In an ideal situation, your estate plan is figured our and finalized long before it has to go into effect.  Life, of course, has a tendency to diverge from the ideal situation and it’s entirely possible for someone to suddenly find themselves trying to tie together their affairs, plan for their estate, with a rapidly approaching deadline.

The most commonly used term for this sort of situation is near death estate planning.  It can happen because of accident or an unforeseen diagnosis.  In many ways, near death estate planning is not different from any other sort of estate planning.  The same documents are used to direct how your legacies will be used after your death.  The only difference in near death estate planning is the timeline.  Planning and preparations that might otherwise be comfortably done over many weeks or months might have to be completed in a few days or even in an afternoon.

We have helped individuals with near death estate planning.  For more information, or for help with other estate planning or probate legal concerns, contact the Chicago estate lawyers at Horowitz & Weinstein.

Legal Disclaimer.

The will contest is to probate what the 1040 is to filing your taxes.  There’s something fundamental to it.  It holds an almost mystical status in the minds of most probate practitioners.  Although other probate actions tend to be more common, nothing sums up the controversies of a conflicted estate quite like a will contest.

A will contest, however complicated it may become, always follows a simple basic structure.  A will has been submitted as the final testament of a decedent.  A will contest happens when someone steps forward and tries to argue that the document in question is not actually the will of the decedent.

In Illinois, a will contest can be filed by any interested person.  As defined by the Probate Act, an interested person is anyone with a financial interest, property right or fiduciary status in the affair.  The will contest has a single goal: to challenge that the document in question is the legal will and testament of the decedent.  In general that can be accomplished through one or both of two methods.

First, the will can be challenged on formal grounds.  Illinois has specific requirements for a will to be accepted.  While in other states it is possible to write a will on the back of a napkin, sign it, and have it carry legal weight, in Illinois the prerequisites are a bit more spelled out.  So a will contest can try to prove that the document in question fails to live up to one or another of those requirements.  Prove it doesn’t measure up to the standards and the will is thrown out.

The second hinges around the actual writing of the will, specifically in trying to argue that it was written through some manner of duress, forgery or fraud.

Every will contest is of course unique and no two cases will look exactly alike.  For more information on will contests, probate or other estate law concerns, contact the Chicago estate lawyers at Horowitz & Weinstein.

Legal Disclaimer.

President Obama’s proposed budget, released a few weeks ago, contained several proposals for the future of the estate tax and estate planning at large.  While these suggestions don’t carry any legislative weight, but taxpayers would do well to pay attention.  At the very least, these proposals mean the idea are in play, they are gaining traction, and in estate planning it pays to plan long term.

Of particular note among is the proposal to limit so-called dynasty trusts to 90 years.  Twenty-three states, including Illinois, currently allow dynasty trusts and at present they can, conceivably, last forever.  These trusts are designed to preserve a portion of an estate, up to the lifetime exemption for the generation skipping tax, from taxation.

If you left all your wealth to your children and they left theirs to their children and so on, each generation would incur estate tax.  If you leave your wealth to your grandchildren or great-grandchildren, you skip a generation and thus a layer of estate tax, but the generation skipping tax (GST) kicks in to make up the difference.  Currently there is a lifetime exemption for the GST, $5 million for individuals and $10 million for couples.  A dynasty trust persists across generations, allowing your descendants to access the protected wealth without having to use their own GST exemption.

The administration has proposed that dynasty trusts be capped at 90 years.  Specifically, it is proposed that the GST exemption expire after 90 years.

The chances of any such repeal passing this year are not great, but the window may still be closing on the immortal dynasty trust.  The conditions for the estate tax and the GST, as shaped by the 2010 Tax Relief Act, are favorable.  They are scheduled to sunset at the end of next year.

For more information on dynasty trusts, the generation skipping tax, or other estate planning issues and concerns, contact Horowitz & Weinstein.

Legal Disclaimer.

The Obama Administration’s proposed fiscal year 2012 budget includes suggestions for permanent changes to the rules governing gift, estate and generation-skipping transfer taxes.  Currently these taxes follow rules contained in the 2010 Tax Relief Act which is slated to sunset at the end of 2012.

The proposal provides for a gift, estate and GST tax top bracket of 45%, a gift lifetime exclusion of $1 million and an estate and GST lifetime exclusion of $3.5 million.  Currently the top bracket is 35% and the estate and GST exclusion is $5 million.  The proposal also is to make permanent the spousal portability of estate exclusion introduced by the 2010 Tax Relief Act.

A few other rules regarding estate tax would also be changed.  Most notably, assets protected from taxation by a GST would enjoy that protection for a maximum of 90 years.

The future of the estate tax is still uncertain and will remain so until Congress takes action on the matter.

For more information on the estate tax or other estate planning issues, contact the Chicago estate lawyers at Horowitz & Weinstein.

Legal Disclaimer.

At its core estate planning is about uncomfortable questions.  No one really wants to think about end of life issues.  The topic of your parents, although it certainly can raise its fair share of tricky questions, is very important to the estate planning process.  In particular, discussing how your parents handled estate planning, how their lives have played out, can help get you thinking seriously about how your life might mirror or diverge from theirs.

Question: Have either of your parents remarried?  If so, what did you think about that? Could the same happen to your spouse?  How did a remarriage affect the rest of your family?  It’s important to consider all possible scenarios when planning your estate and the example of your parents can be invaluable.

Question: Did your parents ever discuss their wealth or business in front of or with you?  Did they ever discuss estate planning? If they did, how did that work out?  How old were you when these conversations happened.  Did they talk with you alone or as part of a larger family discussion?  Conversely, if they didn’t discuss their wealth or estate planning with you, how did that affect the administration of their estate later?  This is probably the best guide, the best example, for you to look toward when deciding how to handle conversations like these with your own children.

Question: What sort of relationship did you have with your parents? This question is especially important if your relationship deteriorated, and if so the follow up question is: why?  In estate planning it pays to engage in hypothetical worst case scenarios.  If your relationship with your own children should follow the example of you and your parents, how should that affect your estate planning?

Question: How did your parents divide up their estate? In Illinois if no admissible will exists, a decedent’s estate is divided up with half going to the spouse and the other half divided up equally among the children.  Plenty of people shape their estate different, of course.  The example of your parents can help you figure out how you’d like to plan for the division of your own estate.  Did you agree with how your parents split up their estate?  Did they ever explain their reasoning to you?

In addition to questions about your parents, similar questions about how your grandparents handled their estates can be quite enlightening.  For more information on estate planning and other estaate concerns, contact the Chicago Estate Lawyers at Horowitz & Weinstein.

Next post: your spouse or partner

Legal Disclaimer.

The Taxpayer Accountability and Budget Stabilization Act was recently signed into law.  The Act raises Illinois income tax rates and places limits of future spending, all with an aim toward curbing Illinois’s budgetary shortfalls.  Most of the buzz has focused on the increase to corporate and personal income tax rates.  Also contained within the act, however, and getting much less exposure, is the reinstatement of the Illinois estate tax. Along with federal estate tax, there was no estate tax in Illinois in 2010.  Federal estate tax was restored with the passage of the 2010 Tax Relief act in December.  With the recently passed tax bill in Illinois, the state level estate tax has also made a comeback. Illinois’s estate tax follows complicated rules and does not lend itself to short-form summary as readily as its federal counterpart.  One key point of difference between the two taxes is this.  While federal estate tax has a $5 million exemption (the first $5 million of an estate is immune to federal estate tax) the Illinois exemption amount is only $2 million.  It is possible for an estate that owes no federal estate tax to incur an Illinois estate tax liability. The act also restored a special election regarding qualified terminal interest property marital trusts, allowing a surviving spouse to defer up to $352,158 in Illinois estate taxes that would otherwise have been due at the death of the first spouse. For more information on the return of the Illinois estate tax or for other estate planning issues, contact the Chicago estate lawyers at Horowitz & Weinstein. Legal Disclaimer.

At its core estate planning is fundamentally morbid.  As the cliche goes, the only certainties in life are death and taxes, and estate planning focuses on both of them.  Surprisingly, in the process of planning for an estate questions about mortality sometimes go unasked.  They’re certainly unpleasant topics for conversation, a surefire way to ruin a dinner party in a hurry, but they are important to the process of estate planning.

Question: What is your greatest fear?

Specifically here, what’s relevant are fears as they relate to end of life issues.  Arachnophobia is not particularly helpful.  Is death your greatest fear?  Maybe loss of autonomy, or misappropriation of your estate most worries you.  Perhaps you fear the process of closing your estate might turn your loved ones against each other.  All of these can and should affect planning for your estate.

Question: Have you ever discussed the possibility of your death with your loved ones?

If you have, what came of that discussion?  Are your family members willing to have that conversation and to think honestly about how to carry on your affairs after you’re gone?  If you haven’t, what’s gotten in the way?  Like many of the questions in this series, this one’s about digging deeper than the obvious issues of finances.

There are of course a plethora of follow up questions that can come from this discussion.  Morbid as it undoubtedly is, open and honest reflection on your own mortality is a key part of effective estate planning.

Next post: your parents

For more information on estate planning, contact the Chicago estate lawyers at Horowitz & Weinstein.

Legal Disclaimer.

The bill has arrived.  The Senate and the House have both passed the President’s tax compromise and it is likely only a matter of time until the President signs the bill into law and the 2010 Tax Relief Act goes into effect.  For estate planning, many of the bill’s effects are obvious.  For two years the estate tax will be 35% with an exemption of $5 million.  But between the lines of the bill, new opportunities are presenting themselves that may afford significant advantages to those who can spot them.

Even if you revised your estate plan as recently as 30 or 60 days ago, there may be major benefits to be gained in taking another look.  Perhaps most potentially beneficial, the 2010 Tax Relief Act’s reunification of the gift and estate taxes, placing the two under the same lifetime $5 million exemption, may potentially create a powerful tool.

The unified gift and estate taxes create an opportunity for sheltering assets of your estate from appreciation.  By transferring (gifting) an amount less than or equal to the exemption ($5 million, or effectively $10 million for married couples) into a trust or similar entity, it may be possible to shield that asset from estate tax on appreciation.  And although the future state of taxes is never certain, $10 million dollars of assets taxed as long term capital gains will almost certainly incur a smaller tax liability than if they were taxed as part of an estate.

Particulars of this possibility are still uncertain.  Commentary by industry analysts and congressional organizations are unclear.  Nevertheless what is clear is this: in light of the new law and the many estate planning opportunities it may constitute, there has never been a better time to take a second look at your estate plan.

For more information on how the 2010 Tax Relief Act will affect your estate planning, or for other estate planning concerns, contact the Chicago estate lawyers of Horowitz & Weinstein.

Legal Disclaimer.

For many, estate planning tends to be an affair of numbers.  How much are you worth?  What can be done minimize the exposure of your estate to taxation?  And while there’s no doubt that questions about estate and gift taxes are an important consideration in estate planning, ensuring that your legacies are handled as you want them to be requires one to dig a little deeper.

Question: Where did your values come from?  Who influenced them?

The obvious answer here is probably your parents and your family.  But a second grade teacher or church pastor or co-worker could also have profoundly shaped the way you see the world.  The point here is to start to dig deeper into your values, to gain a deeper understanding of them, so that you can shape your estate planning to best follow those beliefs and principles.

Question: What are the three values or aspects of life that are the most important to you?

For some people there’s nothing more important that family, integrity, or hard work.  For others life is about friendship or spirituality.  Whatever your answers are, they will provide an important glimpse into what matters to you in a meaningful way.  And what matters to you should help affect your estate planning.

Question: Have you tried to impart your core values to your children?

Now we’re starting move from the theoretical, to the practical.  Illinois law provides that in the absence of an admissible will, a descendant’s estate is divided up half to the spouse, and the remainder divided evenly among the children.  It can be tough, considering whether or not your children are likely to do with your estate as you would like them to.  If you are concerned, that’s important to know when you’re planning your estate, especially when it comes to matters like naming an executor.

Question: What are your goals in life?  Have you achieved want you wanted to?

This the big one.  It’s a broad question and the potential answers are infinite, but this is an essential consideration in estate planning.  We are all mortal but our legacies long outlive us.  It can be a comforting thought to know that we have made it so that even if we cannot do all that we hoped during our lives, our estate will further those pursuits after we are gone.

Next post:  end of life issues

For more information on estate planning or other estate and probate issue, contact the Chicago estate lawyers at Horowitz & Weinstein.

Legal Disclaimer.

Well, now we have a bill.

It’s full name is the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.  Most are just calling it the 2010 Tax Relief Act.  Senate Majority Leader Harry Reid (D-NV) submitted the bill to the Senate late Friday evening.

Among the bill’s many provisions, three are particularly important to estate planning.  First, estate tax is returning in 2011 at a rate of 35% and with an exemption of $5 million.  Second, the estate tax and the gift tax are being unified.  Third, exemption not used by a decedent can be passed to the spouse.

All of these carry weight in estate planning.  But what most be most important to estate planners is the fact that these provisions, like the rest of the bill, come with an expiration date.  The changes made to the 2010 Tax Relief Act will end in two years.  This affects all taxes, of course, but this can be especially problematic for estate planners.  Estate planning, after all, is laying a plan for the future, and that tends to be difficult when the future is uncertain.

If this bill passes we’ll know what the estate tax rules for two years, but estate planners will still have unanswered questions until a longer picture emerges.

For more information on how the 2010 Tax Relief Act could affect your estate planning, or for other estate law concerns, contact the Chicago Estate Lawyers at Horowitz & Weinstein.

Legal Disclaimer.