Wednesday, April 28, 2010

Why most attorneys fail to make good estate plans?

Today, I was at a client's house and an another non-estate planning attorney drafted a will for my client. The will was a pretty good document, but it did not address her practical concerns such as how her husband who has dementia would be cared for in case of her death. Secondly, her brother has a spending problem and she wants to leave an inheritance to him, but he will blow all the money. A solution is a living trust versus a will. With this living trust, we will empower the trustee to purchase an annuity, which will give the brother a guaranteed income for the rest of his life (upon her death). Third, her neighbor is a beneficiary of her six-flat building and has no relationship to her family. One of the concerns is that he would sell the building and her husband would have no where to go. She assumed that the husband would live with the neighbor at a new home. Instead, we have set up her trust where her husband can remain living in his house for the rest of his life. Furthermore, we are setting up a special needs trust for her husband's benefit. The non-estate planning attorney also did not think about qualifying her husband for medicaid. These are simple examples of why it is important to hire an attorney experienced with wills, trusts, estate planning, advanced estate planning, and asset protection.

Sean Robertson, Attorney at Law
Robertson Law Group, LLC
(312) 498-6080

Monday, April 26, 2010

What is independent administration and probate?

Cook County, Dupage County, Kane County & Will County Probate

Independent administration and Probate

Independent administration is a type of probate case that is not monitored by a judge until the end of the case. There are two types of probate administrations. The first type is called Independent administration. The executor is empowered to make financial decisions without the authorization of a judge. These decisions include selling a house, filing a lawsuit, and paying out inheritances or settling claims. The second type of administration is supervised administration. This type of administration occurs when one of the heirs at some point objects to independent administration. Typically, supervised administration is more costly because a judge must approve all financial decisions such as distributions of cash, sale of real estate, and settlement of claims.

The Robertson Law Group, LLC concentrates in probate and guardianship matters in Circuit Court of Cook County, Circuit Court of Dupage County, Circuit Court of Will County, and Circuit Court of Kane County.

We can be reached at 630-364-2318 or 312-498-6080 or

Friday, April 23, 2010

Irrevocable Trusts and Asset Protection-Overview & Analysis

This is a memo prepared for me from my law clerk regarding irrevocable trusts and their effectiveness. I hope you enjoy it as a fyi. I believe they are a very effective tool.


Irrevocable Trusts and Asset Protection

In general, an irrevocable inter vivos trust or otherwise known as "Irrevocable Trust" is an effective way for an individual to protect his assets from creditors. This is because the assets are no longer in the control of the individual; rather, they are in the control of the trustee. The scene gets slightly complicated, though, when the settlor retains the right to receive income for his life from the trust.

In the case In re Brown, 303 F.3d 1261 (11th Cir. 2002), a Chapter 7 bankruptcy settlor-debtor received an inheritance from her mother and put the inheritance in an irrevocable trust with the proviso that she would receive a monthly income payment for her life. Id. at 1263. The settlor-debtor was the trustee, but her powers were limited to making investment decisions; she could not assign her income interest because of a spendthrift provision in the trust agreement. Id. at 1264. The debtor-settlor eventually filed for bankruptcy and sought to keep the trust out of her bankruptcy estate,

The Eleventh Circuit first articulated that under the Bankruptcy Code, if a restriction of the debtor’s interests is applicable and valid under non-bankruptcy law, then the restriction is effective and valid under the Code as well. Id. at 1265; 11 U.S.C. § 541(c)(2). In looking at Florida law, the court determined that spendthrift provisions are effective to keep creditors from reaching trust assets, but only if the beneficiaries of the trust do not have any power over the trust assets. Id. at 1265. When the beneficiary is also the settlor, though, the spendthrift provision is not valid against creditors and they can reach the trust assets that the settlor has an interest in. Id. at 1266.

In looking at Florida law, the court determined that assets within a spendthrift trust are not protected to the extent the settlor creates the trust for his own benefit, as opposed to the benefit of another person. Id. at 1266. The court noted that this is not a concept unique to Florida, and the court cited several other cases from various jurisdictions (e.g. Ninth Circuit, Florida bankruptcy court (applying New York law), Maine bankruptcy court, Florida bankruptcy court (applying Ohio law) and Texas Appellate Court) all reaching the same conclusion. Id. at 1267 n. 6.

Furthermore, this interpretation follows the common law of trusts. Scott’s treatise, The Law of Trusts, specifically distinguishes between trusts reserving an interest for the settlor and trusts reserving an interest for a third-party remainderman. Id. at 1267 (citing II Austin Wakeman Scott, The Law of Trusts § 114 (3d ed. 1967). This treatise also finds that when a settlor reserves a right or interest for himself, a creditor can reach that interest even if the trust says otherwise. Id. A creditor can reach this interest of a settlor-beneficiary even if the settlor was solvent at the time of creating the trust, and even if the settlor had no fraudulent intent. In re Brown, 303 F.3d at 1267.
So, without a valid spendthrift provision, an interest in a trust is a property right. Id. at 1268. Thus, a beneficiary’s right to receive income is a property right that a creditor can attach. Id. But, when this right to receive income is the only right a beneficiary-settlor has reserved for himself, then it is only this income that a creditor can attach. Id. A creditor cannot pierce the trust and reach the corpus (unless the creation of the trust was a fraudulent conveyance). Id.

In Estate of German, 7 Cl. Ct. 641 (1985), the court reached a similar conclusion. The settlor created six trusts, three for each of her two sons, and named both her sons the trustees of all trusts. The trustees had the power to pay the settlor any income or part of the principal as they determined necessary. Id. at 642. The issue was whether the settlor owed an estate tax or gift tax on the property she transferred into the trusts, and the court could only answer this by determining whether the transfer to the trust was a completed gift. Id. at 643. If the settlor’s creditors could have reached the assets under state law (Maryland law, in this case), then the gift was not complete and the estate tax applied; if the creditors could not reach the assets (because the settlor divested herself of all rights to possession and enjoyment of the property), the gift was complete and the gift tax applied. Id. at 643.

The court relied on a Maryland Court of Appeals case, Mercantile Trust Co. v. Bergdorf Goodman, which found that creditors’ rights in trust property depend on whether the property in the trust which is not distributed returns to the settlor or goes to a remainderman at the settlor’s death. Id. at 645. If the trust property goes to a remainderman, then the creditors cannot reach the assets because the remaindermen have a vested interest in the property, even if that interest is delayed. Id. But the creditors can reach the life estate of income the settlor receives. Id. This is because that income returns to the settlor and the remaindermen do not have an interest in the income.

Finally, it is important to note that just because a spendthrift provision fails, the entire trust does not fail. In re Brown, 303 F.3d at 1269; In re Goff, 812 F.2d 931, 933 (5th Cir, 1987). In In re Goff, Mr. and Mrs. Goff, the settlors, created an irrevocable trust containing real property. In re Goff, 812 F.2d at 932. Citizen National Bank had a judgment lien against the property, which it properly recorded in the county records. Id. The settlors filed for Chapter 7 bankruptcy and Citizen National Bank submitted a secured proof of claim based on their judgment lien. Id. The issue the court had to resolve was what type of title the debtors held in the real property in the trust: legal or equitable? Id. If the settlors had legal title, the creditors could attach their judgment lien to the real property. Id. at 933. But, if the settlors had only equitable title, then the judgment lien would not attach and the bank would only have an unsecured claim in bankruptcy. Id.

A valid trust results in the settlors holding only equitable title. The bank argued that because the trust contained a spendthrift clause restricting alienation, the entire trust was void from the beginning. Id. The Fifth Circuit rejected that argument and found the trust to be valid, even though the spendthrift clause is invalid for a self-settled trust. Id. Therefore, the court found that the settlors held only an equitable title in their real property and a judgment lien cannot attach to equitable title. Id. Therefore, the bank can only have an unsecured claim in bankruptcy.

What these cases make clear is that an irrevocable inter vivos trust may be an effective way to protect assets from creditors. However, if the settlor retains any sort of interest in the trust, such as income interest, a creditor can attach a claim to the income interest the settlor receives. Finally, spendthrift clause for the benefit of the settlor is an ineffective way to protect income interest, and it will likely be deemed void (even though the trust itself will remain valid).

Sean Robertson
Robertson Law Group, LLC
(312) 498-6080 or (630) 364-2318

Trust Administration and Estate Planning

Today's blog is on an important topic, which often is ignored by most estate planning attorneys. Often times, we are quick to recommend that family members be given the trustee position upon your incapacity or death. A trustee is a person that is a fiduciary and is required to follow your written instructions. Yesterday, I had a mediation for my client, a trustee of her father's trust. Her brother had filed lawsuit against her individually and as trustee of her father's trust. The brother was alleging that his sister breached her fiduciary duty owed to him under her father's trust. Unfortunately, this brother and sister do not have a relationship any longer after the family feud over money. My law firm did not draft the father's estate plan nor give the trustee advice upon your dad's death. In fact, her dad had a simple trust to be administered. My client through grieven, health issues, and lack of education was ill-equipped to be a trustee. In liklihood, she spent her money taking care of her parents instead of properly using her father's trust to pay for his nursing expenses and his care expenses. Her father had dementia. Prior to his death, my client commingled her personal money with the Trust's money. This is a big "no-no" because a trustee is not supposed to commingle their personal funds with the Trust's funds. Unfortunately, for my client, her legal options were not good. She would lose at trial and face thousands of dollars of litigation costs and attorney's fees to prepare this case for trial. Thus, this case settled for $50,000. We did get her brother to agree to not enforce the judgment (finding of guilt) for $50,000 until my client gets age 62. This is the age when my client can get a reverse mortgage and pay off her brother.

The moral of this story is make sure your estate planning attorney has a simple but clear will and living trust document. Second, it should not read like a lawyer's manual because most likely an average american will be implementing it and not understand the document. Third, make sure your loved ones are actually up to the tasks and make their jobs easy. Fourth, if you have feuding siblings, do not put your children in a situation where they are going to feud. A good estate planning attorney should review all these matters and recommend a good solution.

Sean Robertson, Attorney at Law
Robertson Law Group, LLC
(312) 498-6080 or (630) 364-2318

Friday, April 16, 2010

Power of Attorney and Seniors

This morning, I am meeting with a prospective client and his daughter and her husband. We are going to talk about a power of attorney. There are two (2) types of powers of attorney. The first type is a power of attorney for property or otherwise known as "POA Property". A POA Property is where the senior appoints a trusted person (likely daughter in this case) to be his power of attorney in case he has incapacity issues. Therefore, the daughter is empowered to make financial decisions for her dad such as payment of bills, real estate taxes, among many other bills. The second type of power of attorney is a power of attorney for healthcare or otherwise known as "POA Healthcare". A POA Healthcare is where the father appoints a trusted person (likely daughter again) to make healthcare decisions for him if he is unable to make these decisions.

Unfortunately, a power of attorney is often insufficient because if nursing home care (assisted living, etc.) is required, the nursing home will demand a guardianship hearing. The power of attorneys are relevant to any guardianship hearing, but a revocable living trust is really good option with the powers of attorney. Therefore, one can avoid the necessity of guardianship court. Guardianship court typically costs $1,500 in attorney's fees plus costs in a simple case. This is true for the Circuit Court of Cook County, Will County, and Dupage County.

Sean Robertson, Attorney at Law
Robertson Law Group, LLC
312-498-6080 or 630-364-2318

Tuesday, April 13, 2010

Estate planning for Unmarried Couples

This morning I was at a meeting with other professionals and attorneys. The subject of estate planning for unmarried couples was raised. It should be noted that estate planning for unmarried couples raises opportunities and problems. The first problem arises when an unmarried or same sex couple has assets, which border the amount allowed by the federal estate tax. Currently, in 2010, the federal estate tax has no limit, which means that a person can decease with $3 million in assets in their estate and pay no federal estate tax. The annual amount of gift taxes, which avoid gift taxation is $1 million. With married couples, AB trust are common, which enable an estate planning attorney to shelter each married spouse's estate from federal estate taxation. In 2011, this amount will return to $1 million per spouse, which means most married couples can shelter around $2 million dollars if structured correctly prior to the federal estate tax being an issue. For unmarried couples, advanced planning is critical because otherwise, unmarried couples face a maximum estate tax in 2011 in the amount of fifty-five (55) percent. Thus, unmarried couples and same-sex couples face an urgent need to properly plan their estates. Furthermore, unmarried couples must pre-plan their estates because their family members will likely inherit their assets without a properly drafted will or living trust. For unmarried couples, a will is not a good option simply because of the liklihood of an estate or will challenge. With a will, an heir must go through probate court and pay excessive attorney's fees and costs prior to inheriting the deceased person's assets. With a living trust, one can avoid the complexity and costs of probate court. A properly prepared living trust is a private document and avoids probate court. For unmarried couples, this is a cost-savings and a reduction in possibly litigation expenses and headaches. For example, I currently represent an estate of a gay partner who had the title of a condo in his personal name. Upon his death, his partner had to face the death of his partner and had to move because his partner had no legal right to their shared condo. Therefore, a living trust could have avoided this situation.

The word of advice is simple. Estate planning is critical for same-sex partners and unwed partners. Estate planning is a necessary evil and is simple with the proper attorney. At the Robertson Law Group, LLC, we are non-judgmental and work with unwed couples and same-sex partners in designing a customized estate and asset protection plan.

Robertson Law Group, LLC can be reached at 312-498-6080 or 630-364-2318 or Check out our website at

Key words: same sex couples, same sex partners, wills unmarried, last will and testament unmarried, glbt estate planning, lgbt estate planning, trust and glbt estate planning.

Monday, April 12, 2010

Land Trust and Asset Protection

Illinois land trust are a good strategy to avoid liens and judgments. They also provide you privacy protection because the property appears to be in the Land Trust Company's name. Additionally, a Land Trust can designate who shall be the beneficiary of the property upon one owner's death. This is could be a private land trust may avoid probate court. It may avoid probate court because you can designate a beneficiary upon your death. Typically, a court procedure called probate is required when both spouses are deceased. However, with a properly drafted land trust agreement, the land trust agreement designates who the beneficiary shall be upon the owner's death. In today's litigation, a land trust is valuable because liens and judgments do not attach to your property. This is important because you can sell your house even though you have not satisfied the lien or judgment. Contact Sean Robertson for a free initial consultation. We have offices in Chicago, Naperville, and Chicago Ridge.

Robertson Law Group, LLC
312-498-6080 or 630-364-2318

Thursday, April 8, 2010

What is Estate Planning-Naperville and downtown Chicago

What is Estate Planning?

Estate planning is simply a legal concentration that plans for incapacity and death. Typically, this planning involves wills, pour over wills, living trusts, and powers of attorney for healthcare and property.

A will is simply a written document that disposes of one's property upon your death. A will is a on-death document meaning that it does not have any affect during your life. A pour over will is a type of will that combines with a living trust to make probate a simple process. A pour over will becomes a catchall strategy to assist an estate avoid the complexities of probate. For example, Sue deceased and had a beneficiary that deceased on her bank account and did not designate a successor beneficiary. Thus, a pour over will instructs an asset without a proper beneficiary designation to be transferred into your living trust.

A living trusts is a written instrument that plans for your incapacity and death. A living trust is "living" because it works during your lifetime and upon death. A living trust is designed to avoid guardianship court and probate court. Guardianship court is a court that hears claims of disabled persons. These claims are relevant when a disabled adult loses their capacity to make decisions. Powers of attorney for healthcare and property are important, but to avoid guardianship court, your assets must be titled in your revocable living trust's name.

Essentially, estate planning is the process of working with an individual or family and assisting them with a smooth transfer upon death, avoidance of usual family conflicts, and the planning of incapacity and death. Estate planning also is giving advice on how to properly structure your assets to apply for medicaid or assist you and your family in helping your grandchildren or children remain eligible for medicaid (state public assistance). Many special needs children need the financial assistance of the state of Illinois because the expense of taking care of a special needs child.

In conclusion, estate planning is important because incapacity and death issues destroy many families. In my experience, there is a price that people will or will not pay for their families. If your children or loved ones will get destroyed by your lack of planning, estate planning is a family value.

Sean Robertson, Esq.
Robertson Law Group, LLC
312-498-6080 (all offices) or 630-364-2318 (Naperville)
Locations in Naperville, Chicago Ridge, and downtown Chicago

Key word: Living will, pour over will, estate planning, wills, trusts, living trusts, revocable living trusts, power of attorney for healthcare and property

Irrevocable Trusts and Asset Protection

Irrevocable Trust are a great asset protection strategy. An irrevocable trust is a type of trust that may not be amended. Thus, the person that is creating the trust is re-titling the asset (i.e. real estate) outside their name. Hence, this person does not have control over the asset. Due to a lack of control, your creditors should not be able to seize the assets in the irrevocable trust.

Yesterday, I spoke with a financial advisor that referred his childhood friend. This friend is 59 years of age and is involved in the real estate business. During the good years, we know that real estate was a great way to make a lot of money. However, right now real estate is a tough market. Thus, this friend is considering bankruptcy. Possible, if you are in a situation like this, there are other alternatives. The first alternative may be an irrevocable trust. You cannot hinder, shelter, or defer payment to creditors. Therefore, we must evaluate whether the fraudulent transfer doctrine prohibits you from making any such transfers.

The major point is irrevocable trust are great for asset protection. Unlike domestic asset protection trust that are questionable, irrevocable trust are solid. The big difference is with an irrevocable trust you give up control to a trustee. In contrasts, an domestic asset protection trust gives you semi-control and in my opinion, domestic asset protection trust are unlikely to work in the state of Illinois.

Sean Robertson, Attorney at Law (Tax)
Robertson Law Group, LLC
312-498-6080 (all offices) or 630-364-2318 (Naperville)

Key words: Trust, estate planning attorney, irrevocable life insurance trust, creditor protection, domestic asset protection trust, asset protection trust, wealth preservation, lawyer estate planning, power of attorney, poa, will, pour over will