Estate Planning, Probate & Elder Law Attorneys

» AIG to pay out $100M in bonuses to crisis-causing unit: report
 

» Web sites deal with digital assets after we die

Karin Prangley, an estate-planning attorney in Chicago, became an expert on post-mortem online assets after experiencing first-hand such complications.

» 5 Things You Need to Know About the Estate Tax in 2010: #3 (Trust Problems)

An effective estate plan should be flexible enough to accommodate changes in circumstances -- maybe not every change, but many of them. For instance, instead of specifically referencing the estate tax exemption amount when drafted, most well-drafted documents contain a formula based on the exemption amount in effect when the decedent dies. But does your estate plan account for the possibility that there will be NO federal estate tax when you die?

A lot of married couples have what's known as an A-B plan. If one spouse dies, two trusts are created for the survivor:

(A) Family Trust: usually containing an amount equal to the federal estate tax exemption amount at the death of the first to die

(B) Marital Trust: containing everything else owned by the first to die

The goal is no federal estate tax at the death of the first to die. The Family Trust is by definition exempt from federal estate tax, and the Marital Trust qualifies for the marital deduction (so is not subject to federal estate tax). The surviving spouse is the only beneficiary of the Marital Trust; the Family Trust's beneficiaries might be just the surviving spouse, the surviving spouse and kids of first to die, or just the kids of the first to die.

But what happens if there's no estate tax whatsoever? If the above language is used, the Family Trust isn't created (no exemption = no federal estate tax = no Family Trust). So there's just a Marital Trust.

Alternatively, you could draft a trust whereby the Marital Trust contains the "smallest amount that will result in no federal estate tax," and the Family Trust contains everything else. Under that scenario, no Marital Trust is created (the "smallest amount" would be $0). So there's just a Family Trust.

So what's the problem? There may not be one, if we're talking about a traditional nuclear family where the spouse is also the sole beneficiary of the Family Trust. But what if both spouses have children from a prior marriage? In that case, we may have a Family Trust of which the surviving spouse isn't the sole beneficiary (or not a beneficiary at all). And we run the risk, under the above scenarios, of either shortchanging the surviving spouse (no Marital Trust created) or shortchanging the kids (no Family Trust created).

» Trust-Administration Agreements

Setting up a trust can be a pretty effective way of avoiding expensive and public court proceedings (which are necessary in a probate situation). But sometimes problems arise with a trust, problems where a court proceeding may be needed. Settlements are always a possibility, but there's been some confusion in the past about how you work out a settlement, especially when not all parties are of age (or even born).

Due to an amendment to the Illinois Trusts and Trustees Act, there may be a new solution. Lyman Welch and Susan Bart describe the amendment in this Illinois Bar Journal article (it's from November of '09, but I just read it, so it's new to me!). The amendment adds section (d) to 760 ILCS 5/16.1. Some situations in which you may be able to use 16.1(d) to enter into a "nonjudicial settlement agreement":

-interpretation or construction of trust terms;
-resignation or appointment of a trustee; and
-exercise or nonexercise of a power by the trustee.

There are other situations outlined in the article, which I highly recommend.

» A Little Advice For Young Attorneys

I was recently asked by a 3rd year law student for some advice on how to succeed upon graduation. Basically, what I told her can be summed up in three words: "find your niche."

I realize that this isn't a revolutionary idea, but I think too many young attorneys don't realize the importance of marketing yourself. What unique thing do YOU as a young attorney bring to the table? It can't just be intelligence and hard work -- most attorneys have those qualities.

So how do you find your niche? The easiest way is through your existing connections. If you're married to a doctor, and hang out with him and his other doctor friends, then consider areas of the law that would allow you to make medical professionals your client base.

Of course, not everyone has existing connections. In that case, you need to try to find something to level the playing field. In my experience, one thing that works well is becoming an expert with respect to some new development in the law. That's a big benefit because, with new developments, you are not at a disadvantage in terms of experience. When a new law passes or a new case comes down, you as a first year associate may know just as much about it as a partner who's been practicing for 30 years. Three examples:

1. Read and summarize the new Citizens United Supreme Court case, and write an article for your local paper about what it REALLY means.

2. Your state is legalizing marijuana for medicinal purposes. Totally familiarize yourself with all of the rules and regulations relating to setting up a marijuana dispensary, and advertise yourself as someone who can help clients "get legal."

3. Learn the ins and outs of the Trouble Asset Relief Program (TARP), so you can speak at seminars on the topic.