The Three Principles of Planning LEGAL By Lindsey Markus ICON No client or attorney can avoid valued at $100,000 or more titled in their into the decedent’s trust at death. Tis pro- death and , but estate plan- individual names are required to open a vision does not ensure the assets avoid pro- AN INTERVIEW WITH THE estate. Additionally, guardian es- bate. To ensure assets avoid probate, clients ning does not need to be over- tates need to be opened for any minor child, must retitle assets into the name of their MOST REVEREND whelming. Estate planning can be further draining . Many clients trusts prior to death. explained through three guiding try to avoid probate with strategic titling of Revocable Living Trust – A living trust principles: minimize estate and assets which pass to specifc benefciaries provides no asset protection during the income consequences; avoid by operation of law or transfer on death grantor’s lifetime, but upon death the living designations. Tese forms of ownership are trust becomes irrevocable and assets can be BISHOPBISHOP probate; and provide asset pro- problematic if the parties die simultane- passed in trust to benefciaries. It can pro- tection for benefciaries. ously; fail to maximize the use of estate tax vide for the creation of trusts which can be exemptions; provide no asset protection for used to promote values to heirs (encourage Estate and Income Tax Consequences benefciaries; and may mandate guardian education and philanthropy) and protect THOMASTHOMAS JOHNJOHN Adjusted annually for infation, the 2014 of the estates for minor children. the from the reach of creditors, federal estate tax exemption is $5.34 million In contrast, if virtually all assets are ti- government (in the case of a special needs per person (and will be increased to $5.43 tled in a client’s living trust prior to death benefciary), judgments or divorces. In the million in 2015). However, the Illinois es- and benefciary designations list the living event of the grantor’s incapacity, guardian- PAPROCKIPAPROCKI tate tax exemption is $4 million per person trust, the probate process and guardian es- ship or conservatorship proceedings are also (no infation adjustments). Te tax rates for By Jackson Williams tates can be avoided. avoided as the successor trustee comes into Illinois residents are 28.5 percent from $4 power in the event of disability or death. million to $5.34 million and 50 percent on Asset Protection every dollar over $5.34 million. While many are not faced with creditor (POA) for Property & With proper planning, these taxes can be concerns, in today’s litigation-crazed soci- Health Care minimized or avoided. Ideally, a married ety, I advise clients to live by my mother’s Everyone over the age of 18 is encour- couple with a properly structured estate adage, “hope for the best and prepare for aged to have POAs for property and health plan should be able to pass $8 million and the worst.” care. Te latest statutory POA for property $10.68 million at the federal and state lev- Trusts provide asset protection from became efective in July 2011 and the latest els, respectively, with no tax owed until the creditors, including future ex-spouses; statutory POA for health care is efective in surviving spouse’s death. However, due to protect minor children from themselves; January 2015. Clients with outdated POA the Illinois estate tax exemption, in 2014, ensure inherited retirement plans are asset for health care should make sure their ex- Illinois residents with outdated documents protected; and maximize wealth transfer. isting grants the agent access to medical re- may be subject to a tax of $382,857 on the When assets are distributed outright cords to make informed medical decisions frst spouse’s death. Tis analysis is based on and free of trust (or when a benefciary has in accordance with the Health Information Illinois Attorney General Estate Tax Calcu- rights of withdrawal upon reaching certain Portability and Accountability Act. lator 2013 – 2014. As the federal exemption ages) the assets are reachable by creditors is adjusted annually for infation and the and included in the benefciary’s taxable state exemption stays at $4 million, the po- gross estates. In contrast, if assets remain tential tax will continue to increase. With in trust, even if a benefciary becomes his exemptions so high, and income tax rates or her own trustee upon reaching a certain increasing to 23.8 percent, clients need to age, asset protection can be maximized. update documents to minimize income tax For these reasons, clients are encouraged consequences for future generations. Revo- to have the following four documents as cable living trusts provide the fexibility to the foundation of their estate plan. maximize estate and income tax planning. Pour Over Will – When a client has a Avoid Probate living trust, ironically the will plays a minor Unlike the high estate tax exemptions, role. A pour over will works in conjunction the threshold to avoid probate is much with a living trust. Any assets titled in the lower. Te families of decedents with assets decedent’s individual name will pour over

Lindsey P. Markus, a principal at Chuhak & Tecson P.C., draws on her early career in business, fnance and clinically applied neurosci- AUDREY NILSEN PHOTOGRAPHY ence to communicate with clients and develop creative solutions to ft their estate planning, wealth protection and corporate needs. She has been recognized as one of the 40 Illinois Attorneys Under Forty, a Woman Making an Impact in the Law and an Illinois Super Lawyer Rising Star. She is a collaborative law fellow and is licensed in Illinois and Florida. For more information, visit www.LindseyMarkus.com.

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