Charitable Giving with Taxable Retirement Accounts

More and more Americans have become better at putting money away towards retirement through 401(k)s, IRAs, and other retirement plans within their organizations.  Unsurprisingly, that means that come retirement, a large portion of an individual's wealth is held in tax-deferred accounts that create taxable income.  For those who are charitably inclined, there are options that individuals can utilize to reduce taxable income and to leave assets to charity or religious organizations while leaving other assets to family and friends that may not be taxable. 

Qualified Charitable Distribution ("QCD"): Once you have reached the age of 70 1/2, you can begin to make distributions directly from your IRA to a qualified 501(c)(3) charity.  By doing this, you can make limit the amount that would otherwise be taxed as ordinary income.  This would also be calculated in your annual required minimum distribution (RMD).  By utilizing a QCD, your taxable income would be lower and could also impact your Medicare premiums by reducing them in future years.

Charity Beneficial Designation:  If you wish to leave a portion of your estate to a charitable organization after your passing, you may be told to write those wishes into your Will or Trust.  Whereas, if you have a sizeable retirement account, it may be best to designate the charity directly as a beneficiary of your 401(k) or IRA assets.  This arrangement allows you to easily change charities you may wish to leave your assets to without the need to update your estate planning documents.  Secondly, you would be leaving taxable assets compared to a charity that is able to avoid taxation on the assets to leaving retirement assets to an individual that would be taxable to them on distribution.  This would allow you to leave the taxable, retirement assets to charities and leave other assets that would not result in income tax to individual beneficiaries.

Utilizing these two options allow you to give to your favorite charities while also obtaining tax benefits for yourself and to your heirs. 

If you have any questions about 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.

A Simple Estate Plan with the Use of a Transfer on Death Instrument (TODI)

The largest asset that most individuals possess during their life is their residence.  Over the years, your residence may have been where you raised your children, shared family holidays, and spent money improving and repairing. 

When the main asset in your estate is real property, it oftentimes requires a probate estate to be opened in order to transfer the property to heirs or beneficiaries under a Will.  This can be costly and time-consuming for many families.  Thankfully, in Illinois, we have the option to create a Transfer-on-Death Instrument ("TODI") for real property that easily conveys ownership of the property on the owner's death to named beneficiaries. 

The TODI can be an effective substitute for a will or trust if a residence will be the main asset of an estate.  As long as the TODI is signed with the formalities of a Will (two witnesses and notarized), the TODI is effective once recorded with the County of the real property. Upon the death of the owner, the beneficiary then has to record a "notice of death affidavit and acceptance."  

With the use of a TODI, the transfer of the real property can be less complex and less costly than using a Will or Trust.  It is also revocable if the owner changes his/her mind and wishes to sell the property at any time.  

If you have any questions about preparing an estate plan, 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.

5 Reasons to Review Your Estate Plan

If your estate plan or your parent’s estate plan hasn’t been reviewed in the last few years — or the last twenty years — it’s time to review your estate plan — sooner, not later. Rather than fix a messy situation after death, it is best to work with an estate planning attorney to review your estate plan with you now. The following 5 reasons help explain why older documents may no longer work to achieve your or your parents’ wishes.

1. Stale documents are disliked by financial institutions. If a power of attorney is more than eight years old, don’t expect it to be received well by a bank or brokerage house. The financial institution will probably want to get an affidavit from the attorney who originally created the document to attest to its validity. A regular review and refresh of estate documents allow for the document to remain current as well as confirm that the individuals named as agents and their contact information.
2. State laws change. Changes to state laws alter how estates are handled. They may have a positive impact that could benefit you and your family, but they could also have a negative effect. If the will or trust hasn’t been reviewed in ten or twenty years, you won’t know what consequences new state laws have on your estate planning. More importantly, if the impact is negative, you won’t be able to take advantage of revising your estate planning to protect your estate.
3. Lawyers use updated language in estate planning documents. In addition to changes in the law, there are changes to language that may have a big impact on the estate. Many attorneys have changed the language they use for trusts based on the SECURE Act, which went into effect in 2020. If your parent has a retirement account payable to a trust, it’s critical that this language be modified so that it complies with the new law. Lacking these updates, your parent’s estate plan may create unnecessary increases in taxes, fees, or penalties.
4. Federal estate laws change over time. Recent years have seen major changes to estate law, from the aforementioned SECURE Act to current proposals to federal exclusions and gift taxes. Is your estate plan (or your parents) in compliance with the new laws? If assets have changed since the last estate plan was written, there may be tax law changes to be incorporated. Are there enough assets available to pay the taxes from the estate or the trusts? 
5. The decedent’s wishes may not be followed if documents aren’t updated. Over time, individuals die, people get married, children and grandchildren are born, and relationships change.  If an individual's wishes are not updated in their estate planning documents, the inheritance may go to individuals that are no longer in the person's life or may leave out important people. 

We recommend that our clients review their estate plans with us every three years. This way we can ensure that their estate plans will continue to meet their goals. 

If you have any questions about 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.

 

Bright Start: A Primer on a 529 College Savings Plan

As children begin to return to school for the 2021-2022 academic school year, parents with children of all ages should know that it is never too early to begin saving for their children’s college fund. The Illinois Bright Start College Savings Plan is an excellent vehicle that offers tax breaks to encourage savings for college tuition.

The Bright Start College Savings Plan allows Illinois taxpayers to claim state tax deductions on contributions up to $10,000 for individual taxpayers and $20,000 for married couples filing their taxes jointly. An account owner can contribute $15,000 each year, provided that no other gifts are made to the same beneficiary that year.  It also allows tax-free withdrawals for higher education expenses at the federal and state level. This includes, among other things, withdrawals for tuition, fees, books, supplies and equipment, room and board, etc. There are narrow exceptions to this rule, however.

A contributing taxpayer does not have to be the parent of a beneficiary to open a 529 College Savings Plan. The program has no limitations with respect to who can open accounts. Therefore, if you are a grandparent, relative, or even a friend to a potential beneficiary, you are able to open a 529 College Savings Investment Account for that individual. There are also no income limitations to individuals opening these accounts, so you can open an account no matter what your income level may be for tax purposes.

If you have contributed to the 529 Savings Plan and your beneficiary decides not to enroll in higher education, you do have options. For one, you could change the beneficiary to an individual who intends to enroll in higher education or you can withdraw the funds from the account. Keep in mind that if you were to withdraw these funds, the amount would be subject to federal and state income taxes, plus a 10% penalty.

The Bright Start contribution is simple and easy to use. You can contribute via an automatic investing plan which allows you to have a fixed amount automatically debited from your account on a periodic basis. You can also choose to make a lump sum one time deposit of up to $75,000[1], or have a payroll deduction taken straight from your paycheck each pay period. Additionally, if you are new to Illinois but have a 529 College Savings Plan already established in a different state, Bright Start allows you to roll over the funds from the out of state program to the Bright Start 529 account and keep all of the funds, while potentially earning an Illinois state Income tax deduction by rolling over.

For more information and to open your 529 College Savings Investment account, you can visit www.brightstart.com.  They have a number of different portfolios that you can choose to enroll in. It is recommended that you complete the Risk Tolerance Questionnaire on the website prior to enrolling. This questionnaire will help determine how you would like to allocate your money and develop an investment plan going forward.

If you have any questions about the Bright Start College Savings Plan, 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.

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[1] Gift tax return (Form 709) reporting may be required.

Cook County Property Tax Bills Are Out. Check To Make Sure You Are Getting Your Exemptions

If you are a homeowner in Cook County, you should be receiving the 2nd installment of your property tax bill this week.  Like many other residents, you would likely want to see the tax amount reduced if possible.  One simple way to get a reduction is to ensure you are receiving the exemptions you are entitled to.  

The Homeowner's exemption (also known as Homestead Exemption) if you own your residence is given to property owners on their property tax bill.  Taxpayers whose single-family home, townhouse, condominium, co-op, or apartment building (up to six units) is their primary residence can save $250 to $2,000 per year, depending on local tax rates and assessment increases.

If you are over 65 years of age, you may also be entitled to the Senior Exemption or a Senior Freeze on your property taxes if your income is under the 

First, check to see if you have a homeowner's exemption by searching your property by PIN or address on the Cook County Treasurer's website.

You can also review the most recent 2nd installment of your property tax bill, it will list the exemptions at the lower portion of the bill and whether you received any exemptions for that tax period. 

Next, if you believe you are entitled to an exemption, you can obtain the exemption forms on the Cook County Assessor's website.  If you have lived in the property for a number of years and have not claimed the exemption, you can file Certificate of Error forms to request a refund for the Homeowners and/or Senior Exemptions for the years that you qualify.

Finally, if you are a new homeowner, you may not qualify for this year's homeowner exemption but put a reminder to file for the exemption next year.  This is also important for anyone soon to obtain the age of 65 so that they file to obtain the Senior Exemption.  

This exemption is not limited to Cook County or the State of Illinois.  Contact your local Property Tax Assessor or Treasurer to confirm that you are receiving all credits for being a homeowner in your state.

If you have any questions about 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.

Find Money That You May Not Have Realized You Were Missing

Finding money in a coat pocket is always a nice surprise, but what if you found that you could search the internet to locate lost assets?  Most states have an unclaimed property website that allows you to search your name to determine whether you may have property that the state is holding for you. Illinois is currently holding $3.5 billion in abandoned assets that are unclaimed by its residents. 

It is a good practice to check every year or two with your state to see if you may have unclaimed property in the state where you currently or previously lived.  Many times when you move, checks are sent to your old address.  If the payor is not aware that you moved, the funds are eventually deposited with the state as unclaimed property.  

You may also find assets that may have been held by loved ones who have passed away. This is one of the most common reasons for unclaimed property to go to the state when someone dies and accounts are abandoned.  As estate planning attorneys, we do a search frequently for estates that we have handled to make sure we did not miss anything when administering an estate.

What is unclaimed property?

Common types of unclaimed property include: checking and savings accounts, uncashed wage and payroll checks, uncashed stock dividends, and stock certificates, insurance payments, utility deposits, customer deposits, accounts payable, credit balances, refund checks, money orders, traveler’s checks, mineral proceeds, court deposits, uncashed death benefit checks, and life insurance proceeds.

In most states, you can file a claim form to reclaim your property.  The claim form will tell you which documents you will need to provide to make a claim.  

The following are a few websites for unclaimed property if you live or have lived in these states. 

Illinois

Wisconsin

Minnesota

Iowa

Indiana

If you have any questions about 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.

Understanding the Advance Child Tax Credit

As we pass the halfway point of 2021, the Biden Administration has begun implementing policies that intend to offset the economic consequences resulting from the COVID-19 pandemic.

Pursuant to this effort, the Biden administration unveiled The American Rescue Plan on March 11, 2021. One of the primary components of the American Rescue Plan is an increased and advanced payment of the Child Care Tax Credit (“CTC”). In recent years, a qualifying family was entitled to receive a $2,000 credit per child; and prior to 2017, qualifying families were only eligible for a $1,000 credit per child. However, under the newly ordered CTC, every qualifying family will receive a $3,000 credit for each child between the ages of 6 and 17 and a $3,600 credit for each child under the age of 6 years old. Families with combined adjusted gross incomes over $150,000 for married filers, over $112,500 for heads of household, and over $75,000 for all other taxpayers will not be qualified for the entire amount of the tax credit, but remain eligible for a reduced rate. The credit phases out completely at $440,000 for married filing joint returns, and at $240,000 for all others.

A big advantage to the newly ordered CTC is that half of the credit can be paid to qualifying parents in advance. In a typical year, qualifying families would not receive this credit until they file their taxes the following year. Conversely, in an effort to expedite the economic recovery process, qualifying families will now receive half of the tax credit in monthly installments beginning in July of 2021. These monthly installments will be paid in the amount of $250 for each child between the ages of 6 and 17 and $300 for each child under the age of 6. Qualifying families can expect a total of six payments to be made once a month from July to December of 2021.  In addition, CTC allows the parent of a child who is turning 17 during the 2021 calendar year to receive the benefit, which was not the case in previous years.

It is important to note that these payments are an ADVANCE of the credit so keep in mind that your available CTC remaining when you file your return will be less.

Each qualifying family is automatically enrolled in the plan, so there is no additional action required to receive these benefits. However, if you do not wish to enroll in this program and elect instead to receive your full tax credit when you file your return, you can do so on the IRS website under the manage payments tab. A link to this page can be found below:

https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

If you have any questions about the newly implemented CTC or any other tax policies that may arise during this recovery period, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Tax Effects of Buying and Selling Real Estate

Our clients often consult us to determine the tax effects of their pending real estate transactions. This article is intended to discuss some of the tax issues that may arise from a real estate sale.

Many of our clients are surprised to find that the State of Illinois, the county, and the municipality in which the property is located may levy a transaction tax on the sale of real estate. Some municipalities assess this tax on the purchaser in order to allow residence in their locale; some tax the seller; and some, such as the City of Chicago, tax both the seller and purchaser.

At the federal level, the government includes the profits on the sale of your personal residence as income to be declared on your personal income tax return. However, the IRS allows the first $250,000.00 in profit to be exempt from capital gains tax for a single person and $500,000.00 as being exempt for a married couple.  These exemptions result in most residential sales being a tax-free transaction for the seller.

Profits on the sale of commercial real estate are taxed in various ways depending on how long the real estate was owned prior to the sale, whether you are deemed to be in the business of selling real estate, the amount of depreciation you took during the ownership of the asset, and whether you will be deferring any of the gain pursuant to a 1031 exchange transaction.

You should always consult your tax advisor when you are considering a real estate sale so that the transaction may be structured in the most tax-efficient manner for you. Our attorneys are experienced in advising our clients in the sale and purchase in the sale of real estate, whether it is your personal home, investment property, or if you are in the business of buying and selling real estate. 

If you are in the process of buying or selling real estate and have questions regarding the tax impact, feel free to contact Glick and Trostin, LLC at 312-346-8258 for a complimentary consultation

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.

Estate Planning for Unmarried Couples

In today’s society, marriage is not viewed as a necessity to starting a life together. Many couples opt to cohabitate and share their lives with their partners without “involving the government”. While there are pros to not getting married, like avoiding costly and messy divorces; there are also cons. Many protections offered to married couples under the law are simply not extended to cohabitating couples. This includes the right to make health care and financial decisions on behalf of your partner, certain tax breaks, and rights to inheritance.

Under the Illinois Probate Act, even if a deceased spouse leaves no Will, the surviving spouse is eligible to inherit ½ of the deceased spouse’s estate. Additionally, if the deceased spouse does leave a Will and omits their spouse, the surviving spouse still has options to inherit under the law. The Illinois Probate Act has no such protections for unmarried couples. If either partner dies or becomes incapacitated, the surviving, or non-disabled, partner has no right to make decisions on behalf of his/her partner. Decisions about your home and other assets, your medical decisions, and even your life itself, would instead default to your next of kin. This could result in your final wishes not being met and may cause tension between your partner and family members. The best way to protect your partner and ensure your final wishes are met is to have an appropriate estate plan.

The estate plan can be as simple as drafting Power of Attorney forms designating one another to make financial and health care decisions should you become incapacitated.  To protect your partner in the event of your passing, having an estate plan that includes a Will and a Trust will ensure your remains and assets are handled in the way you desire, and your assets are distributed according to your directions. Please note, any Will can be challenged or contested by your heirs-at-law. This is why you may choose to have a Trust in order to keep your matters private, and include no-contest clauses for added protection for your partner. A carefully executed estate plan could offer you and your partner as much legal security as a married couple.

*The word “partner” as used in this article does not mean a person who has a formalized a marriage or civil union under the laws of the State of Illinois, or any other state or country, with another person.

If you have any questions about preparing an estate plan, 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.

Is Having a Will, Enough of an Estate Plan?

Many people assume that having a will is the simplest and most cost-effective estate plan document to transfer an inheritance to their heirs.  In reality, this is usually not true and many times can be the longer and the more costly of the estate planning options. 

In a will, you name an executor to administer your estate after you die.  In most cases, this person is not able to act until the will is admitted to probate (formal court proceeding) and the court issues Letters of Office for the executor to act on behalf of the estate.

The following are four facts that you should be aware of before relying solely on a will for your estate plan.

1. Probate takes time.  If Illinois estates have no real estate and the assets are under $100,000, an executor can usually avoid probate with a small estate affidavit.  If there is real property or assets exceeding $100,000, the estate will be required to go through probate.  

As with most legal proceedings, the ability to obtain a court date and then have follow-ups with the judge can take time.  An estate must be open for at least six (6) months to allow creditors to make any claims against the estate.  Once everything is finalized, you may close the estate and distribute the assets to heirs.  This typically takes at least 9 months depending on the complexity of the estate.

2. Costs of Probate.  Probate is not a matter to be done on your own ("pro se").  The courts have specific procedures, filing fees to be paid, and forms that must be properly drafted to open and administer an estate. The executor will likely want to engage the services of an attorney and an accountant to assist with administering the estate efficiently.  

3. Probate Documents are Public. Once an individual dies, their will is required, by law, to be filed with the clerk of court.  At that point, the will becomes a public document along with any probate filings.  Many families do not care to have their personal wishes and assets be open for public inspection.

4. Probate Can be Avoided.  While a will is an important piece of an estate plan, there are ways to avoid the probate process altogether by utilizing revocable trusts or by designating beneficiaries directly by transfer on death designations, on certain accounts such as life insurance policies, and on retirement plans.  As you review your estate plan, keep in mind that a will maybe just the first step toward achieving the estate planning goals that you desire. 

If you have any questions about preparing an estate plan, 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.

Do's and Don'ts for an Executor of an Estate

Being nominated as an executor for an estate is a responsibility that can be complex and time-consuming. Oftentimes, the executor appointed is an individual who has little to no experience with estate administration. Lack of experience and familiarity in the niche subject of estate administration can lead to a number of problems including debts not being paid on time, tax issues, and beneficiaries not receiving as much as they would have had you correctly and efficiently administered the estate.

While there are many things to learn with estate administration, there are a few fundamental Do’s and Don'ts that can serve first-time executors who are feeling as though they are in over their heads. If you follow the basic rules below, it will go a long way in ensuring that an estate is administered successfully:

DO stay organized and keep diligent notes: One of the most important skills for an executor to have is the ability to stay organized. Oftentimes, a decedent will have a number of accounts at several different financial institutions. A decedent’s creditors may come out of the woodwork and demand that a debt be paid by the estate. All of these assets and debts coupled with real and personal property that a decedent may have owned can create confusion for an inexperienced executor. If an executor fails to maintain organization and track all records in an accounting, information can be lost in the shuffle and assets may be at risk. Having a clear idea of all accounts, real property, personal property, and debts will allow you to continually distribute assets correctly and efficiently.

DON’T keep beneficiaries out of the loop: Consistent communication and transparency with the decedent’s beneficiaries is an integral part of the duties of an executor. The beneficiaries are the people who will ultimately receive the assets of the Estate. This requires a tremendous amount of cooperation between the executor and the beneficiaries. A beneficiary should always be up to date on the status of any open item, whether it be the sale of property, assets held in accounts, etc. While this may seem obvious, it is sometimes difficult to successfully communicate with a number of different beneficiaries. This is especially the case if the beneficiaries are at odds with one another or do not communicate well on a regular basis. A relatively simple solution is to schedule a bi-weekly or monthly meeting to keep the beneficiaries up to date on open matters facing the estate.

DO act in the best interest of the Decedent: A great rule of thumb to abide by when you run into any issue in your duties as an executor is to act in the best interest of the Decedent. Had he or she be living, would the Decedent want you to make a specific decision with regards to their assets? As executor, the decedent personally entrusted you to distribute his or her belongings after they pass. Keeping that in mind, it is important to do what you believe they would have thought is best when managing and distributing their assets.

DON’T delay opening an Estate Account: An estate account is a bank account in the estate’s name. Once an estate account is open, you can begin transferring funds from the bank accounts held in the Decedent's name to the newly established estate account. Opening an Estate account early in the process is important as it allows you to have all of the decedent’s funds in one place. The sooner that you can have all of a Decedent’s funds in a central estate account, the sooner debts can be paid off and distributions can be made.

DO retain an Attorney and Financial Planning expert with Estate Planning experience: Administering an estate can be an extremely time-consuming and complex matter. Depending on the complexity of an estate, being an executor can be a position that takes as much time as your day job. To ease this burden and to ensure the best for carrying out the Decedent's wishes, you will want to retain an Estate Planning or Probate Attorney to assist you with the facilitation of the Decedent’s assets. This is especially important when you are unfamiliar with the process; but even if you have administration experience, it is always smart to have an expert alongside you to ensure that you are doing the best for the Decedent and the Estate.

If you have any questions about preparing an estate plan, 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.

ALL CORRESPONDENCE FROM THE IRS MUST BE READ!

Receiving a letter from the IRS may send a chill up your spine. What should you do?

The IRS sends out a variety of letters to taxpayers. Some are informative, some are merely requesting additional information after a tax return has been filed, and some are demanding payment for taxes owed. The worst thing you can do is to ignore an IRS letter with a deadline stated in the letter for a timely response. If you miss the deadline, it will become harder to contest the content of the letter.

Many IRS letters contain a “CP” number in the upper right-hand corner. The letter contains an explanation of the tax due and the options you have: to contest it or to pay it (even if you can’t pay it all at once).

Once there is an unpaid tax balance, the IRS simply starts with a reminder notice that you are late in paying your tax. The first CP14 reminder notice comes shortly after you file your tax return. It simply lists the amount of tax due along with penalties and interest that have accrued since the filing date. If you believe the balance due is incorrect, you must either call the IRS or respond to them in writing soon after receiving the letter. When in doubt contact a tax attorney.

Letters CP501 and CP503 are the next reminders that will appear in your mailbox if the tax still has not been paid and no arrangements for payments are in place. These notices again alert you to the amounts owed for taxes, penalties, and interest. If you have tax balances due for a number of years, you will receive one letter for each tax year owed.

The CP504 letter, next in the series, signifies a serious situation. It notifies you of the IRS’ right to file a lien against you and to levy (seize) any state income tax refund you might be entitled to. When the IRS files a lien against you, it is very difficult to remove it until you fully pay the balance due.

The next correspondence, LTR11 or CP90, will notify you of the IRS’ intention to levy your bank accounts, wages, Social Security checks, and any of your other property the IRS can find, such as real estate and vehicles.

After receiving notification of the IRS’ intent to levy, you have only 30 days to respond before the IRS can start seizing your assets. The IRS looks for available assets, held under your name or Social Security number, and starts collecting them until the IRS has recovered the total amount of taxes, penalties, and interest due.

As you can see, the IRS collection division has an established procedure for notifying taxpayers and collecting outstanding balances. Therefore, all correspondence from the IRS must be read so you can determine your rights as a taxpayer.

If you have been contacted by the IRS, you should promptly seek the advice of a tax professional who can help you in choosing the appropriate resolution.

We are ready to assist you. Please feel free to contact Glick and Trostin, LLC at 312-346-8258 for a complimentary consultation

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.

What is the Difference between a Will, Living Will and a Pour-Over Will

You may have discussed estate planning documents with family and friends and heard terms such as Will, Pour-Over Will, or Living Will and wondered if these are all the same document.  As legal documents can commonly be referred to by different names, the confusion is understandable.  Here are the common types of Wills and how they may be of benefit to your estate plan.

Last Will and Testament

This is what most people think of when someone refers to a "Will".  A last will and testament allows an individual to name beneficiaries of their estate assets, nominate guardians for minor children, and identify who they wish to be the executor of their estate.  A Will only takes effect after you have died but can be amended at any time prior to your death.  States have specific formalities for signing. In Illinois, a Will must have two witnesses to be a valid last will and testament. A notary attestation is also recommended.

Pour-Over Will
A pour-over will is a type of last will and testament that goes hand-in-hand with a declaration of trust (a revocable trust).  Rather than the Will stating how the assets are to be distributed, the Will leaves the assets to the declaration of trust and a trustee handles the distribution.  The use of a pour-over will and trust combination is helpful to avoid probate proceedings(court oversight of an estate).  The pour-over acts as a safety net in case the trust is not fully funded and allows the trust to be the primary dispositive document.

Living Will

Finally, a living will is not a dispositive document but instead provides guidance to healthcare professionals regarding a person's preference for certain forms of medical treatment when he or she is in a terminal condition and unable to express end-of-life wishes.  Illinois' statutory declaration of living will allows a person to state his or her preference to withhold any death delaying procedures when possibly nearing the end of life.  A living will allows the family and healthcare professionals to understand a person's wishes when he or she is unable to communicate. Of course, even with an executed living will, as long as an individual is able to communicate his or her wishes with a health professional, those directions will always supersede the written document.

If you have any questions about preparing an estate plan, 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.

Check Your Property Tax for the Homeowner and Senior Exemption

You may have recently received a letter from the Cook County Assessor, Fritz Kaegi, regarding the Cook County Homeowner and Senior Exemptions. If you are a homeowner in Cook County, it is a good exercise to check to make sure you are receiving the homeowner and senior exemptions on your property tax bill. Like many other residents, you would like to see your property tax reduced if possible.  One simple way to get a nice reduction is to ensure you are receiving the homeowner's exemption (also known as Homestead Exemption) if you own your residence.  This exemption is given to property owners on their property tax bill. Taxpayers whose single-family home, townhouse, condominium, co-op or apartment building (up to six units) is their primary residence can save $250 to $2,000 per year, depending on local tax rates and assessment increases. 

If you are over 65 years of age, you may also be entitled to a Senior Exemption or Senior Freeze on your property taxes.

First, check to see if you have a homeowner's exemption by searching your property by address or PIN on the Cook County Assessor's website or Cook County Treasurer's website.  Either website will show if an exemption has been applied to the prior year.

You can also review the most recent 2nd installment of your property tax bill, it will list the exemptions at the lower portion of the bill and whether you received any exemptions for that tax period. 

Next, if you believe you are entitled to an exemption, you can obtain the exemption forms on the Assessor's website.  If you have lived in the property for a number of years and have not claimed the exemption, you can file a Certificate of Error forms to request a refund for the Homeowners and/or Senior Exemption for the years that you qualify.

Finally, if you are a new homeowner, you may not qualify for this year's homeowner exemption but put a reminder to file for the exemption next year. You may want to request the former owner to submit an exemption if they are qualified. This is also important for anyone soon to obtain the age of 65 so that they file to obtain the Senior Exemption.  

This exemption is not limited to Cook County or the State of Illinois.  Contact your local Property Tax Assessor or Treasurer to confirm that you are receiving all credits for being a homeowner in your state.

If you have any questions about 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.

Amending 2020 Tax Return with Unemployment Compensation

Now that President Biden has signed into law the "American Rescue Plan", there are a number of benefits that individuals should take note of such as the next round of stimulus payments and extended unemployment benefits.  One aspect that has not been discussed much is that for individuals who received unemployment compensation in 2020. The first $10,200 per person will not be taxed if the household makes under $150,000.  For married couples filing jointly, this means that the first $20,400 will be tax-free and could result in tax savings of over $1,000.

If you haven't filed your income tax return yet and believe you may qualify for this tax break, it is best to wait until directions have been more clearly defined from the IRS so you can receive this tax reduction. It could take a few weeks for the IRS to provide guidance on how to implement this tax law change in the middle of the tax season but your patience may pay off.  It may also impact your state income taxes as each state treats income differently than the IRS, but it may allow the tax break to benefit your state return as well.

Individuals who have already filed their 2020 income tax returns and did not take this benefit will want to review their situation to see if filing an amended return will allow them to receive this tax break.  If you believe you qualify, contact your tax preparer to ask how you may go about filing an amended return. Fortunately, the IRS has now implemented the ability to e-file amended returns starting this year.  That will hopefully expedite the process for those who normally would have to file and mail in an amended return which could take months to process. 

If you have any questions about 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 'Tax Deduction' for Dividends from Abbvie, Abbott Labs, Caterpillar and Walgreens Boots Alliance

As tax time nears and you begin to gather your tax documents, you may want to look closer at your dividends for the year. If you are an Illinois resident, you may be permitted to subtract certain dividends from specific Illinois companies. Under Illinois law, dividends you receive from a corporation that conducts business in a foreign trade zone and is designated a “High Impact Business” are eligible for the subtraction modification from Illinois base income.

Over the past few years, I have worked with a number of clients who received dividends from companies that qualify for the dividend subtraction in Illinois.  Depending on the total dividend distribution, this subtraction can be a sizable reduction in Illinois State Income Taxes, especially for shareholders who may have received stock through their employment with the companies.

Currently, I am aware of the following 4 companies that have published letters to their shareholders notifying them of the potential dividend subtraction for Illinois in the past. Below are the most current letters online.

Abbott Laboratories (Tax year 2020 letter)

AbbVie Inc. (Tax year 2020 letter)

Caterpillar Inc (Tax year 2020 letter)

Walgreens Boots Alliance, Inc. (Tax year 2019 letter)

There may be other qualifying companies in Illinois although it is best to receive a letter from the company if you decide to utilize the dividend subtraction on your income tax return.  If you believe you have received dividends from a qualifying company in the past 3 years, you may want to determine if filing an amended Illinois Income Tax Return is worthwhile.

If you have any questions about 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.

New Year's Resolution - Create an Estate Plan

As the dust settles on 2020 and we begin to prepare for what hopes to be a better 2021, many of us will make the annual New Year's Resolution.  Most of the resolutions will deal with improving ourselves in numerous ways.  The motivation for many of these goals is to take care of yourself and your loved ones.  

One goal to set for 2021 is to make sure you have an estate plan in place. This may consist of drafting a will or simply reviewing beneficiaries on your accounts.   Too often, people push this process off until it is too late and their family is left attempting to figure out how matters are to be sorted.

A recent 2020 Q4 Wells Fargo/Gallop Investor and Retirement Optimism Index reports that close to half of the surveyed investors did not have a will or an estate plan in place. The majority of those with some type of plan were over the age of 65.  That leaves a substantial number of families without any type of estate plan in place. 

Estate planning does not have to be difficult or overwhelming.  The fact is that not having some simple documents in place such as a Power of Attorney for Health care or for Property can create a much more expensive problem later on. 

Making a New Year's Resolution to create an estate plan is important and doable. By accomplishing this resolution, you can rest easier and help protect your interests and wishes for your family. 

If you have any questions about preparing an estate plan, 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.