Tag: will

Do You Need a Will If You Already Have Life Insurance?

Do You Need a Will If You Already Have Life Insurance?

If you already have life insurance, you may wonder why people keep saying that you need to make a will. Life insurance sounds like it will help your family out if you are not around. There are many reasons to make a will in addition to paying for life insurance.

  1. Life Insurance Provides a One-Time Payout to One Person

Life insurance requires you to make premium payments to an insurance company over time. If you pass away while the policy is in effect, the insurer will pay a lump sum to your chosen beneficiary. You can choose one or maybe more beneficiaries, but they only receive one payment. Depending on the type of policy, your family may only receive enough money to replace your income or pay expenses for a year or two. After that, the insurance will no longer help them.

In contrast, you can use a will to make gifts to many people. You are not limited to one or a few beneficiaries. Further, you can even use a will to roll your assets over into a trust. The trust can make payments to your family over time, and the trust assets may even grow in value.

  1. No Premium Payments or Term Required for a Will

To maintain life insurance, you have to make premium payments on a regular basis. These payments may not seem expensive at first. But if you fall on hard times, you could lose the insurance. You do not need to make regular payments to “afford” a will. Once you and your witnesses sign it, it will remain in effect until you die or change the will.

Further, many younger people purchase term life insurance, which stays in effect only for a specified term (such as 10 years). After the term ends, you are no longer covered. Older people often buy policies that last longer but end up costing a lot of money in premiums. Again, a will stays in effect for as long as you want with no extra cost.

  1. Dispose of All Your Assets with a Will

Life insurance assures a payment from the insurance company to a beneficiary. It has no effect on distribution of your assets after you die. You may not think you have many assets to distribute. But if you have a house, own stock, have valuable jewelry, or own a car, you have assets. Further, you might want those assets to go to specific people after you are gone. A will can give you peace of mind that your wishes will be carried out.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

What Happens When a Relative Dies Without a Will?

When a relative dies without a will, your family may not know what to do. Problems you may encounter include how to deal with funeral expenses, how to cover immediate bills, and what to do about the estate.

No Will? The Estate Needs a Representative

If you and your family cannot find your relative’s will, and there are bills to pay or assets to distribute, you may need help from the court. The probate court can appoint an estate representative to manage and distribute the deceased relative’s estate.

Note that you should not spend your deceased relative’s money until the court appoints the representative. While your family may want to use the money for a funeral or to pay bills, you should wait even if it means delaying the funeral. To make sure the deceased person’s assets stay in good repair and are distributed to the right people, you need to seek legal help as soon as possible after the death.

If There’s No Will, Who Gets the Assets?

Once the court appoints a representative, he or she will begin gathering assets and identifying heirs. The representative is also in charge of managing the deceased person’s money and property, including paying for the funeral and bills. The court provides some minimal supervision, such as requiring the representative to submit an estate inventory and accounting.

Since there is no will, the law of intestate succession will apply. This law explains who receives the estate assets and in which order. Any living spouses or children will inherit the bulk of the estate. If a spouse or children have died before the relative did, then more distant relatives such as parents or grandchildren could inherit. The intestate succession law in Illinois is very complicated, so the personal representative may need a lawyer’s help to interpret it.

Also, the estate may need to pay debts before the representative makes the final distribution to heirs. Many creditors have priority over estate funds, so they get paid first with anything left over going to heirs later. As a result, inheritances from people with many debts and few assets could be smaller than expected.

Finally, the lack of a will can create legal disputes among relatives about distribution of property. It is especially important to seek legal help as soon as you realize that there is no will. Having a lawyer for the estate can head off arguments before they begin.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

Estate Planning for Medical and Financial Emergencies

If you have medical or financial emergencies in the future, you could greatly benefit from a few key estate planning tools. No one knows when emergencies will strike, but advance preparation can be key. Consider signing advance health care directives, choosing a guardian for children, setting up a trust or savings, and getting life insurance or disability insurance.

Health Care Directives

The last thing you want in a medical emergency is for you or a relative not to be getting the medical care you need. It’s surprisingly easy to be out of the loop with doctors and nurses – especially if you and relatives do not have advance health care directives. You might not be able to talk to doctors on your relative’s behalf. Or the doctors might give you treatment that you do not want. Directives confirm your wishes in writing and tell doctors what they should or should not do in an emergency.

Guardian for Children

In an emergency, your children may need care that you cannot provide. To protect them, consider signing a guardian designation for each child. A guardian designation explains who you want to care for your child if you cannot. While a court ultimately gets to choose the appointed guardian, your designation passes on your wishes and may influence who is appointed.

Trusts and Other Financial Fallbacks

In a financial emergency, you may need some money stashed away to help you stay afloat. Starting a revocable trust or setting up an emergency savings account are two options to consider. You can place money or property into a revocable trust at any time, and you can take it out if you really need it (as long as you are the trustee). Meanwhile, the money or property can earn interest or appreciate in value. An emergency savings account or other savings also could pay your expenses in an emergency. Interest-bearing accounts gain value over time while staying accessible should you need the money.

Life Insurance and Disability Insurance

Finally, signing up for life insurance and/or disability insurance could help you and your family in an emergency. Life insurance pays a lump sum to a chosen beneficiary if the policyholder dies suddenly. It’s a good choice for families, especially those with young children. Disability insurance pays out a lump sum or monthly payments if you cannot work anymore due to a disability. It could be crucial making ends meet.

To discuss various options for preparing for medical or financial emergencies, contact a local estate planning lawyer. You may have even more options besides those listed here, and taking the time to plan could make all the difference.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

What Are Discretionary and Mandatory Trust Distributions?

If you are a trustee or trust beneficiary, you may want to know more about discretionary and mandatory trust distributions. You might have questions about how often the trustee needs to make distributions and in what amounts. It is important to get answers to these questions so that the trust functions properly, as the settlor intended.

What Are Trust Distributions?

To help the trust beneficiary, the trust’s settlor permits the trustee to make periodic distributions from the trust. The settlor decides on which language to include in the trust document regarding distributions. For example, the settlor could choose to allow distributions on a regular schedule, distributions if certain events happen, or discretionary distributions at the trustee’s option. Read the trust document to determine which kinds of distributions apply for a particular trust.

What Are Mandatory Trust Distributions?

Some trusts require trustees to make mandatory distributions. These distributions might take place every month or every year. Often, a trust requires distribution of a percentage of the interest earned on trust assets during the year. Or the trust might list a specific amount of money or property to be distributed. Sometimes, mandatory distributions must happen after certain triggering events. These could include a significant birthday (turning 18 or 21, for example) or marriage.

Trustees must make mandatory distributions described in the trust document. If they do not, they could face legal liability for breaching their fiduciary duties to the beneficiaries.

What Are Discretionary Trust Distributions?

In contrast, trustees do not have to make discretionary trust distributions. They get to decide when it is appropriate to distribute money from the trust (interest or principal) to the beneficiaries. Maybe the trust assets do not earn much interest in a particular year, so the trustee decides not to make a distribution. Or a beneficiary runs into hard times and the trustee decides that a distribution would help him out. Trustees need to be careful, however, not to favor any one beneficiary over the others. They also need to carefully track distributions over time. Finally, trustees or beneficiaries with questions about distributions should seek legal advice.

Need help with a trust or will? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

What Is a Spendthrift Trust in Illinois?

If you have a relative who is bad with money but needs support, you may want to form a spendthrift trust. Many people have someone close to them who cannot manage their own money. A relative may have a gambling problem, have a mental impairment, have a lot of debt, or just need help handling finances. You might be surprised to learn that estate planning could allow you to provide for and protect a family member who is like this.

The Perils of Supporting a Family Member Who Is Bad with Money

You may think that giving money outright to a relative is the best option, even if he or she is bad with money. Or you might want to put money in an ordinary trust for the relative’s benefit. Neither of these methods are usually your best option for a few reasons:

  • Your relative may spend all the money right away
  • Creditors could access the money (even if in a trust) to satisfy debts
  • You may owe gift taxes depending on the size of your gift
  • You lose any control over how the relative spends the money

Instead, consider starting a spendthrift trust to both provide for and protect your relative.

What Is a Spendthrift Trust?

A spendthrift trust is a special type of trust that give the trustee full authority to decide how to spend trust distributions for the beneficiary’s benefit. The trust’s language explains how often the trustee needs to make distributions and may specify the amount to be spent. In addition, the trust language must include a special “spendthrift clause” explaining the settlor’s intent that the trust be a spendthrift one.

Because the beneficiary of a spendthrift trust has no authority to spend or receive trust distributions as he wishes, most creditors cannot access those distributions to satisfy debts. The typical exceptions are debts like child support, alimony, and payment for “necessaries” like food and shelter.

It is very important that your spendthrift trust include the necessary language and have an appropriate trustee. If the trust is not set up right, creditors could go after the distributions and your trust would not have the effect you expected. Talk to a lawyer about how to set up a spendthrift trust to benefit a relative.

Want to create a spendthrift trust or another type of trust? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.