Alan Press teaching a class on Wills to Illinois State Bar Association lawyers

Alan Press will be instructing a session on Wills to other lawyers at the Illinois State Bar Association Basic Estate Planning Bootcamp on April 25, 2013 at the ISBA Regional Office in Chicago. To register, follow this link: http://www.isba.org/cle/2013/04/25/estatebootcamp

Choosing Guardians for Minor Children

Many parents struggle with the idea of naming a guardian for their minor child(ren). This is understandable, as it is probably the hardest part of any estate plan from an emotional standpoint. Many clients like to separate the guardian from the trustee to achieve a system of checks and balances between the two. The guardian would have to work with the trustee to develop a budget and make sure that the needs of the child(ren) are being met.

Other clients name a single person to handle both jobs. There is no right or wrong answer. It depends on your own feelings, comfort level, and the people that you may have available to fill those positions.

Also consider contingencies. For instance, your sibling and her spouse may be a great choice, but what should happen if they are divorced? What happens if they move out of the area?

It is difficult to cover every possible contingency, but covering some of these potential issues in advance may be very helpful.

Why You Should Have an Estate Plan, and What Happens if You Don’t

Register now for a FREE webinar that will go over why your family needs an estate plan. This webinar will be presented by nationally renowned spear, Randy Gardner, J.D., LL.M., MBA, CPA, CFP®

This webinar will take place on March 22, 2013 from 1:00 p.m. to 2:00 pm CST. Click on this link to register now: http://www.estateplanning.com/Family-Estate-Planning/

American Taxpayer Relief Act of 2012 and Estate Tax

The American Taxpayer Relief Act of 2012 ("ATRA") contained several provisions related to the estate and gift tax. The hi-lights are as follows:

• ATRA provides for a “permanent” $5.25 million (inflation-adjusted) exemption for gift, estate, and generation-skipping transfer (GST) tax. This provision will not "sunset" and is permanent. (unless a new law would change it in the future) This provision prevented  the exemption from reverting to $1 million.
• ATRA implemented a permanent 40% gift and estate tax rate, up from 35%.
• ATRA provides a permanent portable exemption between spouses, allowing the surviving spouse to make an election to take advantage of any unused portion of the estate tax exemption of the predeceased spouse. ATRA does not allow the GST tax exemption to be transferred to a spouse.

Make Sure You Understand Your Estate Plan

I have met with several widows and widowers over the past few weeks that have been surprised by the mechanics and requirements of their own living trust plans after the recent death of their spouse. These plans were drafted and prepared by other attorneys. It is imperative that when you create an estate plan, you fully understand what will happen when either you or your spouse dies or becomes incapacitated.

When drafting estate plans, the experienced estate planner has no problem understanding the plan he or she created. Unfortunately, many of the clients are confused or don't bother to consider the real-life consequences of what they are signing. When it becomes a problem, it may be too late to rectify.

There is nothing wrong with an attorney explaining in lay terms portions of your estate plan that are necessarily complex and you relying on those explanations. However, if the explanations are unclear, you must insist that the estate planning attorney spend some extra time with you so that you are comfortable and that you understand what will happen when things in your life change. Insist on clarification.

Picking Agents For Your Powers of Attorney

In Illinois, many estate planners use the Statutory Short Form Powers of Attorney for Property and for Health Care. This is usually a wise choice, as the forms are easily recognizable by financial institutions (for the Property POAs) and health care providers (for the Health Care POAs).

A request that I frequently receive is to have multiple persons act as co-agents under a power of attorney. The form does not allow for co-agents, and with good reason.

One of the major reasons to have a power of attorney is to appoint an individual to be your decision maker if you are unable to make decisions for yourself. Appointing co-agents would complicate matters, particularly if the co-agents cannot agree. This may render your power of attorney form useless.

There is no problem with naming successor agent(s), but only one may serve at a time. Also, there is no problem having different agents under your Property POA and Health Care POA. If you are married, you do not have to list the same agents as your spouse.

Leaving Your Assets to Your Adult Children in Trust

When designing an estate plan for clients with adult children, it is common that I am asked to make the distribution to kids upon the death of the parent(s) outright and free of trust. This is true when the  parent(s) consider the children to be mature and fiscally responsible.

Unfortunately, a valuable planning opportunity is lost with this type of set-up. Why not consider leaving the funds to the adult children in trust and allow them to receive income and principal as needed? You may even make them co-trustee or sole trustee of their own trust!

You may ask "What's the point, then?" and the answer would be that leaving the assets to your children in trust, even one that they may control, provides valuable protection for the children in case of creditor problems or divorce.

Consider this type of planning and you will be providing a valuable benefit for your children.