket.
  2. Records of Your Debts: Your estate plan must account for your debts, as well as your assets. You need to provide documentation of debts, including mortgages, loans, and lines of credit. The assets from your estate will be used to pay off your debts before they are distributed to your beneficiaries.
  3. List of Beneficiaries: You need to know who will be your beneficiaries receiving your assets. Spouses and children are usually the primary beneficiaries of estate plans. With children, you must consider at what age they would receive the assets and who would be their financial custodian until then. You also have the option of giving assets to other family members, close acquaintances, or organizations.
  4. Names of Your Trustee or Guardian: If you are creating a trust, you will need to name a trustee to manage your estate. You want someone who is level-headed and will be fair in managing your estate, whether that is a family member, friend, or professional. If you have children, you need to name someone as their guardian in the event that both of their parents are dead or incapacitated. Whoever you choose as a trustee or guardian, you need to discuss it with them before you make it official.

Contact a McHenry County Estate Planning Attorney

The estate plan you create must be clear in how you are distributing your assets and who you are leaving responsible for making decisions. With an ambiguous plan, your family will be forced to guess at your intentions for your estate. A Crystal Lake, Illinois, estate planning attorney at Botto Gilbert Lancaster, PC, will work with you on creating a plan that protects your dependents in the event of your death. Schedule a free consultation by calling 815-338-3838.

Source:

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Illinois State Bar Association State Bar of Wisconsin Crystal Lake Chamber of Commerce Illinois Trial Lawyers Association McHenry County Bar Association
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