Chicago Estate Planning Law

Chicago Charitable Deduction

There is allowed as a deduction from the taxable estate any gift to a qualified group organized and operated exclusively for religious, charitable, scientific, literary or educational purposes. A gift to a trustee for the benefit of any such organization also generates the deduction. A gift of a remainder interest also generates the deduction. A gift of a remainder interest also qualifies.

For instance if you will assets to a trustee on your death to be held for the benefit of your spouse while he or she is alive and then to be paid to a charity. The value of that interest at the time of your death is deductible. Actuarial tables provided by IRS are used to make the valuation.

For all estate planning needs in Chicago you can reach Don Thompson at 312-782-0844.

Chicago Life Insurance Terms

These are trusts designed to own or be the beneficiary of life insurance or both. They usually contain certain technical provisions governing the trustee's powers concerning life insurance. One kind is revocable, designed merely to provide for estate tax savings by using the marital deduction and credit against tax and to provide for management of the insurance funds by someone other than the beneficiaries. The insured can retain the right to change beneficiaries and to borrow against the policy if it has cash value. The insured's will very often pours over all other assets to this trust when the insured dies.

The other kind is an irrevocable life insurance trust. The insured gives up all rights over the policy and transfers it to a trust of which he or she is not trustee or a beneficiary. The object is usually to remove the proceeds from the taxable estate of the insured and sometimes the surviving spouse as well and to provide for trustee management of the proceeds. Special provisions of a technical nature called Crummey powers can be used to allow yearly gifts to the trust up to $5000 per trust beneficiary to be made free of gift tax to pay premiums on the policy. The gift tax is avoided on transfer of an existing policy into the trust by borrowing against the policy's cash value of the policy. Frequently a new policy is purchased and transferred to the trust so there is no gift tax problem on creation of the trust.

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Marital Deductions Tax Free

All property passing to a spouse is deductible - whether by lifetime gift or at death. This means that while the value of these transfers is in the estate, it is also deductible.

Whatever is given to a spouse is not taxable. If you give your spouse $10 million during life or at death there is no tax. But when the spouse dies later there is no marital deduction unless the spouse has remarried.

At this time the spouse could give your property to his or her second spouse, unless you take steps to avoid it.

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Involving Children in Estate Planning

Estate planning often involves lifetime gifts to children. This gets appreciation on the assets out of the parents' estates. This was also done in the past to shift income to children who were usually in a lower tax bracket.

Now a child under 14 pays tax at the parents' highest marginal tax rate on the child's unearned income over $1600 if that would be higher than the child's tax.

Call attorney Don Thompson at 312-782-0844 for all Chicago Estate Planning matters.

Illinois Joint Trusts

When spouses (or anyone else) together create one trust it is called a joint trust. These trusts are common in community property states, but are not widely used in Illinois because of the adverse estate and gift tax consequences that may result. Recently the tax rules have been eased in some private letter rulings and there are also many non-taxable estates so the use of joint trusts is increasing. There are still many technical pitfalls and separate trusts are usually advisable.

These should not be confused with joint wills. When both spouses share one will it is called a joint will. Joint wills, for a variety of reasons, should not be used.

Contact estate planning lawyer Don Thompson today. Call 312-782-0844.

Chicago Organ Donations

The organs, tissues or parts of a decedent's body may be donated to hospitals, doctors, schools, organ banks or storage facilities, organ procurement agencies or individuals for research, therapy or transplantation. The gift may be made by the decedent while alive or by certain persons in the order designated by statute in the case of someone who has died. The persons who may make the gift in the order they may act are:

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Remember the Small Estate Affidavit

What if you forget minor items of property or it is not convenient to transfer all your property such as your checking account or car? $100,000 or less of personal property can be transferred to your heirs or the beneficiaries of your will without probate by means of a small estate affidavit.

This is an affidavit by a survivor which states what property is in your estate (outside the trust or without beneficiary designation), what debts still must be paid, and who is entitled to the property. This authorizes banks and others to release the property to the persons indicated in the affidavit without court intervention.

Contact Don Thompson for all you Chicago Estate Planning Needs. Call 312-782-0844 today.

Make up a Will in Chicago

These do not dispose of property. Instead they tell your doctor or hospital not to keep you alive artificially. They must be signed with witnesses and all the formality of wills. To be effective you must give them to your doctor and to whoever will have charge of your care.

Do you have a will prepared? If not, add it to your to-do list!

Don Thompson is an expert in the field of Estate Planning and Probate. Don can be reached at 312-782-0844.

Income Splitting With a Member of Your Family in a Lower Tax Bracket

Sometimes it is possible to shift income within a family from someone in a higher tax bracket to someone in a lower bracket. This is difficult with children under 14 since their unearned income (except for the first $1600) is taxed at their parent's tax rates. However, not all children are under 14.

Basically income is split by giving property to children.

Thereafter the income from it belongs to the children. Interests in family businesses or farms are ideal. Gifts of cash work too if available. Employing your children also is a good way to shift income to them. However, they must actually work and the pay cannot exceed a reasonable amount for what they do.

For Chicago Income Splitting contact an experienced will, trusts and estate planning lawyer, Don Thompson.

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Chicago Uniform Transfers to Minors Act

Minors do not have legal capacity to contract or deal with assets. They have no capacity to sue or be sued. For this reason minors do not usually hold title to property in their own name. Instead title to a minor's assets is usually held by a guardian or property is given to a trustee to hold for the benefit of the minor. Guardianships and trusts are expensive and for that reason, among others, are not suitable for smaller amounts of money or other property. For this reason Illinois and most other states have statutes similar to the Uniform Transfer To Minors Act.

In Illinois the Act allows a transfer to be made to a custodian for the benefit of the minor. The Act specifies the consequences of the transfer and the rights and duties of the parties. There are no documentation requirements beyond the form of the transfer itself. There are particular requirements for different kinds of property, but generally the document of transfer must state that the transfer is being made to a named custodian to hold for a named minor and the document must state the transfer is being made under the Illinois Uniform Transfers to Minors Act.

Learn more about the Uniform Transfers to Minors Act.