Welcome to the EPAC Corner! We are pleased to bring you this content from the Estate Planning Advisory Committee (EPAC) of the DeKalb County Community Foundation. If you have any questions about the information below or the EPAC group, please contact Community Foundation Executive Director Dan Templin at 815-748-5383 or dan@dekalbccf.org. 

The EPAC Corner celebrates one year this month! The content aims to provide general information about estate planning and charitable giving. We hope it’s helpful and informative. Please know that we welcome suggestions for monthly content topics. We’d love to hear from you.

Do You Need a Trust?

Trust-based planning comes highly recommended when these circumstances are present:

• You live in Illinois, and your family’s net worth is approaching or exceeds $4 million, including life insurance.
• You own real estate in more than one state.
• Your estate plan includes complicated or controversial provisions, such as a disinherited or special needs child.

The large majority of people fall into the “it depends” category. 

The most common motivation for establishing a trust-based estate plan is to avoid probate. The basic principle is that by establishing a trust (aka “living trust,” “inter-vivos trust,” or “revocable trust”), you can transfer your assets to the trust. If your trust owns all your assets, then upon your death, no assets are subject to the court proceeding known as probate administration.

Avoiding probate has been cited as the primary reason for someone’s trust-based planning, but this suggests that probate should be avoided. Four common myths about probate should be debunked:

Myth 1: Probate administration will be costly to my family.

Truth: While some states, such as California, assess probate fees based on a percentage of the estate’s assets, Illinois only permits reasonable fees for probate administration. The court costs and publication costs are typically $600. The attorney’s and individual executor’s fees are usually based on the time spent by each of them multiplied by an hourly rate. Trust administration also requires attorney’s and trustee’s fees. 

Myth 2: Probate administration takes a long time to complete and will delay my family’s inheritance.

Truth: All estate settlement – probate or trust-based – takes time. The most common delay is tax reporting. When someone dies, a tax return must be filed for the year of their death, and an additional tax return must be filed for the post-death administration period. The due dates for these tax returns may be as soon as three months or as long as 20 months after death. If the estate or trust is subject to estate taxes, it may take up to 51 months to resolve any tax liabilities, regardless of whether probate is required.

Myth 3: Probate will cause my family to fight over my estate.

Truth: Probate is never the cause of a family dispute but is always the forum to resolve it. Even with a trust-based estate plan, if a family member wants to contest the estate plan or the trust administration, the litigation is usually filed in the probate court. 

Myth 4: Probate will expose my estate plan to the public.

Truth: This is a partial truth. Probate administration is a public proceeding. All wills must be filed with the court clerk after a death occurs, regardless of whether probate is required. However, since 1975, estates may be administered “independently,” which means that the specific financial details need only to be shared with the interested parties and do not need public disclosure unless there is a dispute.

There is no “one-size-fits-all” estate plan. Each family has a different mix of relationships, assets, liabilities, and goals. All of these factors need integration into a well-planned estate. A trust is one of many tools used to accomplish your goals.

– Matthew L. Brown, local attorney and member of the DeKalb County Estate Planning Advisory Committee

Established in 2020, the DeKalb County Estate Planning Advisory Committee (EPAC) comprises of local professionals providing estate planning services, including attorneys, trust officers, CPAs, wealth advisors, and insurance agents. The purpose of the EPAC is to raise awareness and understanding of the Community Foundation as a resource for professional advisors and their clients, assist with efforts to deliver effective estate planning education to the general public and notify estate planning professionals on topics relevant to the intersection of estate planning and philanthropy.

Matthew L. Brown