The Coyle Law Office
131 East 9th Street
Lockport, Illinois 60441
Phone: (815) 838-6199

Do I Need an Estate Plan?

Little Known IL Laws Regarding Caregivers and Inheritance

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In families with a sick or elderly parent (or grandparent, aunt, uncle, cousin, etc.), it is common for one family member to bear most of the burden of taking care of that relative. Caring for an elderly parent can be extremely taxing, especially when the caregiver has their own family to tend to as well. I find it is quite rare, though, for the sick relative to have an estate plan in place that takes this into consideration (even when that caregiver is not being paid).

In some families, this does not lead to any issues or resentment because perhaps the caregiver never wanted any more recognition for their care or – in some cases – the family has all agreed to provide extra gifts from mom’s estate to the sibling that took the burden from the rest of the family. In many instances, though, there is some friction which can often go unaddressed as it is a touchy subject that can be difficult to bring up. In Illinois, there are two statutes to be aware of that can have a profound effect on the rights a caregiver may have in the estate of the cared-for relative.

First, the Illinois Probate Act provides that caregivers can file a “Statutory Custodial Claim” against the Estate of a deceased person if that caregiver meets some very specific criteria (755 ILCS 5/18-1.1):

  1. The person making the claim must be the spouse, parent, sibling, or child of the person who received the care; and
  2. The person making the claim must ‘dedicate himself or herself to the care’ by living with and personally caring for the person for at least 3 years.

In cases where that criteria is met, the amount of award is to be determined by the Probate judge who should take into consideration the emotional distress and the lost lifestyle and employment opportunities of the caregiver. The law also sets minimum award amounts that vary based on how disabled the person was when they were receiving care. The minimums range from $45,000 to $180,000.

This law can be very beneficial to a family member who meets the criteria above and who would otherwise receive no consideration for the care they provided. This is especially true with regard to estates that are subject to other claims (such as medical bills, credit card bills, or unpaid taxes) because Illinois considers a Statutory Custodial Claim a 1st Class Claim, meaning it is to be paid by the estate before almost all other debts or claims (755 ILCS 5/18-10).

The second law to be aware of is new as of 2015 and, in many ways, is the inverse of the law discussed above. The new section of the Probate Act – 755 ILCS 5/4-a – is titled “Presumptively Void Transfers” and deals with non-family caregivers who are left gifts in the estate plan of the person they cared for. Essentially, the law states that any will, trust, beneficiary designation, etc. that would leave a gift larger than $20,000 to a caregiver is presumed void and ineffective. This would only be the case if the transfer or document is challenged; but, if any such challenge occurs, it is the obligation of the caregiver to prove that the transfer was done of the person’s own free will and not due to fraud, duress, or undue influence. This is the opposite of most such challenges as courts will usually presume that any such transfer or document was a reflection of the deceased person’s wishes and the burden is generally on the person making the challenge to prove that the transfer was done inappropriately. Importantly, the law also states that if the caregiver is unable to prove that the transfer was done of the deceased person’s own free will, then the caregiver shall be responsible for all the attorney’s fees and court costs for both sides.

So, if you are a caregiver, are receiving care, or know someone to whom these situations apply, it is crucial that the estate plan wishes of the parties are carefully written out and overseen by an attorney who specializes in that area. It is a lot easier (and MUCH cheaper) to set things up correctly while mom or dad are still alive and have their faculties than waiting too long and finding out we can’t do what they would have wanted.

Do I Need an Estate Plan?

Many people think that they are too old, too young, or don’t have enough assets to warrant an estate plan. In almost all situations, however, planning your estate can save you and your loved ones headaches, time, and money.

You may not know it, but everyone has an estate plan. If you die with no will, your property will be distributed according to Illinois statute. Very rarely, however, does the statute conform with how you would desire your property to be distributed. It is important that you sit with a professional estate planner who can ensure that your property is given to who you want to have it and that the IRS gets as little as possible.

What can my estate plan do?
An estate plan is a customized set of documents that provide for the distribution of your property at your death. With a well-done estate plan, you can decide who is in charge of your property before it is distributed and to whom it will be given (which may include family, friends, charities, or even to provide for your pet). You can delay distributions or have distributions held in a trust for your heirs. Also, you can ensure that a minimum amount of tax (or, often, no tax) is to be paid from your estate.
How old should I be when I create an estate plan? How much money do I need to have?
There are many factors besides wealth and age that affect the need for an estate plan. If you have minor children, any property you own might not be transferred directly to them. Instead, a court-appointed guardian may be required to look after the child’s interests which requires time, court costs, and the guardian’s expenses. If you care for a dependent adult, the same result could occur. Further, any business you may own will likely be stuck in a lurch while the court decides who will retain your interest – and the business may be ‘adrift’ with no leader during this time.Any size estate can benefit from proper planning. For modest estates, keeping court costs and administrative fees to a minimum means that your heirs will get to enjoy more of the fruits of your labor. Further, many people greatly underestimate their net worth. Retirement accounts, home values, future inheritances, and appreciation of investment property are often overlooked by individuals as they resign themselves to thinking of themselves as poorer than they actually are.Other situations which would lead to a need for an estate plan include:
  • Children from a previous relationship
  • A desire to give charitable gifts
  • Ownership of retirement accounts (401(k)s, 403(b)s, IRAs, etc.)
  • Children (or their spouses) who have a substance problem; are not good with money; or who receive government assistance

 

Do I need a Power of Attorney?
A Power of Attorney is a legal instrument which allows you (the Principal) to give someone else (the Agent) the authority to act in your place should you be unable.There are two separate types of Powers of Attorney (POA). First, the POA for Health Care is an instrument whereby you appoint someone to make decisions regarding your medical care should you be unable to make those decisions. In the document, you can leave guidelines stating what choices you would like the agent to make in different situations.The second POA is the Property POA. This document gives someone else the power to manage your finances if you become unable to do so. A Property POA can give your agent the power to buy or sell personal property as well as real property on your behalf; pay your bills and taxes; operate your business; borrow money on your behalf; and perform other financial and personal functions if you are incapacitated.Many individuals are (rightfully so) afraid to give someone else so much power over their property or health care. While this is a valid concern, it is important to remember that the state legislature has already determined who will make such decisions if you do not appoint someone yourself. Further, by preparing your POA, you can choose to limit some or all of these powers or have them be shared by multiple agents.
What is a trust and do I need one?
A trust is an entity that can hold property for the benefit of a named person (e.g. your spouse), multiple people (e.g. your children), a class of people (e.g. your nieces and nephews), or any other entity that you may want to benefit. Basically, you (the Grantor) place property in the trust and that property is controlled by someone else (the Trustee) who agrees to ensure the property is used for the benefit of those named in the trust (the Beneficiaries).One common trust is a revocable living trust. With this type of trust, the grantor, trustee, and beneficiary are typically the same person. So, you can place property in trust for your future heirs while still retaining complete control over that property. Once you die, the property remaining in the trust is controlled by the successor Trustee who will use or distribute the property for the benefit of the successor Beneficiaries.This type of trust is popular for individuals who want to avoid probate (because the property is owned by the trust, and not the deceased) as well as individuals who may have a taxable estate.

Still have questions?

Please contact us anytime! We look forward to hearing from you.