Estate Planning: Frequently Asked Questions

By Paul Lechner, Esq., CPA — Lechner Law Office, P.C.

Estate planning is one of the most personal and consequential things a person can do — yet it is consistently postponed. The questions below reflect what clients ask most often when they first sit down with us. The answers are meant to be practical, candid, and useful whether you are starting from scratch or revisiting a plan you created years ago.

1. Why do I need an estate plan?

Without an estate plan, Illinois law — not you — determines who receives your assets, who raises your children, and who makes medical decisions on your behalf if you become incapacitated. The state's default rules are blunt instruments. They do not account for family dynamics, second marriages, a child with special needs, a business interest that requires continuity, or a beneficiary who is simply not ready to manage an inheritance.

A properly drafted plan ensures your intentions are carried out, minimizes taxes and administrative costs, and protects your family from unnecessary and expensive court proceedings. It also gives you control over decisions that you will not be able to make when they matter most — at incapacity or death. The cost of not planning is nearly always greater than the cost of planning.

2. When is the right time to create an estate plan?

Now — regardless of age or net worth. Many people assume estate planning is for the elderly or the wealthy. In reality, the consequences of dying or becoming incapacitated without a plan fall hardest on young families and business owners who have the most to lose and the least protection in place.

Certain life events signal an immediate need to act: marriage or divorce, the birth or adoption of a child, a serious health diagnosis, the launch or sale of a business, a significant inheritance or gift, or the death of a spouse or parent. Any of these events can render an existing plan obsolete or make the absence of a plan acutely dangerous. Even without a triggering event, plans should be reviewed every three to five years as tax laws, family circumstances, and asset values change.

3. Should we use a joint trust, or separate trusts with a pour-over will?

For married couples, this is one of the most consequential structural decisions in estate planning — and one that deserves careful analysis rather than a one-size-fits-all answer.

A joint revocable trust holds all marital assets under a single document and is simpler to administer during life. Both spouses are typically co-trustees, and the trust can be amended or revoked at any time while both are living. It works well for couples with straightforward finances, no prior marriages, and no significant creditor exposure.

A separate trust structure — each spouse holding a standalone revocable trust funded with individually owned assets, paired with a pour-over will to capture any assets not transferred to the trust during life — offers meaningful advantages in several situations. Separate trusts provide stronger asset protection from a spouse's creditors, greater flexibility in post-death tax and Medicaid planning, and cleaner separation of assets in blended family situations. They also allow each spouse to independently direct the disposition of their share of marital assets.

The pour-over will is not a standalone plan — it is a safety net. It captures any assets inadvertently left outside the trust and directs them into the trust through probate. The goal is always to fund the trust fully during life so the pour-over will never has to be used.

The right structure depends on asset composition, health considerations, prior marriages, the nature of business interests, and long-term tax and Medicaid planning objectives. This is a decision that warrants individualized advice, not a template.

4. What are property and health care powers of attorney, and why do I need both?

These two documents address different aspects of incapacity and are equally essential.

An Illinois Property Power of Attorney authorizes a named agent to manage your financial affairs on your behalf — paying bills, filing tax returns, managing investments, operating a business, or selling real estate — if you are unable to do so yourself. The document can be made effective immediately or upon a triggering event such as a physician's determination of incapacity. The agent you name should be someone you trust completely, because the authority is broad.

An Illinois Health Care Power of Attorney designates someone to make medical decisions on your behalf when you cannot make them yourself. It should be paired with a Living Will (also called an Advance Directive), which expresses your specific wishes regarding life-sustaining treatment, artificial nutrition, and similar end-of-life decisions. Without these documents, a hospital may be legally prohibited from sharing information with your family, and your loved ones may be forced to petition a court for guardianship — a process that is slow, expensive, and emotionally difficult at an already difficult time.

A trust does not replace either of these documents. They serve different functions and work together as an integrated plan.

5. What is Medicaid asset protection planning, and is it legal?

Medicaid asset protection planning involves structuring the ownership of assets — typically through irrevocable trusts, strategic transfers, or spend-down strategies — so that a client can qualify for Medicaid long-term care benefits without being required to exhaust their life savings first. Long-term care in Illinois can exceed $100,000 per year. Without planning, a lengthy nursing home stay can reduce a lifetime of savings to nothing before Medicaid coverage begins.

This planning is entirely legal. Federal and state law explicitly permit individuals to structure their assets in ways that preserve eligibility, provided the planning is done in accordance with applicable rules and timelines. Illinois Medicaid applies a five-year look-back period for transfers to irrevocable trusts — meaning transfers made within five years of a Medicaid application can trigger a penalty period of ineligibility. Early planning is therefore essential. The earlier you act, the more options you have.

For married couples, additional protections are available under federal spousal impoverishment rules, which allow the community spouse (the one remaining at home) to retain a meaningful share of marital assets. These rules interact in complex ways with trust planning, beneficiary designations, and the structure of jointly held property.

Medicaid planning should always be coordinated with your broader estate plan and, where applicable, your tax planning strategy. Done well, it protects both you and the people you intend to leave something to.

6. What is trust funding, and what happens if I skip it?

Creating a revocable living trust is only the first step. A trust only controls assets that are legally titled in its name. Funding is the process of re-titling your assets — real estate, bank accounts, brokerage accounts, business interests, and other property — into the trust so the trust can actually do its job.

If you sign a beautifully drafted trust agreement and then never transfer your assets into it, those assets will pass through probate at your death as if the trust did not exist. The pour-over will captures them and directs them to the trust — but only after going through court. That means delay, cost, and public disclosure of your estate, which is precisely what most people are trying to avoid.

Funding is not a one-time event. Every time you acquire a new asset — real estate, an investment account, a business interest — it needs to be evaluated and, where appropriate, titled in the trust's name or coordinated with the trust through beneficiary designations. Periodic review is part of the commitment a living trust requires.

We work with clients not just to create plans, but to implement and maintain them. A trust that is properly funded and regularly reviewed delivers on its promise. One that sits in a drawer, unfunded, does not.

To discuss your estate planning situation, schedule a consultation with Paul Lechner, Esq., CPA, or explore our estate planning services and tax and financial planning services for more information.

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