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Robertson Legal Group, LLC

Kendall County Estate Planning Attorney for Life Insurance

Kendall County Estate Planning Attorney for Life Insurance

Robertson Legal Group, LLC concentrate in the areas of wills and trusts and wealth management. Robertson Legal Group, LLC focuses on estate planning and asset protection in Kendall County and Yorkville, Illinois serving Oswego, Yorkville, Plano, Newark, Bristol, Plattville, Plainfield, Joliet, and Montgomery. 

Life insurance death benefits are a major consideration in the areas of estate planning.  Typically, there are two (2) types of life insurance plans.  Term life insurance is for a specific period and provides a death benefit upon the beneficiary’s death.  Unlike whole life insurance, term life insurance does not provide guaranteed cash value accumulation nor earn dividends from the life insurance company.  Whole life plans enable a person to build cash value and whole life insurance policies are an excellent asset protection tools for professionals because whole life insurance policies are exempt from creditor’s claims in the State of Illinois.  Whole life insurance plans also provide payment of dividends and allow loans against the cash value accumulation.

A person names a primary beneficiary, which is a person or persons, who are the receivers of the life insurance death benefits upon a death.  A primary beneficiary is the first choice to receive life insurance proceeds of the life insurance owner.  A contingent beneficiary is the second choice of the life insurance owner to receive the life insurance death benefits.  If the primary beneficiary or contingent beneficiary(ies) die(s) before the life insurance owner, then the life insurance proceeds will go to the next designated beneficiary. 

One of the goals of estate planning is setting forth a game plan for how life insurance death benefits should be paid.  Often, the primary or contingent beneficiary(ies) will have deceased prior to the life insurance owner.  This creates ambiguity and ambiguity creates conflict.  When life insurance death proceeds lack a contingent beneficiary, a probate proceeding may be necessary. 


Life insurance mistakes are costly and designating beneficiaries can cause heart break and family chaos.  There are six (6) common mistakes in life insurance proceeds when naming individuals as the primary or contingent beneficiary.  The first mistake is naming a child or disabled adult who is eligible for government benefits such as Medicaid or social security disability.  Naming a special need’s child as the beneficiary of a life insurance policy has unintended consequences.  A beneficiary’s eligibility of government benefits may be jeopardized.  Government assistance programs have a $2,000 in assets threshold.  Disabled adults who receive a gift or inheritance greater than $2,000 may be disqualified from Supplemental Security Income and Medicaid under federal law.  Medicaid is a federal program administered by the states such as the State of Illinois.  Medicaid also provides health insurance benefits for minor children, such as a person’s grandchildren when a person cannot afford to provide health insurance themselves.  The disabled person or recipient of Medicaid must be eligible to qualify for this federal based program.  There are exempt and non-exempt assets.  Assets such as a home, where one resides, is an example of an exempt assist in the State of Illinois.  Working with a qualified estate planning attorney is beneficial because he/she understands the complex rules and regulations involving different types of trusts.  One type of trust, a Third-Party Special Needs Trust, or otherwise known as a “Supplemental Needs Trust”, is a way to leave a gift or inheritance to a disabled adult and to maintain their eligibility for government benefits.  A Supplemental Needs Trust supplements government benefits such as Medicaid rather than disqualifying those government benefits.  A Supplemental Needs Trust protects inheritances, of a special needs child and protects the child from disqualification of Medicaid.  Generally, the Supplemental Needs Trust supplements and provides expenditures that the government program does not authorize, such as the purchase of a car or a condo for a disabled adult. Unlike naming individual beneficiaries, the idea behind a Special Needs Trust is to provide a flexible plan to serve the needs of a special needs adult and maximize protection of their assets.


 The second mistake is naming a minor child or children as the beneficiary of a life insurance policy.  Life insurance providers such as Met Life and Northwestern Mutual will not pay insurance death benefits directly to minors.  Parents name each other as primary beneficiaries and do not anticipate their early death or that they may die in short periods of each other such as in a car accident.   Moreover, single parents designate their minor child or young adults as their primary beneficiaries without understanding the financial consequences of such decisions.  These scenarios cause problems because minor children cannot inherit life insurance benefits in the State of Illinois (and in most states).  Furthermore, parents do not want their immature and young adults to receive a large inheritance.  This can be a recipe for a disaster.

Another consideration is new born or adopted children.  A well-thought out estate plan can automatically provide for new born or adopted children.  Parents fail to update their life insurance and wills in a timely manner.  Life insurance is a source of financial support that is intended to pay for college, payment of death and estate taxes. Life insurance is used to provide funeral expenses and payments towards one’s house.  An inexperienced adult child may lack the financial understanding of a mortgage or house payment. 

Most people designate beneficiaries of their life insurance policies to individuals.  This can be problematic for several reasons.  First, individual beneficiaries may be deceased or have developed special medical issues where protecting life insurance creditors from nursing home and creditor concerns is a major issue.  Second, minor children should not be a direct beneficiary of life insurance.  Minor children inheriting assets, such as life insurance, will force families to undergo guardianship proceedings which can cause conflict and be expensive.  A guardianship procedure is a type of probate court proceeding which requires a lawyer and yearly accounting of assets.  Third, families fail to designate responsible guardians for their children.  The role of a guardian is twofold.  The first type of guardian for minor children is a guardian of the person.  A guardian of the person is like a parent without spending ability.  The guardian of the person makes education and parent related decisions such as healthcare decisions.  The second type of guardian is a Guardian of The Estate.  A Guardian of The Estate is responsible for management of finances and financial decisions.  A guardian must provide an accounting to the probate court.  Probate court is complicated and likely requires a probate attorney.  Guardianship court provides supervision over the estate and major decisions must be approved by the court.  Court costs thousands of dollars in attorney’s fees and court costs, and is a hassle. Guardianship court also results in family conflicts over money and increases the likelihood of family disputes.

The third mistake is people may unknowingly designate former spouses as their primary beneficiaries.  Failure to update your life insurance policy leads to unintended consequences.  Updating your last wills and trusts are important because failure to update beneficiaries or deceased individuals can cause significant pain.  Owners of insurance policies should update their policies upon major life events, such as divorce, marriage, having a child or children, and/or a disability of one beneficiaries.  Nursing home asset protection is a big area now and protecting one’s inheritance from nursing home care is a major goal now as well.  Failure to update policies, especially if you have a blended family or step children, causes major conflicts and creates negative consequences. 

The fourth mistake is naming only a primary beneficiary.  This is a major mistake because a lack of a beneficiary causes probate issues.  Probate is the court which decides how the inheritance should be distributed to beneficiaries.  Intestate succession is the law in the State of Illinois which determines how an asset should be distributed when a person has no will or any legal plan in place. Estranged family relationships can cause problems in probate court.  Money and assets bring out bitterness and unforeseen consequences.  Hiring a qualified estate planning attorney protects couples and individuals plan against their family conflicts and avoids estate litigation and disputes.  Neglecting key details and family conflicts is a major mistake that causes family disharmony and hundreds of thousands of dollars in attorney’s fees and court costs.  Most spouses fail to consider that it is possible that they may die before their spouse or beneficiary.  Moreover, naming multiple beneficiaries can cause problems if one of the beneficiaries is not alive.  Should the surviving beneficiaries split the inheritance equally or should the deceased person’s children, or branch of their family, receive their inheritance “per stirpes”.

The fifth mistake is failure to plan for natural conflicts in the family.  Many families have one adult child that resides with their parents.  A natural conflict often arises between adult children that are independent and an adult child that resides with their adult parents.  An experienced estate planning attorney understands this type of conflict and can develop an appropriate plan.  For example, a living trust can provide life insurance for the adult children and provide the home to an adult that resides with his or her parents.  This reduces the likelihood of a family dispute and creates a realistic plan to address a complex problem.  Another example is leaving a house to five (5) children and expecting five (5) children to figure it out.  A Living Trust can provide a plan for five (5) children to work together.  Furthermore, a Living Trust designates a successor Trustee who is responsible for spearheading the wishes of the creator of the living trust.


The sixth mistake is failure to plan for estate taxes, especially estate taxation in the State of Illinois.  Illinois has its own estate tax, which applies to a deceased person’s estate with a value of more than $4 million.  Families fail to consider that life insurance proceeds are a major asset.  In contrast to Illinois, the federal estate tax exemption is $11.2 million in 2018.  A credit shelter trust, also known as an “A/B” Trust enables a surviving spouse to maximize their estate tax exemption by automatically using their state and federal tax exemption.  The credit shelter trust utilizes each spouse’s state and federal tax exemption to protect one’s assets against estate and gift taxation


Another planning strategy is called an Irrevocable Life Insurance Trust or otherwise known as an “ILIT”. An Irrevocable Live Insurance Trust is created by a grantor or otherwise named a “maker”.  Irrevocable life insurance trust is irrevocable which means that a person cannot revoke, alter or amend their trust with certain limitations.  The Grantor or Maker picks a Trustee or co-Trustees to manage the life insurance proceeds.  Another part of an ILIT is beneficiaries.  One of the benefits of a ILIT is asset protection and estate taxation minimization.  Generally, a person’s life insurance proceeds are transferred to their Trust, with the Maker as the insured, and the beneficiaries of the ILIT as the beneficiaries.  The life insurance proceeds may pay for estate and administrative expenses upon a death, such as attorney’s fees, debts, probate costs, and income taxes.  A major concern for parents, now, is asset protection against their in-laws.  Second, their beneficiaries’ inheritance is protected from business lawsuits, divorce proceedings, child custody conflicts, and foreclosure lawsuits among other creditor concerns.  Parents can combine a ILIT with a bloodline trust which keeps a family’s assets and trust assets in the blood families name.  This avoids in-laws re-directing a parent’s hard-earned assets to their family members.


A Revocable Living Trust is a good alternative to a Last Will and Testament.  Parents should consider having a Revocable Living Trust; or known as a “Living Trust”, be the beneficiary of their life insurance proceeds.  In the Living Trust, husband and wife can name a guardian and decide whether naming one guardian is the best decision for their minor child or children.  Second, the parents can work with an estate planning and trust attorney to decide who is the best person, or family, to care for their children and manage the children’s inheritance upon the death of both parents.  Determining who will be the trustee of the minor children’s trust is an important decision.  Parents should pick a Trustee that is organized and is financially sound. 

Often, parents will not consider the possibility that their guardian or guardians may get a divorce or one person may die.  This is a major consideration because the parents may want their child or children to grow up in a two-parent household.  One of the advantages of working with an experienced estate planning and wealth management attorney is to anticipate the varied challenges that life will present to them and their minor children. 


Another benefit of a Living Trust versus a Will is the avoidance of probate and court procedures.  A Last Will and Testament is a public document and must undergo a court process called “probate court”.  Another benefit of a Living Trust is a spendthrift provision.  A spendthrift provision is a key term in a Living Trust providing beneficiaries creditor protection and, therefore, providing asset protection for their inheritance.  One of the many decisions parents are making, now, is considering incentives and bloodline trust to keep their family inheritance in their family.  Thus, parents are concerned that in-laws could change their estate plans and pass their wealth to the in-law’s side of the family.

We are a graduate of DePaul University College of Law and University of Illinois at Urbana-Champaign for his undergraduate degree.  Robertson Legal Group, LLC concentrate in the areas of wills and living trusts in the Naperville, Plainfield, Lisle, and Wheaton areas.  We are 44 years old and has years to grow with couples and adult children.  A major consideration when picking an estate planning attorney for many couples is whether the living trust lawyer will be around when their children will need an estate planning lawyer.  Sean may be reached at 630-780-1034 or via online contact form.


Robertson Legal Group, LLC offer a free initial consultation for families in the Yorkville and Kendall County areas such as Newark, Plainfield, Joliet, Oswego, Yorkville, Sandwich, Aurora, Shorewood, Plattville,  We are passionate about wealth management and estate planning and empowering individuals and families to protect their families hard-earned wealth and assets.  Sean provides responsive and personalized attention to families.  Sean may be reached at 630-780-1034 or via online contact form.

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