Death and Taxes Blog

Illinois requires certain formalities to be followed if you want to have your Will considered valid. This makes sense -- a Will is a very important document, and the state wants to make sure that you really meant to say what you said. That's why Illinois requires two witnesses (and has requirements about how the witnesses, and you, sign the Will).

I think people generally know that "Will = formalities," and that it's a good idea to see an attorney, if only to make sure everything has been done correctly. But sometimes people forget that the formalities need to be followed WHENEVER you do a Will, and even if you try to change your Will. To take a recent example (with some identifying facts changed):

Jane Smith signs a Will in 1988 -- the Will was prepped by an attorney, and signed in accordance with Illinois law

In 1993, Jane decides she wants to change the 1988 Will. But instead of visiting an attorney, she makes the changes on the actual Will. She crosses things out, and writes in additions and notations. She also signs each page at the bottom with the (1993) date, and signs the top of the first page of the Will (where she also states that "These changes are intended to amend my 1988 Will").

This is a problem, for a couple of reasons:

1. The 1993 changes are null and void, since they weren't made with any of the required execution formalities. (Note that, in cases, this may be unfair. We might know in our hearts that Jane Smith truly did intend to make these changes, but the law doesn't care. The Illinois legislature has decided to set a bright line rule, and it's hard to blame them for that.)

2. More importantly, the 1993 changes call into question whether the 1988 Will is valid. This is due to the fact that, under Illinois law, "[a] will may be revoked... by burning, cancelling, tearing or obliterating it...." Do the 1993 changes rise to this level? I don't know, but I do know that it's going to take a lot of time and money to find out. And the end result may be that Jane Smith has no valid Will at all.

One final note: Trusts don't require the same execution formalities as Wills. So it's likely that, if Jane Smith had done a Trust in 1988 and then tried to amend it in 1993, both the 1988 Trust and the 1993 changes would be considered valid. This is another advantage of a trust over a Will (or another disadvantage, if you are afraid of the possibility of fraud or forgery).

As I've said before, once a client executes a living trust, additional steps have to be taken to avoid probate. Usually, these steps involve changing ownership and beneficiary designations for the client's property, so that the living trust is the owner or beneficiary upon the client's death.

From a practice perspective, it's always difficult for attorneys for figure out how to handle trust funding. It's not really legal work, and the client can do it with guidance from the attorney. If the attorney charges for it, the cost may be prohibitive. If the attorney doesn't, he may spend a ton of time working for free. (Early on in my career as a solo, I actually did the transfers for free. I had to change that approach when one of my clients turned over something like 23 accounts (and stock certificates in 10 companies) for transfer. Wow -- did that take a lot of time!)

Now my approach is to give the client a letter, detailing how he or she would re-title or change the beneficiary on any property owned by the client now or in the future (CD's, money market, 401k, real estate, etc.). In addition to this letter, I handle the transfer of the client's real estate as part of the fixed fee I charge for estate planning. For a single person, this is usually a transfer from the client individually to the client as trustee of his or her trust. For a married couple, there are usually two deeds involved: one deed from husband and wife to wife as trustee of her trust, and one deed from husband and wife to husband as trustee of his trust. (Each deed conveys a one-half interest in the real estate.)

I also have tried in the past to offer a reasonable amount of assistance to my clients who are taking care of the funding (15-30 minutes?). I do this without charging an additional fee because I think that's fair. Or at least I did think that's fair. But two weeks ago a client of mine contacted me, and the fallout from that situation has made me re-think how I do business.

The client went to Chase Bank to change the names on his accounts, from him individually to him as trustee of his new living trust. The retail bankers told him:

1. That the trust was defective because the word "grantor" wasn't shown on the signature page, and would have to be re-drafted. (Note that there is no Illinois law, or ANY law that I am aware of, requiring the use of the word "grantor.")

2. That the attorneys for Chase Bank would not speak directly to my client or to me. Nor could I write them a letter to resolve the issue. Instead, I would have to work with the retail bankers as a go-between. Keep in mind that Chase's retail bankers tend to (a) be just out of college, (b) know nothing about legal matters, and (c) get very skittish if they have to do something "out of the ordinary." The best retail bankers get promoted; the others, um, don't.

Two weeks (and at least two hours of my time) later, and this issue has still not been resolved. Very frustrating for me AND of course for my client, and totally unacceptable. As a result, I will now:

-advise all of my clients not to use Chase Bank (or, if they use Chase Bank, to switch to somewhere else, like I did a few years ago -- CBOPRF is great!); and

-have to charge my clients my regular hourly rate ($250) if I must work with Chase Bank on trust funding issues.

It's really a shame. I know some attorneys at J.P. Morgan who are really excellent (and who have even tried to help me with the above situation). But the people on the ground -- the ones ordinary folks would need to work with every day -- are a nightmare.

Here's a question I get a fair amount: "Should we list all of our property on a schedule attached to our living trusts?" I see trusts (usually older ones) with schedules attached, but my answer is typically "no." Property changes -- we buy a new house, switch our investment accounts from one custodian to another, and change our life insurance policies. To my mind, the schedule can raise confusion -- why does it list Schwab account #12345678 when no records for this account can be found?

A better solution is to make a list of your property, including how it's titled (or who the beneficiaries are), and put that list with your original estate planning documents. And make sure to update it every year or so.

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.

People often ask me things like, "Can't I do my Will on my own, using a computer program? Isn't it just a form?"

The answer to the second part of that is easy -- not, it's not just a form. As for the answer to the first part, I don't know. There's no reason for me to spend money buying one of these programs just so I can review it.

Today's Wall Street Journal features a comparison of a few Will/Trust computer programs (here), as part of its "Cranky Consumer" series. The biggest program with the article is that it leaves out the most important question: did the documents accomplish what they were supposed to? By "supposed to," I mean "do the documents leave property to desired beneficiaries in the most efficient manner, with no ambiguities and the fewest tax consequences, and are documents valid under the relevant state law." And yet the article completely ignores this -- here's how it ends:

Each site purports to yield documents that clearly outline our intentions in the event of our demise or death, although we didn't hire a lawyer to review them. We're hoping that we—and our heirs—won't have to worry about it any time soon.

There you go -- the author has spent $X on these programs, and has no idea whether they do what she wants them to do.

I'm currently reading Nudge: Improving Decisions About Health, Wealth, and Happiness, by the U of C professors Richard Thaler and Cass Sunstein. I'll probably post a review later, but I found one part (on page 77) particularly interesting. The authors are using a Shel Silverstein poem called "Smart" as the basis for an example, and they ask the reader to Google the poem and read it before continuing in the book.

Why not just print the poem? The answer is in a footnote:

Silverstein had originally given Thaler permission to use the poem in an academic paper published in 1985... but the poem is now controlled by his estate, which, after several nudges (otherwise known as desperate pleas), has denied us permission to reprint the poem here. Since we would have been happy to pay royalties, unlike the Web sites you will find via Google, we can only guess that the managers of the estate (to paraphrase the poem) don't know that some is more than none.

There's a lesson here, for executors and anyone involved in a negotiation: you better know what the other party's options are. The people in charge of Silverstein's estate (this guy?) apparently didn't.

If you are an Illinois estate planning or probate attorney, you may want to check out this month's Illinois Bar Journal. A few things it tackles:

-how to use gifts to reduce Illinois estate taxes;

-FDIC limits for accounts owned by a living trust; and

-whether an adopted child can inherit from a biological parent.

Here is a link, although you need to be a member of the ISBA to see most content.

On Tuesday I blogged about the receipt-distribution dance. One natural question might be, "why do I need to get receipts at all, if there's no court supervision of trust administration?" I think the answer can be boiled down to three letters: CYA.

Just because there is no court supervision NOW doesn't mean that there won't be court supervision (or similar scrutiny) in the future, either because a beneficiary files suit or because of IRS action. The key to effective trust administration is keeping good records, which means documenting everything you do as trustee. This is primarily done via an accounting, but it's also done via a paper file that can tell disgruntled or confused beneficiaries (or even professionals) the story of the trust. Someone stops acting as trustee? Have them sign a document to that effect. Someone steps in as trustee or co-trustee? Have them sign a document to that effect. The trustee decides to make a discretionary distribution? Have them sign a document to that effect. You get the idea.

And, lest I be accused of self-interest, you should note that the documents I reference above can be prepared very easily (most of them require maybe 1/2 hour of attorney time at the most). It's obviously much cheaper to keep good records from the get-go than it is to reassemble these records when a beneficiary is threatening to drag you to court.

Is everyone recovering from election fever? Pretty amazing, isn't it, that a Chicago-based attorney, formerly of Sidley & Austin, can become president? Maybe there's hope for me yet!

In addition to the main event, there were a lot of other issues (and candidates) put before the public last Tuesday. One of the most widely-covered was California's Proposition 8, which would amend the state's constitution to define marriage as being between a man and a woman.

Among the groups supporting Proposition 8 (which passed, barely): the Church of Jesus Christ of Latter-Day Saints (aka the Mormons). Evidently the Church, in advancing its position re. gay marriage, indicated support for other types of civil union-like benefits for gay couples. Now some folks in favor of gay marriage (a group called Equality Utah) are trying to hold the Church to its stated positions, on its home turf (see this article):

"While we disagree with the LDS Church's position on Proposition 8, we respect that their position is based on the guiding principles of their faith," [Equality Utah chairwoman Stephanie Pappas] said. "Throughout the campaign, while the LDS Church stated its support of [Proposition 8], it also made repeated comments that the church 'does not object to rights for same-sex couples regarding hospitalization and medical care, fair housing and employment rights, or probate rights.'

"Just last week, Elder L. Whitney Clayton stated the LDS Church does not oppose 'civil union or domestic partnerships,' " Pappas said. "We are taking the LDS Church at its word."

As Ms. Pappas indicates, Equality Utah is proposing new legislation in the above areas, including probate. Unfortunately, I can't locate the text of this legislation online; if I do, I'll post it.

This is a pretty interesting Wall Street Journal article about the ramifications of the bailout and Great Depression 2.0 for individuals with trust accounts at affected institutions. I’m less interested in how trust assets are being or should be invested in this market (very carefully? no freaking duh) than I am in the issue of what happens if your corporate trustee folds, or is bought out.

Let me be candid – I don’t know why anyone would have an entity like Merrill Lynch as their corporate trustee in the first place. You may have a nice relationship with your broker, but your account is inevitably foisted off on someone else. In my experience, that "someone else" is going to be a recent college grad who doesn't know anything about anything regarding the administration of trusts.

One happy consequence of this financial turmoil might be a return to smaller banks, which – surprise surprise! – have people who know you and provide actual customer service. I can stand in line or go through the drive-thru to make a business deposit at Chase, and it takes me 20 frustrating, alienating minutes. Or I can go see my man Emil at Community Bank Oak Park River Forest, and make my deposit in 2 fast, friendly minutes. Do you really think it’s going to be any different if you use Chase as your corporate trustee?

On a similar note, I recently became aware (thanks to Todd Schneider) of this post by Juan C. Antunez from last year. The case involves a $1 million malpractice verdict against the firm of Gunster Yoakley. The court said:

The substance of these accusations was that Gunster Yoakley wrongfully procured J.P. Morgan's appointment as corporate fiduciary and caused the estate administration to be more expensive.

I discussed conflicts of interest and referrals here. It really is a tricky business. Let me give an example: I have a good relationship with a broker at Edward Jones. In fact, after being impressed with him and his company while working on matters for some mutual clients, I switched all of my investments to him. He's been my broker for about 10 years now. He refers me some business. What if a client comes to me and says, "Do you recommend a corporate trustee? And, if so, which one?" Can I recommend Edward Jones? What must I tell my client?

Trust terminology can be confusing, can't it? Let me take a moment to review some terms:

revocable trust: a trust that can be amended or revoked after its creation (usually by the person who creates it)

grantor: a person who creates or sets up a trust; also sometimes known as the "trustor"

declaration of trust: what a trust document (or instrument, if you prefer) is called if the grantor is also the trustee; if the grantor isn't also the trustee, the document is known as a...

trust agreement: this makes sense, doesn't it? The grantor and the trustee have an agreement about how the trust property is to be held, but if you are both the grantor and the trustee, it would be weird to agree with yourself, wouldn't it?

living trust: basically, the name given to any revocable trust of which the grantor is also (during his or her lifetime) the beneficiary; I think that, if a husband and wife each has a living trust, the trusts are also sometimes referred to as "loving trusts," but that term sort of makes me want to throw up

irrevocable trust: a trust that cannot be amended or revoked once it's executed; usually, for tax reasons, the grantor of such a trust is NOT the trustee

I didn't start my legal career doing much estate planning; for the most part, I was a probate attorney, handling Wills that had "matured" into deceased estates. I think that's a helpful experience, as you quickly figure out from a practical perspective the difference between good provisions and provisions that fail.

Let me give an example from a Will (not drafted by me, luckily) that recently came across my desk. The Will gives most property in equal shares to the decedent's three living children, which is fine. But it also makes a gift of certain jewelry to "the first of my granddaughters to marry." Setting aside the potential inequality here -- why favor the first granddaughter only? why favor only granddaughters? -- there's a problem: none of the decedent's granddaughters have married. So what now? At the time the Will was drafted, this provision failed (it didn't work), and it still fails today.

As a probate attorney, the problem is clear. I have to file with the probate court a document listing the decedent beneficiaries (legatees). Who in the world do I list from the above provision -- all of the granddaughters? someone who can hold the jewelry in trust until a granddaughter marries? somebody else?

If the draftsperson had spent five minutes thinking about the practical ramifications of this language, he or she could have easily fixed it.

I usually talk about estate planning in terms of two different approaches:

Simple: having a simple Will, where you give away all of your property outright

vs.

More involved: having what's known as a pourover Will and a separate living trust. You give your property away in your living trust -- you leave it to a trustee, who holds it for one or more beneficiaries

But there's also a middle way, which involves having only a Will, but incorporating trusts into that Will. This is known as having a Will with a testamentary trust. What's the drawback to this approach, and why isn't it more popular?

Well, when I talk about the advantages of a living trust, I address 5 of them in particular:

1. Probate avoidance
2. Control
3. Creditor protection for beneficiaries
4. Privacy
5. Estate tax minimization

If you create trusts under your Will rather in a separate document, those trusts can't be funded during your life (since your Will has no effect until death). As a result, you will need a probate. Your beneficiaries also don't get privacy, since the trust information is all located in your Will, which is a public document. But the other three advantages still exist.

This article is an interesting one on the use of strange documentary evidence in court. The last item mentioned is the relevant one for my purposes:

MISS LILLIAN PELKEY’S PETTICOAT In Los Angeles, before the Second World War, George W. Hazeltine, 86, lay ill in hospital. He wanted to make a new will and leave $10,000 to his nurses, Lillian Pelkey and Madeline Higgins. There being no paper to hand, Miss Pelkey pulled up her dress, placed a board under her petticoat, and the will was pencilled on her undergarment. The petticoat was eventually admitted to probate but the nurses were prevented from benefiting from the will because they were attesting witnesses of it.

In Illinois the rule about beneficiaries as witnesses is as follows (this is from Section 4-6(a) of the Illinois Probate Act):

If any beneficial legacy or interest is given in a will to a person attesting its execution or to his spouse, the legacy or interest is void as to that beneficiary and all persons claiming under him, unless the will is otherwise duly attested by a sufficient number of witnesses as provided by this Article exclusive of that person and he may be compelled to testify as if the legacy or interest had not been given, but the beneficiary is entitled to receive so much of the legacy or interest given to him by the will as does not exceed the value of the share of the testator's estate to which he would be entitled were the will not established.

That's a sort of convoluted way of saying this:

1. If you are a beneficiary of a Will and a witness to the Will, you can't inherit your share. Neither can anyone "claiming under" you (like a child of yours if you predecease the testator).

2. Ditto for the case where you witness a Will and your spouse is named as a beneficiary -- your spouse can't inherit his or her share.

3. There's an exception to the two above rules if there are at least two other witnesses who are NOT named as beneficiaries in the Will, who can attest to its accuracy. But under this exception, you can't inherit more than you would if the testator died without a Will. An example:

Joe Smith is a widower with three children. He does a Will leaving 1/2 of his estate to his daughter Susan and 1/4 of his estate to each of his two sons. Susan witnesses the Will along with two officials from Mr. Smith's bank. Upon Mr. Smith's death, Susan can inherit only 1/3rd of her father's property (since that is what she would receive if he had died intestate).

As I said last time, most trust funding is fairly easy but tedious. One exception: trust funding with real estate, which is tedious but not so easy. Why is that?

What we're trying to do in funding a living trust with real estate is to transfer ownership of the real estate to the trustee (or trustees -- in the case of many married couples, who own real estate jointly or as tenants by the entirety, the goal is to put one-half of the real estate into each spouse's living trust). This gets complicated because lots of entities besides the owners have an interest in their real estate. Such as...

1. Lender(s). Every mortgage I've ever seen includes a provision saying that the entire loan amount comes due upon a "transfer" of the underlying real estate. That language is intended to prevent you from selling a house but not paying off the mortgage. Obviously, there's no real concern with transferring a house from yourself individually to yourself as trustee, but in order to avoid problems, it's necessary to get lender approval for the transfer. This is made more difficult by the fact that most people employed by lenders don't understand what a living trust is, or what you are trying to do by transferring real estate to it. So you or your attorney will have to do some explaining.

2. Insurance folks. The insurance companies that provide your homeowners insurance and title insurance should be alerted to the fact that ownership of the real estate has changed.

Typically, I contact the lender, find out what they need to give their approval, and then submit it. Once approval is obtained, then the appropriate deeds conveying the property into trust are recorded. Then the insurance companies should be contacted with the information about the transfer.

A couple of years ago (here) I wrote generally about trust funding. Now I'd like to share some of the basics of how the funding process actually works for a living trust.

You start by making a list of your assets -- house, retirement accounts, non-retirement accounts, insurance, etc. The idea is that all of these assets are owned by or will pass to your living trust at the time of your death (note: there are some cases where you may not want retirement accounts to pass to your living trust, but that's beyond the scope of this post).

You will notice that I said "owned by or will pass." Basically, we're doing two different things:

1. Changing ownership of certain assets, like real estate and non-retirement accounts (investment accounts and bank accounts). The trustee immediately becomes the owner of these assets (note that the trustee of a living trust is usually the person who created the trust).

2. Changing beneficiary designations of certain assets, like insurance and retirement accounts. When the person who established the trust dies, the assets flow into the trust.

Most trust funding is pretty easy to do, but rather tedious. For re-titling non-retirement accounts, you just tell the entity how the accounts should be re-titled (your attorney can tell you "the magic words"). Typically, it would be something like a switch from "Joel A. Schoenmeyer" as owner to "Joel A. Schoenmeyer, as Trustee of the Joel A. Schoenmeyer Trust dated January 18, 2003." Beneficiary designations are changed in a somewhat similar way, without reference to the current trustee (since he or she probably won't be around when the grantor dies).

The most difficult part of trust funding involves real estate, which I'll discuss next time.

Just a few quick follow-up notes on things I've already discussed in this series:

1. As I said in Part 1, the main reason people create ILITs is to pass more of their assets on to their beneficiaries free of estate tax. But that's not the only reason -- another reason is liquidity. Let's say that you die with a taxable estate and a family business that can't be liquidated easily to pay your estate tax bill. What to do? If you set up an ILIT correctly during your lifetime, the trustee of the ILIT can purchase assets from your estate or from the trustee of your living trust, and can pay cold, hard cash for these assets (which the ILIT trustee received when he or she collected the insurance proceeds on your life). Your executor or the trustee of your living trust can then use this cold, hard cash to pay your estate tax bill.

2. In Part 3, I talked about one of the "dangers" in transferring existing whole life policies to an ILIT. Another problem -- more of an inconvenience, really -- is that those policies have a value for gift tax purposes. You can find out this value by requesting a Form 712 from your insurance company. This value will need to be included on your gift tax return, and is equal to (wait for it) the policy's "interpolated terminal reserve value" plus any premiums you've paid for a time period after the date of the gift. Fun!

3. The biggest mistakes I see with ILITs are:

(a) the failure of the grantor to understand that he or she no longer owns or has any interest in the property;

(b) the failure of the grantor to understand that "irrevocable" means "can't amend or revoke"; and

(c) the failure of the trustee to continue to administer the trust correctly, by preparing income tax returns, by sending notice of each contribution to beneficiaries, and by keeping good, clear records of what has been done.

The typical ILIT would be set up as follows:

-Grantor signs ILIT document, with grantor's spouse as trustee, and spouse and children as beneficiaries

-Grantor makes annual contributions to the ILIT, and trustee gives notice of contribution to beneficiaries

-Trustee purchases whole life insurance policy on grantor's life, and uses annual contributions to pay premiums

-When grantor dies, death benefit is paid to trust

Does an ILIT always have to work this way? Not really. Four variations on a theme:

1. Instead of setting up an ILIT, grantor gives money directly to his children, who collectively purchase a life insurance policy on the grantor's life. When grantor dies, the children split the death benefit. This variation isn't used very often, mostly (in my opinion) because it seems a little uncomfortable for all parties involved. But the big advantage: no need to have an attorney involved.

2. The trustee purchases a term life insurance policy instead of a whole life policy. The premiums will be lower, but the "danger" (is that the right word?) is that grantor may not die during the term of the policy, thereby making the value of the ILIT disappear.

3. The grantor transfers a current policy (or policies) to the ILIT instead of having the trustee purchase a new policy. This may be necessary if the grantor is now uninsurable, but the downside is what's known as the "three-year rule": if you transfer a whole life insurance policy to an ILIT and die within three years of the transfer, the insurance proceeds are included in your estate for estate tax purposes (as a gift made "in contemplation of death").

4. How about a 1/2 ILIT, 1/2 gift trust hybrid? By this I mean that (to take one possibility) one-half of grantor's contribution is used to purchase life insurance on the grantor's life, and the rest is invested by the trustee. Now you have the protection of the insurance if grantor dies in the near future, and the protection of appreciating investments if grantor doesn't.

Over the next week or two, I'm going to be talking in some depth about irrevocable life insurance trusts (often referred to as ILITs by estate planners). Today I'd like to talk generally about these types of trusts.

There are many reasons to set up revocable trusts, such as living trusts: avoidance of probate, privacy, and controlling when your beneficiaries receive their inheritance are just three. By contrast, most people set up irrevocable trusts, such as ILITs, for only one reason: to pass property to beneficiaries at your death free of estate tax. This works because an irrevocable trust is, well, irrevocable. And that irrevocability goes not only to the trust document you sign, but to any property you contribute to the trust. You no longer own it, which means you can't get it back or control it in any way. This is why property held in a correctly-drafted irrevocable trust will not be subject to estate tax when you die -- because it's no longer your property.

How does a typical ILIT work? Here's an example:

1. Grantor (Mr. Grant), a 47-year-old, signs an ILIT with his sister (Ms. Trust) as trustee.

2. The trust provisions are for the benefit of Mr. Grant's three children, and are similar to the provisions in Mr. Grant's living trust.

3. Mr. Grant contributes $15,000 per year to the trust.

4. Ms. Trust uses the yearly contributions to buy a life insurance policy on Mr. Grant, with the trust as beneficiary. (I'll talk about types of life insurance at a later time, but let's assume $15,000 per year would be enough to pay the premiums on a $1 million whole life, or "permanent," policy.)

5. Mr. Grant dies, and the insurer pays $1 million to his beneficiary (the trust). Mr. Grant has passed $1 million to his three children free of estate tax and income tax.

There's obviously a leverage aspect at work here. If Mr. Grant dies in three years, he's paid $45,000 (in premiums) to "get" $1 million (to his kids as an inheritance). Of course, if Mr. Grant dies in 40 years, he's paid $600,000 to get $1 million -- not the best return.

Next time I'll talk about ILITs and gift tax.

When I draft a living trust for a client, I make it clear that the client still needs to have a Will. "But why?" clients will sometimes ask. "Isn't the living trust taking the place of the Will?"

My answer to that question is, yes, the goal of the living trust is to replace your Will as the primary vehicle by which you dispose of your property. But we don't live in a perfect world, and it may be that all of the client's property isn't retitled in the name of (or made payable to) the client's living trust before he or she dies. Sometimes this is because of an oversight on the part of the client. Sometimes it's because the client unexpectedly acquires property (like an inheritance) right before his or her death. Whatever the reason, the issue is property that for some reason doesn't pass under the living trust upon the client's death. If you don't have a Will, such property passes by intestacy, regardless of what your living trust says. That can be a really bad result, since your property will go to your heirs under Illinois law instead of to the beneficiaries you've chosen.

Enter the "pourover Will." This is a fairly short (maybe 4 or 5 page) document designed to clean up any of your estate's "loose ends." The main provision of a pourover Will would say something to the effect of this:

I give any property I own in my own name at my death to the trustee of the Joel A. Schoenmeyer Trust dated November 20, 1970....

Why "pourover"? The idea is that your living trust is like a big bowl, and funding your living trust is like filling up the bowl. A pourover Will completes this process at your death, by pouring over -- into your living trust -- any property that wasn't placed in your living trust during your lifetime.