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Arlington Heights estate planning attorney

A marriage can have a significant impact on your estate plan. Married couples generally create an estate plan together— all or most of the marital assets are typically passed onto the surviving spouse. Only when he or she passes does the estate plan take effect. However, this is not always the case, particularly if one of the spouses has children from a previous marriage, or if there is a large age difference between the spouses. Moreover, if you are in the middle of a separation or a divorce, which can take over one year to finalize in many cases, it can have a significant impact on how you should handle your estate planning. 

How Marriage Impacts Estate Planning

Marriage makes it easier for you to leave assets to your spouse after death. Even if you fail to do any estate planning or create a will, Illinois intestate succession states that a spouse inherits all of the intestate property. If there are children, then the intestate property is split between the spouse and children 50/50.  

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Lombard estate planning lawyerThe world of estate planning can be complicated, to say the least. If you have started researching your estate planning options, you may understandably be feeling overwhelmed. It can be challenging to know which types of estate planning tools will best help you meet your financial goals. You may have already decided to create a last will and testament but worry that a will alone will not satisfy all of your needs. One option to consider is a testamentary trust or “will trust.” For help determining which estate planning tools are best for your unique situation, speak with an experienced estate planning attorney.

What is a Testamentary Trust?

A testamentary trust is a trust that is in conjunction with a will. If an individual decides to create a testamentary trust, he or she will assign a trustee to manage and distribute his or her assets to the designated beneficiaries as per the directions in his or her will. Unlike a living trust, a testamentary trust does not go into effect until the trust maker, also called the trustor or grantor, passes away. Upon the trustor’s death, the executor of the estate is instructed by the trust provision in the will to create the trust. Although trusts typically avoid probate, the will must still go through the probate process in order for the authenticity of the will to be confirmed.

After probate, the trust goes into effect and the executor transfers the estate assets to the trust. The trust assets often include proceeds from the trustor’s life insurance policy or other sources as well. The trustee then manages the property owned by the trust until the trust expires and the property is distributed to the beneficiaries.

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Lombard trusts attorneysA trust is an estate planning tool that can hold property for the benefit of beneficiaries. There are many different types of trusts that can serve a wide range of purposes. Trusts fall into two main categories: revocable trusts and irrevocable trusts. A revocable trust is created by a grantor during his or her lifetime and may then be modified or revoked at any time. Irrevocable trusts, on the other hand, cannot be charged or revoked after their creation. However, there are certain situations in which an irrevocable trust can be modified or terminated.

Benefits of an Irrevocable Trust

Many people choose to use a trust to transfer assets to a beneficiaries instead of a will. The person who makes the will, called the grantor, transfers property to the trust and designates a trustee to manage the trust. Once the grantor passes away, the assets held by the trust are distributed to beneficiaries. The beneficiaries of a trust may be family members, friends, or entities such as nonprofit organizations. When the grantor transfers assets to an irrevocable trust, he or she relinquishes control of these assets and the assets are now owned by the trust. Because the assets are no longer owned by the grantor, they no longer influence the grantor’s tax liability or the value of his or her estate. Irrevocable trusts also offer protection from creditors and lawsuits.

Modifying an Irrevocable Trust

There are only a few different ways that an irrevocable trust may be modified or revoked. The trustee or beneficiary of a trust may petition the court to request a trust modification or revocation. The Illinois Virtual Representation Statute allows certain trustees and beneficiaries to alter an irrevocable trust without having to go through the court. The easiest and most straightforward way to change or revoke a trust is for the grantor and all potential beneficiaries to agree to the change and sign a consent modification document. A grantor may also be able to petition the court to revoke a trust based on mistake. For example, if there is evidence that the grantor was told that the trust would be revocable, the court may allow the trust to be terminated.

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Lombard estate planning attorneysYou have worked hard to earn the property that you currently own so it is understandable that you would want to have control over who inherits this property upon your death. Disinheritance refers to the act of purposely excluding someone from your will in particular or your estate plans in general. There are many different reasons that a person may choose to disinherit an heir. He or she may have ended his or her relationship with the heir due to abuse or conflict, have concerns about how the heir would spend inheritance funds, or simply believe that the heir is financially secure enough to miss out on an inheritance. Whatever your reasons for disinheriting an heir, doing so can sometimes prove to be a challenging legal process. For help understanding Illinois inheritance laws, drafting a last will and testament, or developing other estate plans, contact an experienced estate planning lawyer.

Disinheriting a Spouse

Through an estate plan, an individual can leave his or her property to anyone or any organization he or she chooses. However, Illinois law does not typically permit a person to disinherit his or her spouse through a will without the spouse’s consent. If a last will and testament does disinherit a spouse, the surviving spouse may be able to “renounce” the will formally. Presuming the renunciation is successful, he or she would then be entitled to a portion of the deceased spouse’s estate. If the deceased person has children, the surviving spouse may be entitled to one-third of the estate. If there are not any surviving children, the spouse may be entitled to one-half of the estate.

It is important to note, however, that an individual’s right to renounce his or her spouse’s will does not extend to living trusts or certain other estate planning documents. It should also be noted that if there is a situation in which the terms of a will conflict with the terms of a prenuptial agreement, the prenuptial agreement takes precedence.

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Lombard estate planning attorneyGetting a divorce can sometimes make it feel as if your world has been turned upside down. Between dealing with the financial consequences of your divorce and managing child custody or spousal support concerns, you may feel like there are almost countless tasks to complete.  In all of the chaos, it can be easy to forget important estate planning considerations. Unfortunately, if a person divorces, beneficiary designations and certain other estate planning arrangements do not change automatically. You will need to update such provisions manually, and a qualified estate planning attorney can help.  

Review and Revise Your Will

Only about 40 percent of U.S. adults have a will or other estate plan in place. If you already have a will or trust that describes your property distribution wishes, you are already ahead of most Americans. However, you will want to read and update your will after divorce. According to Illinois law, any directions in your will that refer to your spouse are made void once he or she becomes your ex-spouse. However, any provisions that address inheritance for your ex-spouse’s family members remain valid. It is always a good idea to go over your will after divorce and make sure it still reflects your current wishes.

Change Your Beneficiaries on Your Retirement Accounts

If you have an IRA, 401K, or other retirement plan, you will probably need to update the beneficiaries listed in your policy. As a part of your divorce settlement, you may be required to share retirement funds with your ex-spouse. However, any remaining retirement funds should rightfully be yours. If your spouse is currently listed as the beneficiary on your retirement account, you need to change this sooner rather than later. Some divorced individuals still want their spouse listed as a trustee for their children. If this is your situation, read through your retirement policy and other estate planning documents any make any necessary changes so that they documents reflect your wishes

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