Urgency of Estate Planning
Naperville Wills and Trusts Attorney
I recently received an interesting phone call from a person who needed to speak with me—she said that it was urgent. I hear this all the time, so I thought it was a sales call or a creditor of one of my probate clients. It turns out that a former client of mine—I will call him “Jack” for the purposes of protecting his privacy—had died of a heart attack the night before. The call was from Jack’s estranged wife who was battling him in divorce court. She was upset and panicking, and the reason for her call was to find out if Jack had a will and whether I knew about any life insurance Jack may have had.
Unfortunately, my answer was “no” on all accounts. Jack was a regular person in his mid-forties. He worked hard and stayed busy, but this former client did not even have enough money to finalize his contested divorce. Jack, unfortunately, left behind very little.
A Real Estate Example
On the same day that I received the call from Jack’s wife, I addressed another urgent matter as well. I regularly draft and review real estate documents for a small title company. One the that company’s financial institutions had a client who lost an ex-fiancée—after she had co-signed a mortgage with the client. For privacy reasons, I will call the client “John” and the deceased co-signer “Becky.”
Unfortunately for John, he had titled his primary residence as a “Tenancy in Common.” Tenancy in Common is a type of ownership that gives two or people interest in a piece of real estate. That interest is then passed to heirs in the event of the death of the original owner. Under Illinois Probate Law, when a person with no will and no spouse or children dies, the decedent’s parents and siblings will split the decedent’s estate. In John’s case, Becky was survived by her parents and two sisters, meaning that four heirs had claim to her half of the property that she co-owned with John.
John’s major problem was that he wanted to refinance his property with the financial institution, but there was now a serious title issue. Becky died about years ago, but John only just found out about it. Now, however, John had a mortgage on the home and he could not sell the property without the four heirs signing an affidavit of heirship or going through the Probate process. The naïve approach was to assume that Becky’s heirs would be willing to execute the affidavit of heirship and a quit claim deed to John without expecting compensation. One could even argue that was the right thing to do since John and Becky had secured the mortgage together without being married.
John had been hoping to refinance his mortgage so he could use his home’s equity to pay off his credit card bills. None of this can happen unless his ex-fiancée’s signs over their interests in his property. Moreover, John now faces the prospect of hiring a probate litigation attorney to resolve the issue—which may be impossible because John does not likely have the money to cover the costs of a protracted legal battle. John may face the same problem that many other people face every day: they have real estate, personal property, and/or other assets that they cannot make full use of because they either cannot afford the legal fees to solve their issues or because they decide that the rewards are not worth the risks and costs. Simply put, real estate and/or other assets that could be rightfully owned after Probate goes unclaimed quite often. This is just one of the potential costs of having an inadequate estate plan or not having one at all.
Components of a Solid Illinois Estate Plan
A solid estate plan consists of at least four estate planning tools. The first is a Living Trust, otherwise known as a Revocable Living Trust. A Revocable Living Trust is an estate planning strategy that avoids probate court because the assets of the person are owned by a Living Trust and not the individual themselves. A Living Trust is a powerful estate planning tool because it involves incapacity and death planning. The second estate planning tool is a Pour Over Will. A Pour Over Will is like a Last Will, but instead of being the only death planning document, the Pour Over Will transfers all a person’s assets to their Living Trust. Thus, a Pour Over Will transfers a person’s property upon their death to their Living Trust. A Pour Over Will is designed for assets that may not have had a beneficiary or failed to be transferred into the Living Trust’s name. The Pour Over Will is a contingent plan to address an unexpected event.
The third estate planning document is called a Durable Power of Attorney for Property or an “Illinois Statutory Short-Form Power of Attorney for Property”. For simplicity purposes, we will call this document the “financial power of attorney”. A financial power of attorney appoints an agent to make financial decisions for a person in case of an emergency or incapacity. Generally, there is a springing provision which appoints the attorney-in-fact or agent to make financial decisions in the case of an incapacity determined by a physician. One of the common traits of a failed estate plan is failing to provide a contingency plan in case the first one or two beneficiaries or agents are deceased or unavailable for any reason.
The fourth type of estate planning document is called a “Durable Power of Attorney for Healthcare or an Illinois Short Form Power of Attorney for Healthcare.” For simplicity purposes, we will call the final estate planning tool as a “Healthcare Power of Attorney”. A person appoints an agent or attorney-in-fact to make health care decisions when they are incapable of making their own healthcare choices. Generally, a Living Will may also be created in combination with a Healthcare Power of Attorney. Again, the Healthcare Power of Attorney has a springing provision which requires a physician to state that the person lacks the mental capacity to make their own healthcare decisions.
An Aurora Estate Planning Lawyer Can Help
People often procrastinate and find reasons to delay making an estate plan. I am reminded daily of the urgency of planning now. It is not uncommon for young or middle-aged people to die prematurely, and estate planning allows you to put your financial affairs in order.
Sean Robertson and Robertson Legal Group, LLC are passionate about helping people with their estate plans. Creating an estate plan is an example of love. Family members and loved ones suffer when a person dies unexpectedly, and a failed estate plan only adds to their problems. Instead of grieving the death, a family member may be calling an attorney’s office desperate for answers, and the answers are not always good news.
A graduate of DuPage University College of Law and the University of Illinois at Urbana-Champaign, Sean Robertson has more than 14 years of experience as an estate planning and asset protection attorney. He concentrates in assisting families with Wills, Trusts, Special Needs Trusts, and Powers of Attorney. Contact our office by calling 630-882-9117 today.