Skip to content

Posts tagged ‘Chicago Estate Planning’

Estate Planning Considerations for Couples With No Children

Estate Planning Considerations for Couples With No Children
Recently the Wall Street Journal published an article titled Estate Planning For Childless Couples, which outlined two important estate planning considerations for couples that do not have children: (1) distribution of the couple’s assets after death; and (2) naming someone other than one’s spouse to make health care and financial decisions if neither spouse is able to make such decisions.

Let’s start with the distribution of the couple’s assets. Last year I wrote about what happens to someone’s property in Illinois if he or she dies without a will. Let’s apply that to a hypothetical husband and wife with no children and no estate plan. If the husband dies first, Illinois law dictates that all of his assets pass to his surviving wife. At the death of the wife (assuming the wife has not remarried and has not had any children), the assets then pass to her siblings and parents. See the issue? In this example, only the wife’s family inherited from the couple due to the order of their deaths. The husband’s family received nothing. Many couples without children will set up an estate plan that allows the surviving spouse to use all of the couple’s assets, but at the death of the surviving spouse the remaining assets are split 50/50 between their families. Or, some prefer that a portion of their assets pass to friends or charity. All of this can be accomplished with proper estate planning.

The second consideration is naming a backup person – called a successor agent – to make health or financial decisions if neither spouse is capable of making such decisions. While one’s spouse is the obvious first choice to make health care and financial decisions, there are times when both spouses are unable to care for each other or even themselves. In this case, having designated ahead of time the person that is in charge of making all decisions greatly decreases the likelihood of a family dispute over who should make such decisions. A backup agent could be a family member or close friend. As the WSJ article notes, if there is not a trusted family member or close friend, then there are care organizations that are willing to serve as an agent. Regardless of who is named as successor agent, it is very important to have this Plan B in place.

Of course, there is always an alternative to setting up an estate plan: spend every penny before one’s death and leave nothing behind. Brilliant plan, so long as one can predict the exact date of his or her death, in which case I would suggest a lucrative career in the fortune telling business.

iPhone Last Will and Testament Recognized as Valid in Australia

phnExecuting a will is meant to be a formal occasion. In Illinois, as in most U.S. states, the will must be in writing and signed by the person making the will in the presence of at least two credible witnesses.

Last month a court in Australia declared a will typed into the Notes app of an iPhone to be legally valid. According to an article in The Australian, the deceased person faced an “intense personal crisis” and typed his last wishes into his phone before ending his life. The “writing” was not signed or witnessed as required by Australian law, but the court still recognized it as a valid will. The attorney for the estate opined that the will was recognized under these very unique circumstances and that the ruling would not set a precedent for wills that are not executed according to formal requirements.

This is not the first time a foreign jurisdiction has relaxed its formal requirements for will execution. In 1948, a Saskatchewan farmer became trapped beneath a tractor. Using his pocketknife, he scratched into the tractor’s fender: “In case I die in this mess, I leave all to the wife.” The Canadian court recognized this “writing” as a valid will, and the tractor’s fender remains on display at the University of Saskatchewan’s College of Law.

Does the Australian ruling mean that everyone should pull out his or her phone and tap out a quick DIY will? Definitely not. Of utmost concern are the questions raised regarding the authenticity of the document if there are no witnesses: was what was typed into the phone just a draft instead of a final version? Did somebody access the phone and add provisions leaving money to him or herself? Was the deceased competent and thinking clearly when he or she typed the will?

With technology rapidly evolving, the formal requirements of executing a will may evolve as well. Nevada already recognizes electronic wills; however, the idea has been slow to take hold in other states. Until the law catches up to technology, the consequences of pushing the envelope could be harsh—if a court refuses to recognize an electronic will, the deceased person’s property will be distributed according to state law as though the person died without a will. This may or may not align with the deceased person’s actual wishes. Therefore, until the law progresses, adhering to the formal requirements of will execution (and relying on an estate planning attorney to draft the will and supervise the signing ceremony) is the safest bet.

And it may turn out that the Saskatchewan farmer was inadvertently on the cutting edge of the law of electronic wills. “In case I die in this mess, I leave all to the wife” is less than 140 characters. All he needed was a hashtag . . .

Same-Sex Marriages Under New Illinois Law Will Be Entitled to Equal Estate and Gift Tax Treatment

November 2013 is in the books, and it was a historic month in Illinois. On November 5 the Illinois legislature passed a bill legalizing same-sex marriage. Surprisingly, the Chicago Sun-Times deemed this significant event the second most important story of the day after the death of chef Charlie Trotter.

same sex Chicago estate planning


How did the Chicago Tribune do?

same sex Chicago estate planning

Ahhhh, much better!

Governor Pat Quinn signed the bill on November 20. However, the bill does not take effect until June 1, 2014.

What does this have to do with estate planning?

The current state of the law is that same-sex married couples are entitled to the same federal tax benefits as heterosexual married couples. However, this does NOT apply to Illinois civil unions, because Illinois does not recognize a civil union as a marriage. After June 1, 2014, same-sex marriages will be entitled to the same federal estate and gift tax benefits as all marriages, including portability of the federal estate tax exemption and the unlimited exemption for gifts to a spouse. With equal access to these rules and proper estate planning, there is potential to significantly reduce a same-sex couple’s overall estate tax liability.

Side note: Even after poking fun above, I’ll forgive the Sun Times and assume that the story rankings on its mobile site are based on an algorithm—at least the paper didn’t put a picture of a random cat on its homepage.