June 7, 2017
There’s much you can find on the internet on the ramifications of not having a will. In a nutshell, Illinois intestacy law* dictates distribution of the deceased’s estate as follows:
Sounds like a decent backup plan, but what if the spouse needs a larger share just to pay the bills? What if one adult child is considerably better off financially than his siblings? This is why it’s so important to have a will or trust.
When you establish a will or trust, you are in charge of apportioning your estate as you see fit, as well as determining when benefits are disbursed. As circumstances change during your lifetime, you can easily amend the document to accommodate shifting needs.
Simply put, a will must be executed through probate court; a trust avoids probate. This is critical for two reasons: the event you become incapacitated and cost.
While you’re alive and healthy, you’re the boss of all your stuff. But if you begin to suffer from dementia or another medical condition, you need someone else to step in and manage your affairs. A trust provides for that situation by allowing you to name a successor trustee who will serve in you and your family’s best interests — while you’re still living. This can mean the world to a spouse who needs to sell property that’s in your name in order to stay afloat.
A will, even with a named executor, does not take effect until you die. In the meantime, someone (likely your spouse or heir) will have to go to court to become your guardian, which is time-consuming, emotionally draining, and costly.
The cost to draw up a trust may run up to a couple thousand dollars, while the cost of a will is only around a couple hundred dollars. However, the will’s true cost hits you in attorney and court fees when the will goes to probate court. At that point, your family could be looking at a four- or five-figure fee depending on the value and complexity of your estate.
With a trust, you don’t go to court at all, saving thousands and thousands of dollars in attorney and court fees. Well worth the initial set-up charge, don’t you think?
While we’ve just given you a brief overview, we realize there can be many variables that make the decision more complicated. Through our partnership with the Law Office of Dominic Mancini, an estate planning firm, 4Wealth can provide expertise in drawing up your will or trust, as well as assistance in periodic review of assets and terms.
Stay tuned for part two of this series where we’ll talk about business continuity and income assets.
* Laws vary from state to state, so please consult with an advisor in your state of residence.
About Peter: I am president and Founder of 4Wealth® Financial Group, a CPA and Accredited Investment Fiduciary (AIF), and have over 25 years of experience. I take pride in developing custom solutions for every client, whether it involves tax planning, creating large or small pension programs, or simply offering sage advice that is always in my client’s best interest. I can be found on LinkedIn, Twitter, Facebook, and at (708) 695-5300.
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