Estate Planning in Illinois - Frequently Asked Questions

Estate planning is one of the most important steps you can take to protect your family and your assets. Whether you are just beginning to think about creating a plan or updating an existing one, understanding the basic questions is key. Here are some frequently asked questions about estate planning in Illinois.

1. What Is Estate Planning?

Estate planning is the process of organizing your financial and personal affairs to ensure they are handled according to your wishes after you pass away or become incapacitated. This includes making decisions about who will inherit your assets, how taxes will be handled, and who will manage your estate or care for your minor children if you're unable to do so.

2. What Documents Are Typically Included in an Estate Plan in Illinois?

An Illinois estate plan usually includes the following key documents:

• Last Will and Testament: This designates how your assets will be distributed and can also name guardians for minor children.

• Living Trust: A trust can help avoid probate, keep your estate private, and streamline the distribution of assets.

• Durable Power of Attorney for Property: This allows you to name someone to manage your finances if you become incapacitated.

• Healthcare Power of Attorney: This names someone to make medical decisions on your behalf if you're unable to do so.

• Living Will: This document outlines your wishes for medical treatment, particularly end-of-life care.

3. Do I Need a Will If I Have a Living Trust?

Yes. Even if you have a living trust, it is still recommended to have a "pour-over" will. This ensures that any assets not titled in the name of your trust at your death will be transferred to the trust and distributed according to its terms. The will also covers guardianship of minor children, which a trust does not.

4. What Happens If I Die Without a Will in Illinois?

If you die without a will (called "intestate"), Illinois law determines how your assets are distributed. Typically, assets are split between your spouse and children. If you do not have a spouse or children, other relatives, such as parents or siblings, may inherit. This distribution may not reflect your personal wishes, which is why creating a will is so important.

5. How Does Probate Work in Illinois?

Probate is the legal process of administering a deceased person’s estate. The court ensures that all debts and taxes are paid and that the remaining assets are distributed according to the will or state law if there is no will. In Illinois, estates valued under $100,000 or those without real property may avoid probate by using a small estate affidavit.

6. How Can I Avoid Probate in Illinois?

To avoid probate in Illinois, many people choose to create a living trust. When assets are titled in the name of a trust, they can bypass probate and be distributed directly to beneficiaries. Joint ownership of property, payable-on-death (POD) designations for bank accounts, and beneficiary designations for retirement accounts and life insurance policies are other ways to avoid probate.

7. Are Estate Taxes Applicable in Illinois?

Illinois has its own estate tax, separate from the federal estate tax. As of 2024, the Illinois estate tax applies to estates valued at over $4 million. The tax rate ranges from 0.8% to 16%, depending on the size of the estate. Careful estate planning, such as creating trusts, can help reduce estate tax liability.

8. Who Should I Name as My Executor or Trustee?

Choosing the right person to manage your estate or trust is crucial. This individual should be trustworthy, organized, and willing to carry out your wishes. Many people select a family member, but in some cases, it may be better to choose a professional, such as an attorney or financial advisor, to ensure impartiality and expertise.

9. How Often Should I Update My Estate Plan?

It’s a good idea to review your estate plan every few years or after any major life event, such as marriage, divorce, the birth of a child, or the death of a beneficiary. Tax law changes can also impact your estate plan, so staying informed about relevant updates is important.

10. Can I Disinherit Someone in Illinois?

Yes, you can disinherit someone in your will or trust. However, Illinois law does protect spouses to some extent. A surviving spouse can choose to take an "elective share" of the estate, which means they are entitled to a portion of your assets, even if they are disinherited. Children, on the other hand, do not have the same automatic protection under Illinois law and can be disinherited.

11. What Is a Power of Attorney, and Do I Need One?

A Power of Attorney (POA) allows you to appoint someone to act on your behalf in financial or healthcare matters if you become unable to do so. Without a POA in place, your family may have to go to court to gain control over your financial or medical decisions, a process that can be time-consuming and costly.

Estate planning is essential to protect your legacy and ensure that your wishes are carried out. While the process can seem overwhelming, working with an experienced estate planning attorney can provide peace of mind. By taking the time to create a comprehensive estate plan, you can spare your loved ones the stress of probate and the potential for family conflict.

For those in Illinois, understanding the unique rules and procedures of estate planning is critical. Be proactive, and make sure your estate plan reflects your goals and provides security for those you care about most.