Our office prepares complete estate plans consisting of:

• Living Trusts

• Wills and Memoranda

• Land Trusts

• Powers of Attorney for Heath Care

• Powers of Attorney for Property

• Living Wills

• Advanced Estate Planning and Tax Planning    

  • Irrevocable Life Insurance Trusts

  • GRIT's GRAT's and GRUT's

  • Crummy Trusts

  • Generation Skipping Trusts

  • Special Needs Trusts

  • Qualified Retirement Account Planning

  • Specialized Estate and Gift Tax Planning

We can also assist in the transfer of your assets into trust.

Owens, Owens & Rinn, Ltd. offers a Estate Planning Information Packet without obligation.  Included in this Packet contains valuable information for you on your estate planning options.  Below is just a portion of what is included in this Packet.  To request our Estate Planning Information Packet without obligation:

    1.    Please call our office at (847) 825-2128; or

    2.    Please e-mail us and include your name, address and phone number.

Schedule an appointment to create an Estate Plan:

Please download our Estate Planning Booklet, WordPerfect or Word97 document, and complete the eight page booklet, and e-mail the booklet to us or if you find it easier, please print out the booklet and then mail to:  Owens, Owens & Rinn, Ltd., P.O. Box 578, Park Ridge, Illinois 60068

Download our Estate Planning Booklet in:

WordPerfect

Word 97 

    1.    Please call our office at (847) 825-2128; or

    2.    Please e-mail us and include your name, address and phone number.

The Self Declaration (living) Trust has become an increasingly popular vehicle for current income management as well as estate planning. One of its most attractive features is the avoidance of probate. In Illinois, assets held in an individual’s name totaling over $50,000 will require the appointment of an executor or administrator by the Probate Court for transfer to the intended beneficiaries. These assets must be held for a period of at least six months for the benefit of creditors.

A self declaration trust may be established by any person. For example, a husband and wife may create a trust naming themselves as trustees. Bank accounts, pension plans, stock, real estate and other property, insurance policies and death benefits are then transferred to the trust, with the grantor(s) of the trust named "as trustee." The use of a self declaration trust in no way diminishes the individual’s right to control his or her own finances, but on the contrary provides many safeguards.

The document creating the trust, called a Declaration of Trust, may provide for income and principal payments during life and also provide for any disposition of property upon death that may be provided for in a will. For instance, one spouse may provide for the passage of all property to the other spouse upon his death; may make bequests to children and others; and may make specific directions for the disposition of assets.

Upon death, the provisions of the trust continue to be effective. There is no necessity for probate of the trust assets. This means that there is no delay in the orderly transfer of property; the costs, if any, are modest; and all transactions are private. Contrast this with the probating of a will, which requires a minimum of six months, may result in a devaluation of the estate and the estate information is a matter of public record.

It should be emphasized that the self declaration trust does not itself offer a tax savings for individuals, but can help substantially in avoiding probate and its attendant expenses and assist in achieving the desired tax savings by proper estate planning.

Living trusts are just as important under the new law as they were under the old law. All the non tax advantages of trust continue to exist, such as avoiding probate, protecting against incapacity, privacy of information, the potential for creditor protection for later generations, protection of beneficiaries from the beneficiary’s own imprudence or incapacity, etc.

Unmarried Individuals. Lifetime gifting, even if taxable, can always produce significant tax savings for beneficiaries. With the increase in the gift tax exemption beginning next year, lifetime gifts will become even more important. However, a gift in excess of the exemption amount will be taxable, and after 2010, the estate tax will be eliminated.  However, unless Congress extends the Repeal, the estate tax will come back into existence in 2011.

Married Individuals. All married couples should review their estate plans at least every year. This is crucial in 2002. Nearly all marital deduction formula provisions now in use are designed to allocate to the credit shelter trust (By-Pass Trust or B Trust) the maximum amount that can pass free of tax without claiming a marital deduction or incurring a state death tax under the current state death tax credit provisions. The problem is that the increasing estate tax exemptions may shift too much to the credit shelter trust. The following example illustrates the potential problem:

Example: Clients H and W have a $1.5 Million estate. H has $1 Million in his living trust and W has $500,000 in her living trust. H passes away in 2002. Under the terms of H’s living trust, H’s trust splits into two trusts, the A Trust (Marital Trust) that passes to the surviving spouse free of estate tax and the B Trust (Credit Shelter Trust). Under the terms of the B Trust, all income is paid to the surviving spouse for life and principal is available for the surviving spouse and the children under "ascertainable standards" (health, support, maintenance and education).

The potential problem is that too much may be allocated to the Credit Shelter Trust and not enough goes to the surviving spouse. This may or may not have been what H wanted after his death.

Two potential solutions are the disclaimer trust and the credit shelter with a limit. First, the disclaimer trust is a trust that leaves all of the estate outright to the surviving spouse with a provision that any property disclaimed by the spouse would be added to a credit shelter trust. At the first death, the surviving spouse and the attorney for the estate review the asset situation in light of the existing estate tax law and decide how much to allocate to the credit shelter trust. Note that with this approach, the surviving spouse may not utilize any of these assets until this planning is accomplished. The rules for disclaimers are very specific and you should consult a qualified estate planning/tax attorney.

The second approach is to simply add language to the existing credit shelter trust placing a limitation upon how much is to be added to the credit shelter trust. This alternative allows the decedent to control the amount passing to the credit shelter trust and takes the burden off the surviving spouse.

Because each estate planning situation is unique, each of you must review your estate plan to see exactly how the new law may affect your particular plan. We will be happy to schedule an appointment with you to review your specific situation.

Another very important aspect which can be part of a living trust is the provision for the incapacity or disability of the person(s) creating the trust. When, for example, a person becomes physically disabled or mentally incapacitated, the successor trustee may assume control of the trust assets under the terms of the trust without the necessity of a court proceeding to declare the person disabled. This also eliminates costly probate proceedings required for withdrawal of funds.

Your successor trustee is responsible for carrying out all your wishes and distributing your trust. We recommend the selection of a trusted family member well versed in finances to act as your successor trustee. It is also recommended that you consider the selection of a bank or trust company to act as successor trustee in the management of your assets in the event a qualified family member is unable to serve as successor trustee.

Bypass Trusts May Reduce Estate Taxes

Owens, Owens & Rinn can set up trusts which are commonly used to reduce estate taxes in the estate of the surviving spouse. The trusts divide the estates between spouses and enable both the husband and the wife to take advantage of the tax credit equivalent amount. Below is a chart that will help you understand how to reduce your estate taxes.

ADVANTAGES TO A REVOCABLE LIVING TRUST:

• You retain full control over your assets

• Once the trust is funded, all your assets are under one plan

• During your lifetime, if you are incapacitated, your successor trustee manages your financial affairs without court intervention

• Avoids probate upon demise and eliminates court costs and reduces attorneys’ fees

• Can reduce or eliminate Estate tax

• Confidentiality of disposition and identity of beneficiaries... living trusts are not a matter of public record

• Can be easily amended according to your desires unlike the formality of a will

• Assets are distributed according to your wishes

• Can protect dependents with special needs

• Administration time after death minimized

• Large fees of corporate trustees eliminated by use of family members

• Prevents joint ownership problems and unintentional disinheriting

ILLINOIS LAND TRUST

A land trust is a unique and inexpensive manner of handling title to real property which frees the owner of many problems peculiar to real estate, whether it is a home, income producing property, or just vacant land.  A Trust is formed by an agreement between you and yourself as Trustee, a Bank or a Trust Company.   The title of record is deeded into the Trust.  The Trust Agreement spells out in detail that you are the beneficiary and retain all rights of ownership which include the controlling, maintaining, insuring, mortgaging and even selling of the property.  You can receive income and deduct depreciation if property is income producing.

ADVANTAGES TO A LAND TRUST:

• Avoiding Probate:  A Land Trust can save unnecessary delay and cost of probate.  The six month minimum probate time in Illinois is avoided.  The probate cost, amounting to as much as 10% or more of the value of your property, is saved

• Private Ownership:  When title to your property is held in a land trust, your ownership need not show in public records, yet you may exercise all of the rights of ownership

• Avoid Liens Against Title:  Judgment claims entered against a beneficiary do not automatically become liens on the real estate.  Marital or other difficulties of one beneficiary do not affect the interest of the other beneficiaries

• Avoidance of Martial Rights:  A land trust can be set up to permit you to control the property without the problems of martial rights attaching.  Your beneficial interest is personal property and thus your spouse need not join in signing mortgages, leases or deeds

• Multiple Ownership:  Ownership can be in several persons simply by having more than one beneficiary of the trust.  The ownership can be as joint tenants or tenants in common with each beneficiary having an undivided interest.  The interest can be treated separately when providing for succession of interest upon death of a beneficiary

• Avoid Joint Tenancy Problems:  Land Trusts give you all of the benefits which motivate the average person to use joint tenancy, but without creating the hidden problems often incumbent through use of joint tenancy such as unexpected Federal Estate, Gift and/or Illinois Inheritance taxes

Frequently Ask Questions on Living Trusts

Schumacher Publishing has a valuable SLIDE SHOW on understanding Estate Planning and Living Trusts

Questions?  E-Mail our Head Legal Assistant of the Estate Planning Department

Marybeth Learnahan

All information on this page is copyrighted by Owens, Owens & Rinn, Ltd. 2002