When someone passes away, his or her property must somehow pass to another person. In the United States, any competent adult has the right to choose the manner in which his or her assets are distributed after his or her passing. (The main exception to this general rule involves what is called a spousal right of election which disallows the complete disinheritance of a spouse in most states.) A proper estate plan also involves strategies to minimize potential estate taxes and settlement costs as well as to coordinate what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event of death or disability. On the personal side, a good estate plan should include directions to carry out your wishes regarding health care matters, so that if you ever are unable to give the directions yourself, someone you know and trust can do that for you.

Sadly, many individuals don’t engage in formal estate planning because they don’t think that they have “a lot of assets” or mistakenly believe that their assets will be automatically shared among their children upon their passing. If you don’t make proper legal arrangements for the management of your assets and affairs after your passing, the state’s intestacy laws will take over upon your death or incapacity. This often results in the wrong people getting your assets as well as higher estate taxes.

If you pass away without establishing an estate plan, your estate would undergo probate, a public, court-supervised proceeding. Probate can be expensive and tie up the assets of the deceased for a prolonged period before beneficiaries can receive them. Even worse, your failure to outline your intentions through proper estate planning can tear apart your family as each person maneuvers to be appointed with the authority to manage your affairs. Further, it is not unusual for bitter family feuds to ensue over modest sums of money or a family heirloom.

Your estate is simply everything that you own, anywhere in the world, including:

• Your home or any other real estate that you own
• Your business
• Your share of any joint accounts
• The full value of your retirement accounts
• Any life insurance policies that you own
• Any property owned by a trust, over which you have significant control

If you die without a will in Illinois, you are said to have died “intestate.” Illinois intestacy law then determines who receives your assets — and that distribution may not reflect your wishes at all. For example, if you are married with children, Illinois law splits your estate between your spouse and children rather than passing everything to your spouse. If you have no spouse or children, assets pass to parents, siblings, or more distant relatives in a fixed order set by the state.

Beyond asset distribution, dying without a will means a court — not you — will decide who administers your estate and who becomes guardian of your minor children. Your estate will also go through probate, a public, court-supervised process that can be time-consuming and costly. Creating a proper estate plan is the only way to ensure your wishes are carried out and your family is protected.

Both wills and living trusts are valid estate planning tools, but they serve different purposes and work differently. A will takes effect only at your death and must pass through probate court before your assets are distributed. A revocable living trust, on the other hand, takes effect immediately upon signing, allows you to manage your assets during your lifetime, and — importantly — avoids probate entirely upon your death or incapacity.

For many Illinois families, a living trust offers significant advantages: it keeps your estate private, speeds up distribution to your heirs, and reduces court costs and delays. However, if you have a living trust, you typically also need a “pour-over will” to capture any assets not titled in the trust at the time of your death. The right choice depends on your family situation, the types of assets you own, and your goals. Our attorneys can help you determine which approach — or which combination — makes the most sense for your situation.

If you have children under the age of eighteen, you should designate a person or persons to be appointed guardian(s) over their person and property. Of course, if a surviving parent lives with the minor children (and has custody over them) he or she automatically continues to remain their sole guardian. This is true despite the fact that others may be named as the guardian in your estate planning documents. You should name at least one alternate guardian in case the primary guardian cannot serve or is not appointed by the court.

It is also worth considering that the person you name to manage your children’s finances (a trustee) does not have to be the same person as the guardian who raises them. In many situations, designating different people for these roles creates a healthy system of checks and balances.

Many people assume that a spouse or adult child can automatically step in to manage their finances or medical care if they become incapacitated. In Illinois, that is not the case. Without proper legal documents in place, a family member who wants to manage your affairs must petition a court to have you declared legally incompetent — a process that is lengthy, expensive, and emotionally draining.

The solution is to have a Durable Power of Attorney for Property and a Durable Power of Attorney for Health Care in place before incapacity occurs. These documents allow you to designate a trusted person to manage your finances and make medical decisions on your behalf, without court involvement. They are “durable” because — unlike a standard power of attorney — they remain in effect even after you lose capacity. Planning ahead is the only way to ensure the right people are empowered to help you when it matters most.

At Krupp & Krupp, we view estate planning as an ongoing process, not a one-time event. You should review your estate plan whenever a major life change occurs, including:

• Marriage, divorce, or remarriage
• The birth or adoption of a child or grandchild
• The death of a beneficiary, guardian, or named trustee
• A significant change in assets, income, or business ownership
• Purchasing or selling real estate
• Changes in Illinois or federal tax law
• Moving to a different state

Even if none of these events have occurred, it is generally a good idea to review your estate plan every three to five years to make sure it still reflects your wishes and complies with current law.

A comprehensive estate plan should include the following documents, prepared by an attorney based on in-depth counseling which takes into account your particular family and financial situation:

Living Trust: A Living Trust can be used to hold legal title to and provide a mechanism to manage your property. You (and your spouse) are the Trustee(s) and beneficiaries of your trust during your lifetime. You also designate successor Trustees to carry out your instructions in case of death or incapacity. Unlike a will, a trust usually becomes effective immediately after incapacity or death. Your Living Trust is “revocable” which allows you to make changes and even to terminate it. One of the great benefits of a properly funded Living Trust is the fact that it will avoid or minimize the expense, delays and publicity associated with probate.

Pour-Over Will: If you have a Living Trust-based estate plan, you also need a pour-over will. For those with minor children, the nomination of a guardian must be set forth in a will. The other major function of a pour-over will is that it allows the executor to transfer any assets owned by the decedent into the decedent’s trust so that they are distributed according to its terms.

Last Will & Testament: A Will is primarily designed to transfer your assets according to your wishes. A Will also typically names someone to be your Executor, who is the person you designate to carry out your instructions. If you have minor children, you should also name a Guardian as well as alternate Guardians in case your first choice is unable or unwilling to serve. A Will only becomes effective upon your death, and after it is admitted by a probate court.

Durable Power of Attorney for Property: This document allows you to carry on your financial affairs in the event that you become disabled. Unless you have a properly drafted power of attorney, it may be necessary to apply to a court to have a guardian or conservator appointed to make decisions for you during a period of incapacitation. This guardianship process is time-consuming, expensive, emotionally draining and often costs thousands of dollars. There are generally two types: a present durable power of attorney in which the power is immediately transferred to your agent; and a springing or future durable power of attorney that only comes into effect upon your subsequent disability as determined by your doctor.

Durable Power of Attorney for Health Care: The law allows you to appoint someone you trust to decide about medical treatment options if you lose the ability to decide for yourself. You can allow your health care agent to decide about all health care or only about certain treatments. You may also give your agent instructions that he or she has to follow. Your agent can then ensure that health care professionals follow your wishes. Hospitals, doctors and other health care providers must follow your agent’s decisions as if they were your own.

Living Will: A Living Will informs others of your preferred medical treatment should you become permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions regarding treatment. In conjunction with other estate planning tools, it can bring peace of mind and security while avoiding unnecessary expense and delay in the event of future incapacity.

HIPAA Authorization: Some medical providers have refused to release information, even to spouses and adult children authorized by durable medical powers of attorney, on the grounds that the 1996 Health Insurance Portability and Accountability Act (HIPAA) prohibits such releases. A HIPAA authorization form allows the release of medical information to your agents, your successor trustees, your family and other people whom you designate.