Think of all the pieces of your life. Your business. Your home. Your financial accounts. Your debts. Your treasured heirlooms.
Thinking about it all at once like that, it can seem somewhat overwhelming, right? Well, now imagine that you’re acting on behalf of someone else, taking care to ensure that their last wishes are respected while also struggling to find important documents, deal with courts, and take care of expenses.
Fortunately, you don’t have to put your friends and family in this position! Creating an estate plan now will help set up your loved ones and beneficiaries for a smoother transition down the line. But what goes into an estate plan? What will need to be considered, and what do you actually have to do?
To have an effective and workable estate plan in place, you’ll want to consider:
1.) Distribution of Assets
Before you pass away, one of the most important things you can do is to make sure that your remaining assets and property will be passed along to your friends and family as you would have liked. Not only will this protect your peace of mind, it will make things easier for your loved ones in a time that is sure to be marked by stress and sorrow.
To help ensure that your wishes are respected, you will want to create a last will and testament. Having this document in place will let you state who you want to inherit which pieces of your property, and help provide important directives for special circumstances (such as passing along guardianship of your children to a new party, for example).
In many ways, your will acts as the bedrock for all other aspects of estate planning; it is where you name your executor, and can be used to help provide guidance when it comes to navigating your accounts or locating other important documents pertaining to your estate.
2.) Long-Term Care
While most of us don’t wish to think about it, the reality is that we can become seriously injured or otherwise incapacitated, at just about any time. It’s vitally important that you have incapacity and long-term care plans in place.
This should include a living will (or declaration), which will allow you to dictate your end-of-life wishes should you become incapacitated or otherwise unable to express your wishes clearly. You’ll also want to consider making your final arrangements clear (i.e., do you intend to donate your organs? Would you prefer to be buried or cremated?)
You’ll also want to be proactive when it comes to considering things like insurance, long-term care expenses, and funeral costs, which can all pile up in a relatively short span of time.
3.) Powers of Attorney
Along with your advanced healthcare directives, you may want to name a durable power of attorney for healthcare and a durable power of attorney for finances.
For healthcare, granting POA will allow an individual to make treatment and care decisions when you are incapable of doing so on your own.
Similarly, when you name a POA for your finances (also called an agent- or attorney-in-fact), you will be granting a trusted individual with the authority to deal with your finances and property if you become incapacitated or otherwise unable to handle your own affairs.
4.) Probate Avoidance
Often (though not always), the death of an individual triggers probate, a process which brings in the courts to ensure that all property is properly distributed, in accordance with the decedent’s wishes and in line with all state and local laws.
This process can drag on and prove costly, particularly when there’s room for claims and disputes to crop up. The good news is that it’s not always necessary – and that there are plenty of steps that an individual can take to help their loved ones avoid the hassles of probate in the future.
For instance, you may want to consult with a professional about the pros and cons of setting up a revocable trust, which, in essence, grants ownership of certain property to a trustee, separating it from the rest of the estate and allowing it to bypass probate.
Similarly, in Illinois, you can name a death beneficiary for many financial accounts, securities, and other assets; when you set up this arrangement, your stated beneficiary can claim the money or property directly when you die, without having to go through probate, allowing them to access your assets much more quickly.
The bottom line? In Illinois, having a well-crafted and thoroughly documented estate in place is one of the most important things you can do to protect yourself, your assets, and your loved ones in the good times and the bad. To further discuss your unique circumstances and personal questions, don’t hesitate to get in touch!
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