Frequently Asked Questions about Estate Planning
Answers from an Experienced DuPage County Estate Planning Attorney
Estate planning can be a complex area of law. At AvoidProbate, many of our clients know they want to protect their family’s assets, but they aren’t sure how. We offer free consultations with our DuPage County estate planning attorney to help you find answers to your questions and solutions that will protect your family’s wealth following your passing. However, there are some questions our clients regularly ask, so we have provided those answers below.
What happens if I don't have an estate plan?
Without an estate plan in place, the survival chances of your assets will depend on how they were initially set up. For example, assets like retirement plans and life insurance require named beneficiaries so that all the included property will pass directly to those beneficiaries. Other assets might be in joint name with someone else, such as spouse or child, so they will also be passed on without any trouble.
However, for assets only in your name or without any stated beneficiary, they will pass to your estate. In this case, your will declares where they will go. If you do not have a will, the state will determine how the asset is distributed.
What's the difference between a will and a trust?
Not much. Both are just documents—one is titled a "will" and the other is titled a "trust." A will names an executor while a trust names a trustee. The main difference between the two is what is done with each of them once they are signed.
Wills are declarations while trusts are establishments. Wills sit in a drawer until they are needed while trusts can gain more property without having to undergo any fundamental changes. For example, you can title your assets under a trust, such as with recording a deed of real estate ownership and having its containing county transfer it into your trust. The property will not be owned by you, but by the trust, and you (or whoever you choose to name) will be its trustee.
Financial vehicles like investments or bank accounts can be retitled in the name of a trust as well, protecting them from probate and excess taxes at your passing. A trust can even be the beneficiary of life insurance and retirement accounts, but you should only do so with the help of an experienced DuPage County estate planning attorney.
How do I avoid probate?
Probate is worth worrying about. If you do not effectively secure your estate before the time of your passing, it could be liquidated to pay off debts and taxes you did not even know existed. To avoid probate, you should review all your assets—real estate, bank accounts, investments, etc.—and make sure each of them has a named beneficiary.
With assets such as retirement plans and life insurance, this is easy: simply ask the custodian or insurance company for a change of beneficiary form.
For all other accounts, we have two options:
- Ask the company holding the account for transfer on death (TOD) or payable on death (POD) form. This option avoids probate but does nothing for periods of incapacitation. It also does not protect young or vulnerable beneficiaries from wasting their inheritance.
- Retitle the account/asset in the name of a living trust
For more information, call (708) 367-3272 now.