Many families work their entire lifetime to build a "nest egg." In the unfortunate event that Mom or Dad develop dementia or have a stroke - their life savings can be gone in a few years leaving the other in poor financial condition. The time to start your research and planning is NOW!
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Start with a Little Research at the Library, Bookstore or Search Online.
It is important to get a basic understanding of how Medicaid laws and exemptions are applied in Illinois. If Mom and Dad are both still alive and living in their marital home there is more flexibility then iif one has passed or is no longer living in the marital home.
Illinois offers its citizens the right to avoid probate court by executing Medical and Property Powers of Attorney when they are of sound mind - these are very important documents - so you may wish to read a little about how powerful Powers of Attorney are if used properly.
Lastly, do a bit of research to learn about "Living Trusts" and "Land Trusts." They can be very useful devices to avoid probate court.
Your goal is not to become an expert but to get a feel for what is available and what documents could be useful for your parents.
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Talk with Mom and Dad about what they own and if they have any legal papers.
Yes, I know it is hard to do as you don't want to interfere with their independence. Additionally, they may not wish to share this information with you or maybe they just don't want to think about incapacity or death (who really does). Although it is hard to start the conversation it often ends with Mom and Dad feeling much better knowing that should "bad things" happen, they have
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Let your parents know that Joint Tenancy accounts are not always good!
It is a common belief that by naming children as joint owners on their home or other investments, then not only will probate be avoided but it will simplify things when they are gone. The opposite can be true!
A judgment against a child on their joint account could cause Mom and Dad to lose all the money in that account.
Capital gains taxes on a residence can be substantial if children are added as joint owners. These taxes are often totally avoided if a Trust is used or, minimally, the children are NOT made Joint Owners.
Naming one child as a joint owner with the understanding that the funds will be "informally" divided once Mom and Dad are gone can sometimes create grave misunderstandings and lawsuits.
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Having a "Simple Will" may have been cutting edge 30 years ago - but today - not so much!
Prior to 1987, Powers of Attorney had limited use in Illinois as they ceased to be effective when the signor became incompetent and, therefore, they were not used regularly as a part of an estate plan. However, today they may be the MOST IMPORTANT documents that Mom and Dad can execute.
Additionally, Revocable "Living" Trusts used to be solely a device for the well-to-do clients. Today, many middle-class people use these Trusts to avoid probate, avoid problems and deal with other family concerns in a manner that can not be done in a Last Will and Testament.
Learning the important of these documents is critical to planning for yourself and assisting your parents!
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Lastly, lawyers that you hire are NOT you adversaries.
Attorneys that you consult with and retain are your partners in planning. You know what you want and he or she can help you achieve your goals with the least amount of hassle and costs. Yes, I said costs!
It is common to think that attorneys will promote the services that are the most profitable for them, however, this is not true of most attorneys. As YOUR attorney, there is a fiduciary relationship. This means that the attorney MUST put your interest and well-being before their own. And, believe it or not, it usually does work that way.
The cost to hire an attorney for good advice and document preparation are often substantially less than the benefits and savings to a client and their family - both in terms of money as well as family relations. Leave a good legacy goes far beyond the money - it is more importantly about passing on love and good feelings among your children and grandchildren. Best wishes!
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