Category: Trusts

Illinois Special Needs Trusts

Illinois Special Needs Trusts

An Illinois Special Needs Trust is a legal tool that allows families or caregivers to set aside funds for a person with special needs, without affecting their eligibility for government benefits such as Medicaid, SSI, or other means-tested programs.

In Illinois, a special needs trust is also known as a “supplemental needs trust.” There are two main types of supplemental needs trusts: a first-party supplemental needs trust and a third-party supplemental needs trust.

A first-party supplemental needs trust is funded with the assets of the person with special needs, such as an inheritance, settlement, or a personal injury award. This type of trust must be established before the beneficiary turns 65 years old and is subject to certain restrictions. Also known as a “self-settled” or “payback” trust, a first-party supplemental needs trust, is a type of trust that allows an individual with a disability to retain their eligibility for government benefits, while also setting aside their own assets to supplement their needs.

This type of trust is typically established by the individual with a disability, using their own funds, in order to provide for their own needs while still maintaining eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI). The term “supplemental needs” refers to the fact that the trust is designed to supplement, not replace, government benefits.

One of the key features of a first-party supplemental needs trust is that it must contain a “payback” provision, meaning that upon the death of the beneficiary, any remaining funds in the trust must be used to reimburse the government for the cost of benefits received by the beneficiary during their lifetime. This requirement is intended to ensure that the government is not left with the cost of providing benefits that could have been paid for by the trust.

A third-party supplemental needs trust, on the other hand, is funded with assets that belong to someone other than the person with special needs, such as a parent, grandparent, or other family member. There are fewer restrictions on this type of trust, and it can be established at any time.

A third-party supplemental trust allows someone to provide additional financial support to a loved one who has a disability, without interfering with their eligibility for government benefits. This type of trust is often used by families or loved ones of individuals with disabilities to supplement government benefits, such as Medicaid or Supplemental Security Income (SSI).

The term “third-party” refers to the fact that the trust is funded by someone other than the beneficiary. The trust is typically established by a family member or friend of the beneficiary, and the funds in the trust are used to supplement the beneficiary’s income or provide for their care and support.

One of the key benefits of a third-party supplemental trust is that it can provide a safety net for the beneficiary in the event that government benefits are reduced or discontinued. The trust can also help to ensure that the beneficiary has access to funds for expenses that are not covered by government benefits, such as dental or vision care.

Overall, a third-party supplemental trust can be a valuable tool for families or loved ones who want to provide financial support to an individual with a disability without jeopardizing their eligibility for government benefits.

The purpose of a special needs trust is to provide financial support for the person with special needs while also preserving their eligibility for government benefits. The trust is managed by a trustee, who is responsible for distributing funds to the beneficiary in a way that does not interfere with their eligibility for benefits. It is important to consult with a qualified attorney who specializes in special needs trusts in Illinois to determine which type of trust is appropriate for your situation and to ensure that the trust is properly established and managed.

If you are thinking about a Special Needs Trust, local attorney Andrew Szocka provides thorough and speedy real-estate assistance in the Chicagoland area.  To schedule a free initial consultation, visit Andrew Szocka, P.C. online or call the office at (815) 455-8430.

 

Special Needs Trust Overview

Special Needs Trust Overview

Using a Special Needs Trust to manage the funds of a person with special needs can be beneficial.  The funds can be used to cover extra expenses and provide for the person’s lifestyle. In some cases, the trust can also be used to pass down wealth to the next generation.

A Special Needs Trust is a type of trust that allows a disabled person to receive income and other benefits without disqualifying him or her from public assistance benefits.  This can help families fill in the gaps left by SSI payments, Medicaid coverage, or other benefit programs.

Special Needs Trusts can be funded with the disabled person’s own assets, or by other sources.  However, they must follow certain state and federal rules.  These rules vary based on the type of benefit program the person is receiving.

The type of trust that you choose to use should be determined by your needs.  There are several different types of Special Needs Trusts.  These include self-settled, third party, and pooled trusts.

Self-settled Special Needs Trusts are created when the child has lifelong care needs.  The trust is funded with the disabled child’s own assets, and the assets may be pooled with funds from a non-profit organization.  The remaining assets in the trust are designated to go to the state when the child dies to repay any Medicaid received by the beneficiary.

Third party Supplemental Needs Trusts are created by a family member or other third party.  The trust provides for the disabled child without interfering with Medicaid expenditures or disability income.  The trust is usually created by the parents of the child.

Special Needs Trusts are complex and require state specific language as the requirements for Special Needs Trusts vary from one state to another.  It is imperative that the trustee and beneficiary understand the terms in the written trust agreement.  Our law office can help you create a Special Needs Trust.  We can also prepare an estate plan to ensure that the estate and trust documents will meet the needs of the beneficiary, the person funding the trust, and the trustee who will be administering the trust.

PROBATE IN ILLINOIS: THE BASIC PROCESS

PROBATE IN ILLINOIS: THE BASIC PROCESS

When a person dies, Illinois law generally requires that the decedent’s estate go through the probate process.  The exception to this rule is if the decedent owned no real estate at the time of death, and the remainder of the estate is valued at less than $100,000.  In this situation, the decedent’s heirs can use a Small Estate Affidavit to obtain and distribute the estate’s property.  However, if the Small Estate Affidavit exception does not apply, Illinois generally requires a court of law to probate the estate.

An estate may be probated whether or not the decedent left a Will.  If a Will exists, the estate must be divided pursuant to the Will’s instructions.  If there is no Will, the decedent is deemed to have died “intestate.”  The estate is then divided pursuant Illinois’ laws of intestate succession.  In general, intestate succession in Illinois provides for the decedent’s spouse and children to receive the estate.  If the decedent left no spouse or children, the estate is divided among decedent’s parents or siblings.

In order to initiate the probate process, the decedent’s original Will (if applicable) must be filed with the Circuit Clerk in the county where the decedent resided at the time of death.  Next, a Petition to open probate estate must be filed.  The Petition must plead the following facts:

  • Full name of decedent;
  • Decedent’s place of residence at death;
  • Date of death;
  • Place of death;
  • Approximate value of the decedent’s real estate located in Illinois;
  • Approximate value of the decedent’s personal property located in Illinois;
  • Approximate value of the decedent’s real estate located outside Illinois;
  • Approximate value of the decedent’s personal property located outside Illinois;
  • Full name and mailing address of the Petitioner;
  • Full names and mailing addresses of the decedent’s heirs;
  • Whether any of decedent’s heirs is a minor or person with a disability.

If decedent died with a Will, a Petition to admit the Will to probate must also be filed along with a Petition for Letters of Office.  The Petition for Letters of Office should be verified, or sworn to, by the Petitioners.  The Petition for Letters of Office asks the court to appoint a certain individual, called an Executor, to manage decedent’s estate as identified in the Will.

If the decedent dies without a Will, a Petition for Letters of Administration is filed.  In this Petition a close family member or friend asks the court’s permission to serve as the Administrator of the estate.  The court will generally appoint this person as the estate’s Administrator.  The Petition for Letters of Administration should identify the Petitioner, the Petitioner’s relationship to the decedent, and a formal request to be appointed Administrator.

Before the court will appoint an Executor or Administrator, the individual seeking appointment must submit an Oath of Representative that swears the individual will perform his or her duties in accordance with the law.  If there is no Will, the Court may require the Petitioner to post a bond.  Many Wills waive the bond requirement.

Once the Executor or Administrator is appointed, the court orders the circuit clerk to issue the Letters of Office.  The court will also issue an order naming all of the decedent’s heirs.

Within 14 days after the Letters of Office are issued, a Notice to Heirs and Legatees must be sent to all known heirs.  This Notice must include the Petition for Probate, the Order admitting the matter to Probate, and a description of the rights of the heirs.

Also within 14 days of the admission to Probate, a Notice to Unknown Creditors must be published in a local newspaper that advises the estate was opened and creditors have 6 months to file a claim against the estate.

During this 6 months, the Executor or Administrator should be distributing the estate’s property to the heirs named by the court.  Once the 6 month period for creditors to file a claim expires and all estate property is distributed, the estate should be closed.

Navigating a probate case in Illinois can be difficult.  If you are wondering how to manage the estate after the death of a loved one, local attorney Andrew Szocka can provide thorough and speedy probate and estate help in the Chicagoland area.  To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

When Should You Update Your Estate Plan?

If you already have an estate plan, you may not realize that you need to update it regularly. But how often do you need to update the plan, and how will you know that it needs some changes? We recommend that you revisit your estate plan just before or just after any major life changes, or at least every few years.

Man and Women holding hands

Major Life Changes Often Require Estate Plan Updates

The most frequent reason you will need to update your estate plan is because of major life changes. Lawyers customize wills, trusts, and other estate planning documents to fit each client’s individual circumstances. When those circumstances change, the plan may no longer match the client’s wishes.

Major life changes that may trigger the need for an estate plan update could include:

  • Marriage
  • Divorce
  • Birth or adoption of a child
  • Death of a relative
  • Major financial problems
  • Receiving an inheritance
  • Moving
  • Buying a house or other property
  • Changing jobs

Everyone’s circumstances are different, and you may experience other changes that lead you to change your plan. For example, some people decide to edit their wills after major disagreements with relatives or losing touch with family.

Other Reasons to Update Your Estate Plan

In addition, you may need to update your plan (but not know it!) if the laws change in your state or nationwide. In particular, many changes to the federal tax laws went into effect at the beginning of 2018. The new estate tax provisions could affect your plan.

Another reason to change your plan could arise over time. As you increase retirement savings or begin thinking about your legacy to your relatives, you may want to set up more estate planning. You could start a family trust, decide to open a foundation, or want to sign a medical directive. Updating your estate plan every few years will keep your planning in line with your goals.

Want to update your estate plan today? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

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