Simple Steps to Ensure That Your Assets are Protected During this Uncertain Time

In the midst of the COVID-19 pandemic, our country and society as a whole seems to be facing more uncertainty than ever before. The virus has significantly disrupted nearly everyone’s daily routine. We are left to remain in our homes and contemplate the circumstances, which often causes more worry.

Though an uncomfortable topic, it is especially important during these uncertain times to ensure that your assets are protected. If something were to happen to you, would your assets be distributed to the people you would want them to be distributed to? In the event you are incapacitated, would the individual best suited to speak on your behalf be empowered to do so? Will your personal and real property be taken care of? Developing a comprehensive estate plan is a quick and cost-effective way to ease some of these burdens. The following documents are common tools utilized in an estate plan:

A Basic Will: A Will is the instrument that passes your personal assets to the individual or individuals who you wish to receive your assets. This instrument also allows you to name a Guardian for your children. Unlike a Trust, a Will is a public document that is typically filed with your local Clerk of Court Office. A Will is an especially important instrument because if you were to pass without a Will, your entire Estate would be distributed through the laws of intestacy, which can lead to probate. Probate arises when there is a dispute as to where a particular asset or assets should be distributed. Probate issues can lead to unwanted costs such as attorneys' fees and court costs.

Declaration of Trust: While a basic Will is a public document that can be seen by anyone who inquires, a Declaration of Trust is a private instrument that is not recorded. While being private, a Declaration of Trust (a so-called “living trust”) has the advantage of avoiding probate with respect to the assets which are transferred to the Trust during your lifetime.  In other words, assets which you transfer to your Declaration of Trust during your lifetime will continue to be held by the Trust after death and, in turn, will be distributed in accordance with the provisions of the Trust.  In this way, those assets will “by-pass” probate while still being distributed in a manner consistent with your estate plan.  In addition, a funded Declaration of Trust enables you to provide for the management of your assets should you become disabled.  For income tax purposes, so long as you are alive, your Declaration of Trust is “transparent” and you will be taxed (as owning directly) any assets transferred to the Trust.  This means that you can transfer assets into your Trust without any effect on your current income taxes.

Power of Attorney for Healthcare: The Health Care Power of Attorney enables you to select an agent to make health care decisions for you (and includes provisions regarding life-sustaining machines and anatomical gifts).  Although typically effective upon execution, this Power of Attorney is designed to facilitate the handling of your health care decisions should you be unable to.  

Power of Attorney for Property ("Durable Power of Attorney"): Similar to the Power of Attorney for Healthcare, a Power of Attorney for Property is an instrument that enables you to select an individual to make decisions on your behalf should you be unable to. However, this particular Power of Attorney allows your elected agent to make financial decisions on your behalf, as opposed to decisions related to your medical treatment and healthcare. These financial decisions can be as broad or narrow as you would like. From handling tax matters to Social Security or employment matters, to simply dealing with one single property, the Power of Attorney for Property is an extremely powerful but flexible estate planning instrument. 

Before signing estate planning documents, it is extremely important to have a preliminary discussion with the people closest to you about what should happen to your assets once you have passed. While this may be a difficult and emotional conversation, this is critical to the estate planning process. It is also important to keep in mind that these documents can be (and typically are) often modified throughout your lifetime. During times of uncertainty and worry, having one less burden to worry about can make a significant difference. 

If you have any questions about preparing an 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.