By Misty A. Watson
On January 1, 2012, the Illinois Uniform Real Property Transfer on Death Act (Act) goes into effect. The Act permits owners of real property in Illinois to execute a deed which will allow for the property to be transferred to a designated beneficiary upon the owner’s death. If the property is owned jointly, the deed will transfer ownership upon the death of the second owner to the designated beneficiary.
The Transfer on Death Deed varies from its counterpart in other states in that it requires the deed to be executed with the formality of a Last Will and Testament. The deed must be witnessed by two witnesses, notarized, and the witnesses must attest that the person signing the deed is of sound mind. The deed requires certain language such as that it is not effective until the death of the owner and must be properly recorded before the death of the owner.
Prior to the enactment of the Act, owners of real property were forced to have a trust in order to avoid probate of real property, even if the owner’s situation did not warrant having a trust. Also, the Transfer on Death Deed allows for property to be maintained in joint names with a spouse which is a great form of asset protection against the creditors of one spouse.
The Transfer on Death deed will permit greater flexibility in estate planning and cost-effective probate avoidance.
Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.
12/29/11 2:44 PM
Estate Planning, Probate, Trusts | Comment (0) |
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Transfer on Death Deed Now in Illinois
By David A. Zobel
Part of a monthly multi-part series of discussions aimed at explaining legal and financial considerations for young professionals as they establish and develop their careers, relationships and lives
It’s probably a safe bet that most people in their twenties and thirties have not given much thought to estate planning. Short of a first child or a friend asking if you want life insurance, planning for what will happen when you die probably hasn’t come up and why should it? You’ve got youth and health on your side. Moreover, you probably don’t have a lot of assets at this point.
So why is it important? I asked estate planning attorney Misty Watson to help explain. According to Watson,
“Planning for the future encompasses much more than where your property goes upon your death. Estate planning can also cover who handles your finances if you are out of town, who makes medical decisions for you in the event you become incapacitated, and who becomes your guardian if a court declares you incompetent.”
With these thoughts in mind, you may want to reflect upon the following considerations:
What Happens to My Assets?
You have more than you think you have. Even if you don’t own a home or a wall safe full of bullion, you still have assets and they need to be distributed somehow and to someone. Consider the following examples: bank accounts, savings accounts, stock, bonds, 401ks, IRAs, other retirement accounts, automobiles, clothes, art, appliances, and furniture. Chances are you have at least one of these things and more than likely you have a few. Maybe you’d like your friend to get your watch or a fund be set aside for your nephew’s college fund. Estate planning assists in sorting out who gets what and when.
What Happens to My Children?
If you have children and are single, chances are you may have spoken with someone about taking care of your children in the event you pass. However, without any sort of document proving these intentions, how will the State know what to do? If you are married with children, your spouse will take on the responsibility, but what if you die at the same time? Or get divorced? Your children’s future should be your decision and not left up to the State or a court system.
Continue reading »
12/12/11 9:32 AM
Estate Planning, Family Law, Probate, Trusts | Comment (1) |
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Estate Planning for Young Professionals: Why Considering Your Death is Important Even at this Age
By Misty A. Watson
There are several ways you can leave your children (or other beneficiaries) your assets upon your death.
One option is an outright distribution. I call this the “here’s your inheritance” method. Upon your death, after payment of expenses and debts, your child receives their full share of the assets outright.
A second option is the staggered distribution method. This method gives your child a percentage of their inheritance at certain ages, dates, or events. A typical example is upon your child turning 30, he or she will receive one-third of their inheritance, at age 35 another third, and final distribution of the entire amount at age 40. In the meantime, your child would typically receive distributions of the principal and income of his or her share for needs such as a house down payment, educational expenses, or even a monthly stipend for living expenses. Another example would be an incentive based trust. With this trust, your child will receive 1/2 of his or her share if he or she graduates college and the remaining distribution if he or she maintains full-time employment for at least two years.
A third method for leaving your child an inheritance is known as a lifetime trust or dynasty trust. With this method, the share remains in trust for the child’s entire lifetime. Your child receives distributions from the trustee for health, education, and support. For example, if your child needs funds for a house down payment or private school tuition for his or her children, the trustee can make a distribution from his or her share. Distributions can be mandatory, meaning your child can compel the trustee to make distributions if the trustee refuses a reasonable request or purely discretionary, where the trustee has sole discretion to make distributions. While a lifetime trust can mean more administrative costs, it is also a form of asset protection. Creditors and divorcing spouses cannot reach the assets in a lifetime trust.
Whatever method you choose when discussing your estate plan with your attorney should be tailored to fit the needs of your family. Each method has pros and cons that should be carefully weighed to meet your goals for your family.
Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.
11/4/11 5:00 AM
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Lifetime Trust or Outright Distribution – How to Leave Your Assets to Your Beneficiaries
By Misty A. Watson
With the advent of electronic banking and e-statements, the face of our financial recordkeeping has changed over the past few years. Along with this change has come the limited knowledge of and access to your financial information. This is great for security now – but it can cause problems for your family when you are no longer around if you do not plan ahead.
Prior to online banking, when a person died the family could easily discover assets of the departed through statements delivered via “snail mail” – the U.S. mail. Bank statements would arrive in the mail on a monthly basis. Most brokerage statements would arrive at least quarterly. Worst-case scenario would be the annual statement from a life insurance policy, but there was usually a previous year’s statement available for reference.
Today, most people do their banking online and access retirement account/401(k) information online as well. They receive statements online with notifications via email, and dividends are electronically deposited.
Your family may not have a list of all of your accounts and policies – especially if they are accessed online. Without a forensic expert, it may be impossible for family members to determine where the information is located. And remember: all of these records are password protected. In some instances, people are even using fingerprint recognition to access their computers and other password protected websites.
In order for your family members to be able to discover your assets (bank accounts, life insurance, brokerage accounts, retirement accounts, etc.), it is vital to keep a list in hard copy of where you hold your accounts. While account numbers are helpful, those concerned about security do not need to provide this information. Keep this information with your estate plan documents and update it when you do your taxes each year.
Be sure also to provide your family members with important information such as the name of your lawyer, accountant, and financial advisor. By taking this important step, you can ensure that your assets are left to the beneficiaries you have set up through your estate plan.
Posted by Attorney Misty A. Watson. Watson’s practice focus is estate-related: planning, administration, and probate. She creates trusts, wills, financial, and health care powers of attorney, guardianships, and conservatorships.
08/10/11 9:31 AM
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Electronic Estates – Keeping a Record of Your Assets
By Thomas G. Glick
A lot of clients call me looking for contingency fee agreements. You hear a lot of talk about contingency fees. In part because of lawyers that are advertising them. Lawyers that use contingency fee agreements typically advertise as “if you don’t win, you don’t pay any attorney fees” (though you may pay costs). The problem with contingency fees is that lawyers take on additional risk for them. Many clients think of contingency fee agreements as an excellent opportunity for people who would otherwise not be able to afford a lawyer to gain access to the justice system, and they are. However, it is important to recognize that there is also a down-side to contingency fee agreements for clients.
As a rule, in my probate and trust practice, I do not take contingency fee cases for a variety of reasons. Clients are often let down by this because they wish that I was able to do that in order to represent them. In a contingency fee case, a lawyer is taking on more risk in representing a client. That is, the lawyer that takes on a contingency fee case, knows that if he loses he does not get paid. All risks have costs. He might well spend hundreds of hours working on the case in order to prepare for trial or even prepare settlement negotiations. The risk that they won’t get paid causes lawyers to increase their percentage fee. For this reason, contingency fee cases result in higher fees for attorneys.
In order to run a successful overall law practice, attorneys that rely on contingency fee cases must collect enough in the cases they win to make up for the cases that they lose. This means that if you have a case that you can win, you pay more money to your lawyer in order to achieve that victory because of the risk that you will lose.
Instead of contingency fee cases, I try to set my hourly rate at a reasonable level in order to assure that my clients are paying appropriately for my services and enough so that I can pay my staff and other overhead costs, but without the need to cover any additional risk.
If you want to learn more about contingency fee agreements from the lawyer’s perspective, in order to gain a better perspective from the client, you may wish to read the following articles from the American Bar Association and The Missouri Bar.
04/13/11 8:50 AM
Litigation, Probate, Uncategorized | Comments Off |
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Contingency Fee Agreements – The Part They Don’t Tell You
By Thomas G. Glick
In the 1981 film Body Heat directed by Lawrence Kasdan , the character played by Kathleen Turner uses her smoldering sexuality and an arcane rule of common law to trick her attorney, William Hurt. The arcane principal that she relies upon is the Rule Against Perpetuities. The Rule is an aspect of law which we inherited from our British colonizers, along with much of the rest of common law. The Rule Against Perpetuities has been the bane of existence of law students and young lawyers for generations because of its obscure purposes and complex phrasing. I could argue that the Rule Against Perpetuities was the basis for many general practice attorneys choosing not to practice probate law and instead refer probate and trust cases to lawyers who concentrate their practice in this area. Alas, the Rule Against Perpetuities has been repealed or partially repealed in most American jurisdictions. Missouri repealed its version ten years ago because the purpose was no longer being achieved by the rule and tax laws were achieving the original goals.
Essentially, the purpose of the rule is to prevent control of wealth and property by people who have died long ago. It is one aspect of a broader common law principal archaically known as prevention of restraints on alienation. These types of laws seek to make sure that living people who own, occupy or oversee property have the ability to use and sell that property anyway they wish otherwise society suffers because property becomes unused and unusable as time passes and situations change.
For example, in many families where property has passed down from one generation to the next, over the course of several years, the ownership of the family home has not followed the uses by the family and the occupants. One or more members that own the property no longer live there, have died or have lost touch with the family. These sorts of problems arise not only in wealthy families but also in families of more modest means whose principal asset is the family home. After only one or two generations, the legal ownership of a home can be hopelessly confused such that correction of the pending issues requires the services of a probate and trust lawyer. I find that I am often able to help such families at a cost less than the purchase of a new home but at a substantial cost. I have talked on television about a similar false economy when people attempt to save money with the internet and other form wills but generate much larger legal bills for their heirs.
The best course of action in preventing property from becoming entangled in legal confusion is to plan ahead. It can often be difficult to choose amongst heirs but there are many ways which a skilled attorney can assist a property owner in transferring their wealth in ways that ensure their heirs benefit but does not restrict the families ability to use the property with legal entanglements. Unfortunately, I find that a great many people attempt to address these issues themselves through simple, inexpensive means such as quit claim deeds and simple wills in order to avoid attorneys fees. Matters of titling property are amongst the most complex areas of the law. Frequently, inexpensive solutions generate much larger legal bills later than is saved by the attempted shortcuts.
Even families who have had ancestors take ill advised shortcuts that complicated their problems, or created problems where there were none still have options. I find that I am often able to correct these matters, admittedly with an expense, but still in a way that ensures continued use of the property in question and without property becoming a blight on neighbors or others with interest attached. Of course you will need to catch me when I am not enjoying a classic film noir redux…
03/4/11 3:10 PM
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Controlling Family Assets
By Patrick J. Murphy
The revised Illinois Power of Attorney Act, 755 ILCS 45/2-1 et seq. provides greater protection to principals. These revisions are designed to minimize abuses of the elderly, incapacitated and disabled persons by their agents serving under powers of attorney. House Bill 6477, the new state bill containing the changes, was passed by both houses and signed into law by Governor Quinn on July 26, 2010. The effective date for the changes is July 1, 2011. All powers of attorney which were validly executed prior to this date will continue to remain effective.
A few highlights of the changes to this Act are:
- Definitions of these key terms: “incapacitated,” “incurable or irreversible condition,” “permanent unconsciousness,” and “terminal condition,” some of which are borrowed definitions from the Health Care Surrogate Act.
- The agent’s duties and standard of care for the principal are expanded, particularly in the area of record keeping, as well as liability for neglect or elder abuse.
- The agency-court relationship has been rewritten to allow the review of an agent by the court and additionally adds new remedies to protect the principal.
- New paragraphs with respect to successor agents, co-agents, and powers executed in another state or country.
- Forms for Certification and Acceptance of Authority of agent, successor agent, and co-agents are available.
- New paragraph has been added with respect to persons who may be witnesses to the signature of the principal on a power of attorney. For instance, the witness cannot be a relative of the principal or agent by blood, marriage or adoption, an agent or successor agent, the attending doctor or relative of the doctor, owner or operator or relative of an owner or operator of the health care facility of the principal.
- The health care power does not authorize the agent to make any anatomical gifts, and incorporates recent improvements to the Disposition of Remains Act. The principal’s agent is to be treated as the principal in using and disclosing health records as governed by HIPAA.
- A specific “Notice to Agent” is required under the new statutory short form power of attorney to be given to the agent detailing the agent’s rights and responsibilities so that agents know what they should do and should not do.
If you are interested in learning more about the specifics about the changes to the Illinois Powers of Attorney Act, or any estate planning need please give our office a call and we can provide you with further information
10/18/10 2:00 PM
Estate Planning, Healthcare, Probate | Comments Off |
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Illinois Changes Its Power of Attorney Laws
By Thomas G. Glick
Most people don’t realize that in Missouri Probate Courts have jurisdiction to involuntary commitment of people who are mentally ill. These can be initiated by the police, by doctors or by the friends and family of the person with a mental illness.
Locking up a person who hasn’t committed any crimes is a pretty extreme measure but this provision is for people who are so sick that they represent a threat to themselves or others. My associate Misty Watson and I recently wrote an article [download PDF] aimed at other lawyers on the subject. The relevant lengths of time may also be helpful to non-lawyers as well.
07/1/09 8:02 AM
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Helping a Family Member with Mental Illness
By Thomas G. Glick
A lot of people ask me about quick probate, particularly for small estates. It allows people to quickly and cleanly transfer items, including bank accounts, brokerage accounts even homes and real estate to heir or beneficiaries under a will with nominal assistance from a lawyer and quick.
Missouri has adopted a super-fast, super-easy high speed probate tool called the Small Estate Affidavit.
I have written about it and given CLE presentations to lawyers and judges [download PDF]. I’m always surprised by how many people don’t know more about it.
This is a great tool for people.
05/1/09 8:22 AM
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Small Estates in Missouri
