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elgin estate planning lawyerA person’s last will and testament describes their final wishes and instructions regarding asset distribution to their heirs. In some cases, family members, other beneficiaries, or others who were close to a person may be unhappy about the decisions made in the person’s will, or they may believe that a will is fraudulent. During the probate process that takes place following a person’s death, a person’s heirs or potential beneficiaries may take legal action to challenge the person’s will. However, a will can only be contested in certain cases, and those who are involved in these types of cases will want to understand how these issues will affect them.

Grounds for Contesting a Will

While one or more of a person’s heirs may be unhappy about the choices made by their loved one, claims of “unfairness” or similar issues will usually not be a valid reason to challenge the person’s will. In most cases, wills can only be contested based on one of the following issues:

  • Lack of testamentary capacity - This refers to a person’s inability to understand what they were signing when creating or updating their will. A beneficiary may claim that a person was not of sound mind, did not have the capacity to understand the decisions they were making, or was not aware of the extent of the assets they owned. While proving that a person did not have the capacity to properly execute a will can be difficult, a beneficiary may be able to do so based on medical evidence. For example, a person may provide evidence showing that the deceased person signed a new will or an update to their previous will after they had been diagnosed with Alzheimer’s disease or dementia.

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elginAs part of the estate planning process, a family may be looking to make sure they can help their loved ones provide for their needs. This is especially true for family members who have disabilities or other special needs, since they will often need assistance to make sure they will be able to cover their ongoing expenses. However, people with disabilities may also rely on government aid or public benefits, and in many cases, they will only qualify for these types of benefits if they have limited assets or income. This means that a gift of money or assets from a family member could make them ineligible for certain types of benefits. To avoid this issue, a family may be able to set up a special needs trust.

Resources That Affect SSI and Medicaid

Typically, people with qualifying disabilities can receive Supplemental Security Income (SSI) through Social Security, as well as healthcare benefits through Medicaid. To qualify for these programs, a person must own no more than $2,000 in resources, including cash, funds in bank accounts, investments, or retirement savings. 

Rather than gifting money or assets directly to a person with special needs, it can be better to create a trust. With a special needs trust, assets will not be owned by the person, but by the trust itself, and a trustee will manage these assets and distribute them to the beneficiary. Ensuring that assets in the trust are used for the proper purposes will help the beneficiary meet certain needs without jeopardizing their eligibility for government aid.

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Kane County identity theft protection attorneyIn a recent blog, we looked at the issue of tax-related identity theft, which can occur when a person steals someone else’s information and files a fraudulent tax return in their name. Another form of identity theft that is sometimes related to these illegal practices involves a person applying for unemployment benefits in someone else’s name. Unfortunately, this practice has become more widespread during the COVID-19 pandemic as scammers attempt to take advantage of expanded unemployment programs. Individuals and families who are building a wealth protection strategy will want to address any forms of identity theft quickly and take the proper measures to ensure that they will not be victimized by this type of fraud.

Reporting Unemployment-Related Identity Theft

In many cases, people become aware that they have been the victim of identity theft when they receive notice of unemployment benefits being paid in their name, even though they never applied for these benefits. In other cases, a person may receive a 1099-G tax form stating that they received unemployment benefits and are required to pay taxes on the amount that was paid out.

After learning of a false unemployment claim, Illinois residents should immediately contact the Illinois Department of Employment Security (IDES) in writing to report the identity theft. A victim of identity theft will not be required to repay IDES for any fraudulent benefits that were paid out, and they will be able to receive unemployment benefits in the future if necessary. The IDES has noted that due to widespread unemployment fraud, notices may be sent out stating that a person must pay back an overpayment of benefits. Those who have reported identity theft can ignore these notices, although they may want to contact the IDES to verify their requirements.

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Elgin, IL tax planning lawyerThe first few months of every year are known as “tax season,” and during this time, many taxpayers compile their financial information and prepare to file their tax returns, which are due on April 15th. Unfortunately, many taxpayers may become the victims of identity theft during this time. If a taxpayer’s personal information is compromised, scammers may file fraudulent tax returns in their name, access their accounts, or use their information to open new accounts or obtain employment. A person’s identifying information may also be used to file false unemployment claims (we will be providing more information about this type of identity theft in an upcoming blog). However, families can take steps to prevent identity theft as a part of their larger wealth protection strategy.

Signs of Identity Theft

Scammers may use a variety of methods to obtain a taxpayer’s personal information, such as calling a person, claiming to be an IRS agent, stating that the person owes money, and asking for details such as bank account numbers or the person’s Social Security number. They may then use this information to file a tax return and claim a refund in the person’s name.

A taxpayer may have been the victim of identity theft it:

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Elgin trust administration attorneyThere are a variety of estate planning tools that a person can use to protect their assets and pass them on to beneficiaries. Trusts are some of the most powerful and flexible of these tools, allowing a trustmaker (also known as a “settlor”) to place assets in the control of a trustee, who will then distribute the assets to the beneficiaries according to the terms of the trust. There are certain requirements that must be met during the trust administration process, and trustees and beneficiaries should be sure to understand how recent changes to Illinois law will affect their rights and responsibilities.

The Illinois Trust Code

In 2019, the Illinois legislature passed the Illinois Trust Code (ITC), which took effect on January 1, 2020, replacing the Illinois Trusts and Trustees Act. This new law addresses the rights of trust beneficiaries in a number of ways, including:

  • For trusts that become irrevocable on or after January 1, 2020, the trustee must provide an annual accounting of the trust’s inventory, receipts, and disbursements to ALL beneficiaries. These include beneficiaries who are currently receiving or could receive a distribution from the trust, as well as presumptive remainder beneficiaries who would be eligible to receive a distribution if the trust was terminated or if the interests of other beneficiaries ended. In the case of married couples, it is typical for one spouse to create a trust for the benefit of the surviving spouse during the surviving spouse’s lifetime, and then, upon the death of the surviving spouse, the trust would distribute the trust assets to their children. This new law REQUIRES the children to receive annual accountings during the surviving spouse’s lifetime, which may or may not be desire of the creator of the trust. If not desired, the creator of the trust can “opt-out” of this requirement.   
  • A settlor may create a “silent trust” that waives the requirement for the trustee to provide an accounting of the trust to beneficiaries under the age of 30. However, the trustee will be required to make an annual account to a “designated representative” nominated or authorized by the settlor, and the beneficiary will have the right to receive an annual accounting upon reaching the age of 30.
  • Trustees are not required to provide beneficiaries with advance notice of transactions involving property owned by the trust.
  • A beneficiary of a trust can serve as the designated representative of other beneficiaries, including minors, unborn children, or beneficiaries who have not been located.
  • A beneficiary can serve as the sole trustee of a trust, but in these cases, they will only be able to make distributions to themselves based on an “ascertainable standard.” This means that distributions should be used to provide for needs such as healthcare, living expenses, or education, rather than to pay off personal obligations or debts.

Contact a Kane County Trusts Attorney

If you are the beneficiary of a trust, you should be sure to understand how your rights will change under the ITC. At Ariano Hardy Ritt Nyuli Richmond Lytle & Goettel, P.C., our experienced Elgin estate planning lawyers can answer your questions about trusts, and we can assist you in any matters involving trust administration. To arrange a free consultation, contact us today at 847-695-2400.

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