Build a foundational plan and create a lasting legacy
Estate planning is not just for the wealthy or the elderly. Every adult can benefit from having a thoughtful plan in place. At its core, estate planning is about making intentional decisions for yourself and the people you care about, both during your lifetime and beyond. Whether your goals are to provide for your family, simplify the administration of your affairs, or ensure your wishes are clearly understood, having even a basic plan in place can make a meaningful difference. By understanding the purpose and function of key foundational estate plan documents such as wills, trusts, and powers of attorney, you will be better equipped to make informed decisions that align with your priorities. Understanding these principles and concepts will help you evaluate your options with confidence and create a plan that reflects your values, your family, and your longterm goals.
What are the foundational estate plan documents in Illinois?
Power of Attorney for Property
This document nominates the people who you trust to make financial decisions on your behalf, in your best interests. This includes the ability to pay your bills, buy or sell property, manage your investments, make gifts to your family or charities, and other financial matters you would normally attend to. This document grants authority over all property held in your name (not property in trust).
Power of Attorney for Health Care
This document nominates the people that you trust to make health care or other personal decisions on your behalf, and allows that person to obtain information from your treating medical providers about your care or condition. This ability includes making decision about end-of-life treatment, communicating with your physicians, and agreeing or refusing treatment options.
Last Will & Testament (“Will”)
This document nominates guardians for any children who are minors at the time of your death and also appoints executors, who are the people who in charge of paying your final expenses and debts, collecting assets held in your name, and distributing them to your beneficiaries. If you have a revocable trust, the will most often directs that all property should be transferred to your trust and distributed through that document, which is more private. Without a revocable trust, the Will will serve as the operative document to set distributions to your beneficiaries and can include testamentary trust(s), which are trusts that only spring into existence at your death (such as a division of assets into separate trusts for each of your children).
Revocable Trust
This document (also called a “living trust”) can hold most of your assets during your lifetime and will distribute all trust property at your death according to your specific terms. It is more private that a Will in that only the trustee (person in charge of managing the trust) and the beneficiaries can see the document. In a typical Illinois core estate plan, this is the central operative document.
Things to consider as you begin your foundational planning
Who are the people you trust with decision making and financial management? Think about this from the perspective of the people who might control your assets after your death but also those who would be best positioned to make decisions for your in the event you are living but incapacitated. These are the individuals who might be named in the fiduciary positions of agent under powers of attorney (health care and/or property), executor, and/or trustee. For executor/trustee roles, you might also consider corporate trustees, which are financial institutions who can serve as neutral, independent fiduciaries and can be particularly helpful if sophisticated, professional management of assets is required or to avoid putting family members in the middle of potentially contentious management or distribution decisions.
Where would you want your assets to go in the event of your death? Think about the immediate (perhaps to your spouse and if they are no longer living, to your children, for example), but also further scenarios (contingent beneficiaries). Who are the individuals you want to benefit from your estate? Are there any charitable organizations (charities, foundations, or donor-advised funds for example) that you would want to incorporate either directly or as contingent beneficiaries?
How do you want your assets to pass to your beneficiaries? This becomes particularly poignant with regard to children. When children are young, its hard to envision what the future will hold— will they be able to manage potentially complex financial transactions? At what age? Are there guardrails that could be beneficial to include in case they inherit during a particularly fraught time (during divorce or a law suit)? Is it important that assets stay in the family and not flow out to other individuals (spouse of a beneficiary, or their friends)? All of these considerations can be addressed in your estate plan.
There are other considerations to work through which will be addressed in the course of estate planning. The role of an estate planning attorney is to guide clients through these options and help assess what might be appropriate for each client’s particular situation. Having given some of these core principles and foundational documents some thought before starting the process will go a long way towards making your estate planning process most efficient.