Often people ask: “Do I really need a Will? I have people designated on my retirement accounts and my life insurance, so why do I have to create a Will?”
The first version of “simple” planning is to do nothing. Name people as beneficiaries and hope that your house along and other assets will get to them as well. The problem with this plan is that it’s short sighted. If the person who died has assets greater than $100K in Illinois, which would include the house and savings accounts, then the family members left behind must open a probate estate. This court process can cost the family $5K-$10K to begin with and can go upwards from there depending on how much fighting may happen or how many claims are made against the estate. The process takes a long time, often 1-2 years, or more. The process is also available for the public to see. Your family members’ names, addresses and how much they will inherit will be available for anyone to see. This can lead to scam artists taking advantage of people who are already in a vulnerable state because of the death of the loved one.
Doing nothing may feel fine for you, and may eventually carry out the plan that you have in your head, but it will likely cause more time and money for your family.
The second “simple” option is to create a Last Will and Testament, and Transfer on Death Instrument. The Will has the provisions to say, any assets that does not have a beneficiary designation will go to the people you name in the Will. The Transfer on Death Instrument, or TODI, allows you to add a beneficiary to your real estate. The TODI gets filed with the county, and when you die, the real estate automatically titles into the person you have named in the TODI. Then as long as all of your other assets have beneficiaries, then your estate should avoid probate.
The problem with the first two options of doing nothing, and creating a Will, is that you have not done any planning for your beneficiaries/family members. In other words, once they receive the assets, such assets are subject to potential divorce, lawsuits, creditors, bankruptcy and special needs issues. In our experience, some of our client’s beneficiaries have lost money because they were already in the middle of bankruptcy, or they were already on Medicaid, and become disqualified since they received an inheritance directly. So if you are at all concerned about your family’s protection of your hard-earned wealth, then the simple solutions are probably not enough for you.
The last and most comprehensive solution is creating a Living Trust. This is a standby device that will own your assets during your life, if you become incapacitated and upon your death. It will avoid probate for your family, and it can also provide a lot of instructions as to protection for divorce, lawsuits and special needs issues.
Simple always seems like such a nice and cheap option when it comes to estate planning. However, if you really care about protecting everything you have worked your entire life for, and you really care about your family’s well-being, it is often better to look at the more comprehensive way to plan and protect with the assistance of an estate planning lawyer in Rolling Meadows, IL. This way you will have peace of mind.
Thanks to Bott & Associates, Ltd. for their insight into estate planning and smart ways to plan.