This document provides an overview of basic estate planning documents and concepts. It discusses wills, trusts, powers of attorney, living wills, probate, guardianships, and their purposes. Key points covered include how a will passes property according to instructions but requires probate, while a living trust avoids probate; and how powers of attorney can designate someone to handle financial and medical matters if one becomes incapacitated. The document also summarizes estate tax implications. Overall it serves to explain common estate planning tools and why having an up-to-date plan is important.

1. Samuel De Jong
Arbor Law, LLC
20 N. Clark St
Ste 2700
Chicago, IL 60602
Estate Planning Basics

2. Why get an Estate Plan Done?
 What does an Estate Plan do?
 There once was a family…

3. Basic Estate Planning Documents
 Will
 Living Trust
 Power of Attorney – Financial
 Power of Attorney – Healthcare
 Living Will

4. WHAT IS A WILL?
 A will is a legal document which allows you to leave
your property to persons or charities in the amounts
you wish.
 It may also name guardians for your minor children,
trustees for any trusts you create in your will and
your personal representative (executor) to administer
your probate estate.
 A will only takes effect upon death and is submitted
to Probate

5. WHAT IS A TRUST?
 A trust is a method of holding property
 Is created based on a written agreement
between three persons: 1) the person
creating the trust (grantor); 2) the person
administering the property (trustee); and 3)
person who enjoys the benefit of the property
(beneficiary).

6. WHAT IS A TRUST?... Cont
 Trusts have many different uses.
 Trust can be created during life time (living
trust) and by operation of will (testamentary
trust)
 Also trusts can be revocable or irrevocable.

7. What is a Trust?... III
 Testamentary Trusts
– Set up to manage assets of minors
– Can put conditions on how assets are managed,
dispersed to beneficiary, and at what age
ultimately given to beneficiary
 Living trust is the most common form of trust.
– Grantor, trustee, and beneficiary are all the same person
– Trust document specifies who is successor
– Thus avoids probate

8. WHO SHOULD HAVE A TRUST?
 It depends.
 Trusts for minors should be set up to manage any
assets they inherit
 Trusts can also be used to address issues like tax
planning, asset protection and problematic heirs.
 Properly organized living trusts will avoid probate.
This may be important depending on issues such as
cost of probate, privacy etc.

9. WHAT IS PROBATE?
 Probate is the court process in which will is submitted to court
and personal representative is installed
 During the probate process, the personal representative will go
through many routine tasks, such as
– Distributing property as directed by the will or state law if
there is no will
– Paying estate debts and taxes
Probate typically lasts 6 months to a year (small estates).

10. WHAT HAPPENS TO YOUR PROPERTY IF
YOU DO NOT HAVE A WILL?
 If you do not have a will, your property will be
distributed according to “intestate
succession” which is a pattern of distribution
found in the Illinois statutes.
– If only spouse only survivor, everything to spouse
– If children only survivor, everything to children
– If spouse and children both survivors, half to
spouse and half to children
– If no spouse or children then parents, then
siblings, etc…

11. WHAT HAPPENS TO YOUR CHILDREN IF
YOU DO NOT HAVE A WILL?
 If no guardian is appointed by a will or other
written instrument, the guardian will be
appointed by the court.
 The person appointed by the court, however,
may not be the first person you would choose
to care for your children.

12. WHAT HAPPENS TO ANY MONEY
DISTRIBUTED TO YOUR MINOR CHILDREN IF
YOU DO NOT HAVE A WILL?
 If you have a will, you can include trust provisions, which
create a trust for your minor children. Within these trust
provisions, you can name the person or institution that
you want to manage the money you leave your children.
 If you do not have a will, the court may appoint a guardian
ad litem to manage your minor children’s financial affairs.
The appointed guardian ad litem may or may not be the
same person serving as guardian, and may not be the
person you would choose to manage the money left for
your children.

13. ADVANTAGES OF HAVING A WILL
 You choose who you want to receive your property,
which may be different than stated in the Illinois
intestate succession statutes.
 You choose who you want to be your children’s
guardian.
 You can create a trust in the will and choose who
you want to serve as trustee for your children’s
financial needs and make preferences known.

14. NON-PROBATE PROPERTY
 There is other property that will not pass through the
probate estate: 1) Joint Tenancy Property 2) Life
Insurance; 3) Retirement Accounts
 On all Life Insurance policies and Retirement
Accounts, you must list a primary and contingent
beneficiary. The proceeds will be paid out to
whomever you listed as the beneficiary, regardless
of what your will may say.
 Designate beneficiaries with care!

15. PLANNING FOR INCAPACITY
 Typically this is the most overlooked issue for
families.
 Plan ahead by designating someone to act on your
behalf as to your person (including medical) and your
property.
 If not, your family will need to go to court for a
guardianship order to do so.

16. POWER OF ATTORNEY FOR PROPERTY
 A property power of attorney is a document in which
you name another person to act on your behalf for
legal and financial matters.
 The power of attorney may allow your agent to do all
acts or the acts may be limited to certain acts.
 By appointing an agent, you can avoid a court
procedure to appoint a conservator in the event you
become disabled or unable to make your own
decisions.

17. MEDICAL DURABLE POWER OF ATTORNEY
 A medical power of attorney names another person
to act on your behalf for medical decisions.
 A medical power of attorney becomes effective only
if you are unable to make the decisions for yourself.
 The power of attorney may allow your agent to do all
acts or the acts may be limited.

18. LIVING WILL
 A living will states your wishes regarding the use of
artificial life support systems if you are terminally ill,
comatose, and beyond hope of recovery.

19. ESTATE TAX CONSEQUENCES
 You will pay estate tax only if the value of
your assets is over the applicable exclusion
amount.
 Applicable Exclusion Amount:
– Currently $5.45 million (Federal)
– $4 million (Illinois)
 Step-up in basis (fair market value)

20. ESTATE TAX con’t
 As long as the fair market value of your
assets are below the exclusion amount, there
will be no estate tax consequences upon
your death.

21. WHO SHOULD HAVE AN ESTATE
PLAN?
 Families with children
 People with outdated Estate Plans
 Everyone over age 18!

22. Conclusion
Thanks for listening!