Estate Planning During and After Divorce

Divorce can be a painful and difficult process for you and your family. Once the big decision to go separate ways has been made, there are more decisions and seemingly endless paperwork separating and re-titling assets, selling or refinancing the family home and/or relocating to a new one, custody issues if there are minor children, college expenses for older children... These tasks and more must be completed to be able to move on with your lives.

Often forgotten after everything is settled are changes that need to be made to your beneficiaries and estate planning documents. No matter how well your relationship is with your ex-spouse, most people would agree that their ex-spouse is the last person they want to inherit when they die or to have that person make life and death decisions for them. Unfortunately, that is exactly what can happen if your estate planning documents are not updated. Below is a list of items to review and update to ensure that the correct person/people are named.

Beneficiaries on Retirement Plans and Insurance Policies

Even if you never created an estate plan while you were married, you may likely have a retirement plan or life insurance policy.  Many times the named beneficiary on those accounts is your spouse. After a divorce, your spouse is not likely the beneficiary you would like named unless required pursuant the divorce decree.  As these plans are contracts, the named beneficiary benefits upon your passing unless you update the policy or plan documents accordingly.  

Power of Attorney for Healthcare and Property

As most people will not want their former spouse to have authority over end-of-life decisions or access to medical records it is, therefore, important for someone going through a divorce to update their power of attorney documents.  Most importantly for someone going through a divorce or soon thereafter, is to make sure their power of attorney for property is updated.  The POA for property could allow an ex to have access to bank, brokerage and retirement accounts, or possibly make financial transactions without your consent.  If a client does not have a health care or property POA, it is encouraged that they prepare one so that they can name a trusted individual.

Executor and Trustee
Similar to your health care and property POA documents, revising your will and revocable trust should be at the top of your list.  Most people probably don't want to leave everything to an ex-spouse and will want to revise their will and trust to provide for their children, parents, siblings, and/or charities.

The ex-spouse is also likely named as Executor and Trustee in these documents,  you will want to name someone else for these positions as well as naming a guardian and successor guardian for your children.

It is important to review and update your estate planning documents accordingly after a life-changing situation. If you would like to have one of our attorneys review your current estate plan or if you have any questions, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

Protect Rental Property Assets with an LLC

Real Estate has always been considered a safe investment since the supply is finite and the demand grows with the population.  Even though we have seen some swings in the real estate market over the past decade, the theory still is held true by many.  Purchasing a rental property is a common investment as individuals look to diversify their portfolio with reducing their risk in the stock market. Oftentimes individuals will buy their first home and keep it as a rental when they purchase their next home.

One downside to owning rental property is that you are at the risk for the liability arising out of any accident that might occur on your property.  If the property is in your name alone, a lawsuit could expose your other assets to this risk.  This is why it is advisable to place rental properties into a limited liability company ("LLC") to limit the liability exposure.  Having an LLC provides an owner with a legal veil that will usually protect the owner's other personal assets from legal claims and limit what could be recovered in a lawsuit.

Most states have enacted Limited Liability Statutes.  Since LLCs are governed by state law, it is important to understand the filing and annual reporting requirements within the state and how to effectively transfer title of the assets into the LLC.

An LLC has the advantage of pass-through taxation.  This means that the LLC will file either as a partnership if there are 2 or more members (owners) or report the earnings directly on your individual tax return (Schedule E) if you are the sole owner. This avoids double taxation as corporations have to file a corporate tax return and then each individual owner files his/her earnings on an individual return, resulting in double taxation.  You can avoid this by forming an LLC.

If you have any questions about business entities and tax and estate planning, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

Illinois Probate law Frequently Asked Questions

The probate process can be confusing and complicated for many who are trying to navigate issues that may come up at the end of the life of a loved one.  A good probate attorney is one who is willing to walk a client through the process, address common issues and assist with strategic planning for an estate. Below are answers to common questions that we receive from clients who are attempting to understand the probate process in Illinois.

What is Probate?

Almost everyone leaves assets behind when they pass away.  Some individuals will plan extensively for the distribution of their assets, while others leave little direction behind.  The process to determine the distribution of assets after someone's passing is called probate.  Whether there was a Will or not, legal assistance can help tremendously when going through this process.

How Long Does Probate Take in Illinois?
Every case involves different sets of facts and circumstances so there is not a standard timeline for probate proceedings.  Thankfully, we do have an approximate minimal time period as Illinois law requires the executor or administrator of the estate to file notice to creditors and run an official notice in a local newspaper.  Upon such notice, creditors have six (6) months to file claims.  Once the six month period expires, if there are no other matters before the probate court, the estate may close.

When is Probate Required in Illinois?
Probate is not always required in Illinois, and when it is required it is determined by the amount of property being passed through the estate*. However, probate is not required for assets like life insurance, retirement accounts and other assets that have assigned beneficiaries.  These types of assets go directly to the named beneficiary after the decedent's death.  

*If an individual passes away with real and personal assets that are greater than $100,000 in value, the estate must go through probate with a judge overseeing the distribution of the assets.

What is a "Small Estate" in Illinois?
Under 755 ILCS 5/25-1, there is an exemption for smaller estates in Illinois to avoid probate.  If an individual passes away with assets under $100,000, the use of a Small Estate Affidavit may allow a representative of the estate to collect assets and pay creditors without the need of going through the probate process in court.  It is important to seek advice as without the probate process and notice to creditors, creditors may have up to two (2) years to file claims against the estate.

How to Avoid Probate in Illinois?
Many individuals think having a Will will help avoid the probate process.  While it may help make the probate process proceed a little faster, it does not avoid the probate requirement.  Individuals may plan to put assets in joint accounts with individuals they would like to inherit their assets or name beneficiaries on certain accounts.  Another common planning technique is titling assets in a Living Trust in combination with a Will.  Discussing a Trust with an attorney will help to understand the process of retitling assets and making sure that the objectives of the estate plan are met.

How much will the Probate Process Cost in Illinois?
There are numerous variables in the probate process so the total cost will vary case by case.  There will be certain fixed costs of the probate process such as filing fees and Notice to Creditors; however,  the planning put into place by the decedent may help reduce the time and expenses needed to administer an estate. Discussing the process with an attorney beforehand and understanding the requirements and potential issues will hopefully provide you with an approximate cost.

What does "Testate" and "Intestate" mean?
In Illinois, if someone passes away with a valid Will at the time of their death, then that person is said to have died "testate" and their assets will be distributed according to their Will.  If someone passes away without a Will, then they are deemed to have died "intestate" and their assets will be distributed according to the laws of Illinois under the intestacy statute 755 ILCS 5/2-1

What are "heirs" and "legatees"?
If a decedent leaves a valid Will in Illinois leaving assets to a specific person, then that person is referred to as a "legatee".  If an individual is inheriting under the laws of intestacy in Illinois or by relation to the decedent, then that person is considered an "heir".

How are Creditors Paid after Death?
A decedent's final expenses must be paid before their assets may be distributed to beneficiaries. The creditors are paid from the estate's assets and those assets alone. There is no liability on the executor, administrator or heirs personally.  If the estate goes through probate, creditors have up to six (6) months to make claims under 755 ILCS 5/18-3 on the estate as long as notice is properly given.  If the estate does not go through probate, creditors have up to two (2) years to make a claim.

Once claims are filed, they are paid in order of priority under 755 ILCS 5/18/-10.
1.  Funeral and burial expenses, statutory custodial claims, and expenses of the administration;
2.  Surviving spouse's award or child's award;
3.  Debts due the United States;
4. Money due employees of the decedent of not more than $800 for each claimant for services rendered within four months prior to the decedent's death and expenses attending the last illness;
5.  Money and property received or held in trust by decedent which cannot be identified or traced;
6. Debts due the State of Illinois and any county, township, city, town, village or school district located within Illinois; and
7.  All other claims.

How is Property Transferred in Illinois after Death?
Once all claims and expenses have been paid, then the estate may begin distribution to the heirs and legatees of the decedent.  The distribution may also be delayed if assets need to be sold such as a home or other property in order to allow for distribution to the heirs and legatees.

If you have any questions about probate or creating an estate plan, please feel free to contact Glick and Trostin, LLC at 312-346-8258. To read more about essential estate planning documents, please click here.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice.  Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein.  No one should rely upon the information contained herein as constituting legal advice.  The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.