Estate Planning
Estate planning is a process whereby a person's objectives for management and disposition of his or her property are analyzed and action is taken to accomplish those objectives. After the objectives have been defined, documents are prepared and property is transferred to put the plan into effect. A Will is almost always drafted as part of agreements. The agreements may also include beneficiary designations for life insurance and deferred compensation benefits, living wills, and powers to sell agreements. Sometimes there is a restructuring of the basic business entity through corporate recapitalizations, the creation of partnerships, or the establishment of a pension or profit sharing plan.
Wills
A Will is a document that controls the disposition of a person's property at death. Each state has formal requirements for a Will. For example, in Illinois:
- The maker of a Will must be 18 years old and be of sound mind and memory.
- The Will must be in writing.
- The Will must be signed by the maker and must be witnessed in the special manner provided by law.
- Two witnesses are required in Illinois. (Persons who are beneficiaries under the Will should not serve as witnesses.)
After death the Will is presented in court, and after being proven valid, it becomes effective and the provisions thereof are carried out. A Will may be revoked or changed at any time before the death of the maker. To be effective, changes must be made strictly in accordance with legal requirements. A change in a Will is often made by an addition called a "codicil."
Probate Administration
WHAT IS A PERSONAL REPRESENTATIVE?
A personal representative is the person or entity who manages the decedent's estate. Executors and administrators are types of personal representatives. If the decedent left a Will (referred to as dying "testate"), the person who administers the estate is called an executor; if the decedent left no Will (referred to as dying "intestate"), the person is called an administrator and is appointed by the court to manage the estate.
WHO SERVES AS PERSONAL REPRESENTATIVE?
An executor is nominated by the decedent in his or her Will. An administrator is nominated, generally by the decedentís family. One or more individuals or a bank or trust company, or a combination may be named. An administrator must be a resident of the United States of America, but need not be a resident of Illinois. Each executor or administrator must be approved and appointed by the court.
Joint Tenancy
Joint tenancy with right of survivorship is a useful tool for holding title to property and for planning the transfer of that property after one's death. Joint tenancy is probably the most common form of ownership for residences and bank accounts between husband and wife. It is used less frequently with other family members. The fact that joint tenancy is widely used does not mean that everyone fully understands it.
Living Trusts
A trust, generally, is an agreement where one person (the trustee) holds and manages property for another (the beneficiary). If you create a trust under your Will, it is called a testamentary trust. If you create a trust while you are alive, it is called a living trust, sometimes called an "inter vivos trust." The living trust is a vehicle for managing your property during your lifetime and passing it on to your beneficiaries at death without probate.
Powers of Attorney
The living trust is usually the best way to provide someone to manage a person’s property and the payment of his bills during disability. The power of attorney is a simple device that may serve that same purpose. In concept, the power of attorney creates a form of agency. The person named as "attorney-in-fact" has power to act as your agent for whatever purposes are specified in the document that appoints the attorney-in-fact. (The attorney-in-fact need not be a lawyer- the word "attorney" in this sense means "agent.")