It’s Tax Day: A Detailed Analysis Of Why Estate Planning Is The Best Investment For Your Tax Refund 

It’s Tax Day – April 15^th – a day of celebration for some, or for my fellow entrepreneurs, sometimes not so pleasant. For the vast majority of Americans working a W2 job, you’ve probably got a check coming your way. The statistics for 2024, show that the national average for tax return refunds is up this year, somewhere between 2.1% to 4.6%. For 2024, the average return is ranging from $3,011 to $3,207 per household.  Further, if you filed electronically, you should be expecting your return in about 21 days, but if you mailed your return it should take four to six weeks to process.

So, the question is… what are you going to do when that tax refund check lands in your bank account? It's easy to start dreaming about all the ways you can use it. Financial experts may tell you that it's a chance to pay off debts, tuck away savings for an emergency, or add to your retirement savings. You, on the other hand, may want to splurge on a vacation, new appliances, something for the kids, or on an upgrade to whatever eye sore has been bothering you around the house over the past year.  However, there's an often-overlooked item on your long-term to do list that will not only provide you with immediate satisfaction, but will also provide necessary and life-long benefits for both you and your loved ones: Estate Planning.

For most, estate planning sounds like a chore. They think it’s depressing and something that will be complex, so they justify putting it off for one reason or another. Maybe you tell yourself that you’re too busy and don’t have the time, that you’ve got other bills to take care of first, that it isn’t right the time or necessary for right now, or that you have a simple estate and aren’t wealthy enough to need an estate plan. Contrary to popular belief, I’m here to tell you that:

• Regardless of how much money you have in the bank, estate planning is crucial for every family and it’s absolutely necessary if you have kids. 

• In terms of time, my grandfather died at the age of 42, two of my wife’s aunts died in their 20’s (one in a freak accident and the other of cancer), and I’ve personally had 4 friends die under the age of 40 from cancer and heart-related problems – so you never know. I always like to say that you should hope for the best, prepare for the worst and plan for every possibility in between – so get your ducks in a row, while you can and before it's too late. 

• In terms of complexity – I often hear from clients that they believed it would be a difficult and tedious process, but after working with our office, they realized it's actually pretty straightforward and seamless. Beyond having to fill out an online questionnaire, summarize their assets and provide contact information, all they had to do was show up to my office and it was all taken care of. 

In its most basic terms, estate planning involves creating a plan for 2 stages of life: (1) If you are unable to manage your financial and healthcare decisions due to injury or illness, who do you trust to make these decisions for you; and (2) what happens to your belongings and finances after you're gone. Think of it as creating a roadmap for your loved ones to follow, ensuring they're taken care of and know exactly how to handle your estate according to your wishes. After all, someone will have to do something to handle your affairs and manage your stuff after you’re gone. The question is, do you have a plan in place guiding them along the way, or will your family be stuck dealing with the government’s default plan and paying lawyers to go to court, while a stranger (the judge) makes these very important decisions for you. If you invest the time and money to take care of these things while you have the power to do so, you can save your loved ones a lot of money, time, delay and frustration in dealing with the court system at an extremely difficult and emotional time.

More importantly, if estate planning is done the right way, it will cover so much more than you ever expected. For our office, estate planning isn’t only about money and there is so much more to the definition of your wealth and legacy than a simple balance sheet, but we’ll get into a bit more about Legacy Planning in just a bit.  For now, let’s start with the basics. 

Why Do You Need an Estate Plan?

Not only do you need a plan for what happens with your finances and personal items after you’re gone, or if you should become incapacitated, but you also need an estate plan if any of the following are true:

You care about the people in your life and want to choose who will handle things for you, if you cannot. First and foremost, estate planning isn’t something you just do for yourself, it’s truly an investment you make for your loved ones. If it feels daunting or overwhelming to consider planning while you’re alive and well, imagine how your loved ones will feel if they’re left with a mess when something happens to you.

We all know we should get a plan in place, but it’s often one of the easiest things on your to do list to put off. Yet, estate planning is something you must handle because by the time it becomes an urgent need, it’s often too late, and the final memory you’ll leave behind for the people you love, is a huge expensive mess that they’ll be required to clean up.

It’s shocking to most people, but in Illinois we often find that married couples who do not have a plan in place will go through anywhere from two to four probates, to address the same set of property multiple times. One for either spouse’s incapacity or “guardianship” while they are alive, and then a formal probate for each spouse upon their death. Depending on the family and what transpires, a married couple can go through multiple forms of “probate.” All of which amounts to excessive costs and delay for their family to manage and transfer one set of property over their lifetime.  

That’s why we say that estate planning is about protecting your family from life’s most common legal problems: Death, Disability and Divorce. During the process of designing and creating your plan, the education and guidance we provide allows you to consider and protect your loved one’s time, energy, attention and final memory of your life. You are leaving them a gift by carefully considering and making these all-too-important decisions for them, without the need for a court to interject and make them for you.  It’s a way of saying "I love you" that goes beyond words, providing your family with guidance during a difficult time. By making your wishes clear, you can keep them out of court, prevent potential conflicts and ensure your loved ones are supported exactly as you intend.

You want your wishes to be honored. With an estate plan, you have the power to dictate exactly how you want to be cared for if you are incapacitated, or who makes decisions for you if you cannot. If you don't want to linger in a hospital bed, kept alive artificially for years like Terry Schiavo did before her death, you must create a plan. Otherwise, the people you love could get stuck in a court process fighting over your care and what you would have wanted – but, they will have to do so without your guidance and input. 

You also get to say who inherits your assets, from your home and savings to sentimental items. Planning ensures there isn’t any confusion and guarantees that your possessions end up in the right hands. Planning also makes it clear who should handle things after you are gone, and it makes it as easy as possible for the people you choose.

You want to minimize estate taxes. If you have good counsel, planning also will involve a detailed strategy on how to structure your plan to save taxes and maximize your loved one’s inheritance that will be left behind. In Illinois, we are one of the 12 states (not including the District of Columbia, which makes it 13) that has a state estate tax.  In Illinois, if you cross the threshold where these taxes will kick in, your family will automatically have to pay a minimum of $300,000 in taxes that could have easily been avoided through proper planning.

You want to maximize your loved one's inheritance. During the planning process, a good attorney will analyze your specific assets and advise you on the smartest way to leave those assets to your loved ones. This becomes imperative if anyone you are naming to receive your property is disabled, receiving government benefits, or is still a minor. I can’t tell you how many well-meaning grandparents have named their underage grandkids as a beneficiary of an account, or in their Will, thinking they were doing a nice thing. Yet, their children are none-too-happy when they find out that they now have to pay an attorney to establish a guardianship for their kids, where the money will be placed in a locked account and they will have to pay that attorney to provide an accounting to the court every single year until their kids turn 18, when they will then be given those funds outright to spend however they please. 

You want to save money and time (for yourself and your family). Dealing with the court if you become incapacitated or when you die is completely unnecessary and can easily be avoided. Not to mention, it’s also time-consuming, expensive and completely public. After twenty years of litigating in courtrooms, I can tell you that based on my experience, once people are in court there is a much greater likelihood of conflict. Without a clear plan in place, you or your family may face costly legal battles and time-consuming administrative hurdles. By carefully planning now, you can save your loved ones from unnecessary stress and financial strain, while making the process as smooth as possible with the support of counsel that your family has gotten to know, like and trust. In addition, careful planning also ensures that you save yourself money by avoiding these unnecessary costs if you are unable to care for yourself, so that your family won’t have to go through a “guardianship” where a judge will be required to grant them rights that you could have easily done yourself, for a much lower investment of money and time.   

You have minor children. If you have minor children, consider who is home with them when you aren’t? Would that person know what to do if you didn’t make it home? Or, would the authorities show up at your house and have to take your children into the care of protective custody/strangers while they figured it out? After the authorities then locate your “next of kin” (a relative), a court case will have to be filed where the judge will appoint someone to raise them? Will it be the same person you would have chosen? If the idea of any of this terrifies you like it does most parents, you need an estate plan.

Most parents of minor kids are overwhelmed with the demands of everyday life and don’t stop to think about how estate planning may impact their family. Young parents are often the least likely to take the time to educate themselves on estate planning based on their busy schedules, but in my opinion, they are the most at risk by not having a plan in place. The common misconception in our country is that planning is only for older folks who know their mortality is staring them in the face, and young parents think that’s too far off to warrant any consideration. That’s a mistake. Death happens to everyone, and incapacity (an accident or injury) can strike when least expected, no matter how old you are. So, please do not leave your kids at risk because these are often the saddest examples of why estate planning is so important. If you are a parent, please consider if you want your life and legacy to be remembered as a cautionary tale, or as an

example of the right way to handle your affairs for your family.
   

So now you know if you need an estate plan, but you may not be sure what to do next. If you feel overwhelmed, don’t worry. Taking that first step is easier than you might think.

Your Estate Planning Options & How to Put Your Tax Refund To Work

You might consider using your tax refund to do your estate plan on your own and opt for a cheap online service. It’s 2024 and in today’s day and age, Artificial Intelligence is changing the way we live in so many ways and I’m sure you’ve been inundated with commercials and online ads for Legal Zoom and Trust & Will. While these options may seem simple and cost-effective, they don’t offer the comprehensive advice and personalized guidance that your unique situation requires. 

On a regular basis, I review my clients, friends and family’s online DIY plans and I can honestly tell you that I have yet to see a single online plan that was done correctly. To no fault of the websites, in fact their documents aren’t half-bad, but the problem lies in the user. Estate planning is one of the most complex areas of the law and every estate plan is drastically different. Your family circumstances and assets are very different than your neighbors and you can't lump everyone into a box and think that a generalized plan is going to work for everyone.  It takes someone with the knowledge and experience to identify potential issues and pitfalls to guide you through the process and spot those issues for you.  In addition, each state has extremely different laws that must be carefully followed to ensure that your plan is legally valid and will be recognized as such in your state, which your national website may not address or provide you with the necessary instructions. In my experience, and the reason I’ve never seen an online plan that is done correctly is that they often aren’t signed properly, rendering them invalid and worthless. Alternatively, the user didn’t receive a complete estate plan because they didn’t understand ALL the documents necessary to be included in a comprehensive plan. In the end, my clients, friends and family have spent somewhere between $600 - $1,000 as a learning lesson on what not to do when it comes to estate planning. Even worse, if they hadn’t come to see me, they would’ve had a false sense of security thinking that they had a valid estate plan and their family would’ve realized the truth, at a time when it was too late to correct them and they needed them most.

Instead, investing your refund in working with an honest and caring attorney, who will go above and beyond to take you through a personalized process to ensure you understand what you are doing, why you are doing it and how to manage your your plan throughout your lifetime is a much wiser decision. When done right, an attorney should take the time to get to know you, your family dynamics, your wishes, your assets, and then help you choose the right plan for you both now, and into the future. That is why we have a four-meeting process in our office, as opposed to the traditional two-meeting process you will find in most transactional law firms. It simply isn’t enough time to get to know you, while providing you the necessary education and guidance on ALL your available options.   

In addition, a common misperception that you need to be aware of is that creating an estate plan is not a set-it-and-forget-it, one and done thing you do, and then put it on a shelf or in a drawer and never look at it again. When you do that, your plan is almost guaranteed to fail when the people you love need it most. In that case, it’s almost better to do nothing because then at least you have it on your to-do list and will get to it when you're closer to needing to use it. False security is one of the greatest risks of estate planning. The reason is that your life, your assets and the law will change drastically over time, and your plan must evolve right along with them. I can assure you that the law, in and of itself, has drastically changed over the past 20 years and for that reason alone, you need to have a system in place to regularly have your plan and your assets reviewed by an expert. 

That’s why we have built into our process, a FREE 3-year review of all our plans, so that our clients can rest assured that their plan will work for their family when they need it most. We will help you navigate the law, and tailor your estate plan to fit your specific needs as your life and assets change. In addition, these regular check-ins provide our clients with the peace of mind of knowing that their estate plan is up-to-date and legally sound. Remember, when it comes to safeguarding your family's future and ensuring your wishes are accurately reflected, the value of expert guidance is well worth the investment.

What Documents Do You Need In Your Estate Plan:

At the very least, your attorney should help you create the necessary and relevant documents, including:

Creating a Will: A Will is a document in which you detail the distribution of your assets and designate guardians for any minor children. It serves as your voice, ensuring your assets are allocated as you desire.

Powers of Attorney and a Living Will: These documents will allow you to appoint people that you trust to manage your financial and healthcare decisions if you are injured or suffer from an illness that leaves you unable to make your own decisions and manage your affairs. They will also provide your loved ones with your instructions and guidance for what you would have wanted during an emergency and extremely difficult time.

Setting Up a Trust: For greater control over the distribution and management of your assets, during both life and death, a trust is invaluable. It not only allows for precise management of how and when your assets are distributed but can also offer tax advantages and circumvent the lengthy and public probate process. In addition, and maybe more importantly, a Trust will help your loved ones avoid a lengthy, expensive and totally public court process, which can cost your family significant amounts of time, energy and attention. Not to mention, if you don’t want your children to receive the entirety of their inheritance at the age of 18, a Trust is the only way to avoid that reality for your children.

Selecting Guardians and Executors: A key component of estate planning is choosing individuals who will execute your wishes and look after your children if you are unable to do so. These crucial choices help safeguard your family's future. And if you want to go beyond merely choosing people to raise your kids, you need a thorough Children’s Protection Plan™, which takes into account anything that could happen (i.e., you’re in a car accident and they’re with a babysitter at home). A Children’s Protection Plan™ also ensures your kids are raised by the people you want in the way you want, that someone you’d never want to raise your kids is able to, and that the right people are able to get emergency care for them if you’re traveling without them. We have developed this proven process to ensure that the people you have chosen will know that they have been appointed, what their role is and what to do in an emergency.

Managing Taxes and Expenses: Effective estate planning can significantly lessen the tax load on your beneficiaries, allowing a larger portion of your assets to benefit them directly instead of going towards tax settlements.

The Family, Wealth & Legacy Plan:

All of the documents referenced above are undoubtedly important, and will be included in an estate plan from most attorneys. However, a Family, Wealth & Legacy Plan™ will go a few steps further, ensuring that investing your tax refund in an estate plan is the best investment you’ll make all year. In fact, every Family, Wealth & Legacy Plan™ ensures that your plan will work throughout your lifetime by:

• Educating and empowering you to make wise decisions for your family and choose the right plan that fits your unique family situation, values, and budget (most lawyers will tell you what you need without educating you on ALL of the options available to your family);

• Ensuring your assets are inventoried and don’t end up lost by creating an Asset Inventory and giving you the tools to update this for free and easily on your own (most lawyers won’t tell you that this happens - a lot - to the tune of billions of dollars every year). Right now, there is over $70 billion dollars being held nationally in the departments of unclaimed property; and Illinois is currently holding over $5 billion dollars.

• Creating a Children’s Protection Plan™. This is a comprehensive plan that we have developed that goes well beyond your Will and creates an emergency plan for what happens to your kids if something happened to you (most lawyers don’t even think to do this, and I have yet to see another plan that addresses each of the extremely important documents, instructions and letters in a traditional estate plan);

• Notifying your loved ones that they have been appointed and providing instructions for your family on what to do when an emergency strikes. 

• Being a trusted advisor for your family, so they have someone to turn to for help when something happens to you (most lawyers don’t ever make contact with your family after they’ve completed an estate plan and they’ll never hear from them again after their signing meeting. Not to mention, that if they call to ask a question, they’ll often get a bill in the mail at their hourly rate);

• Capturing your memories, stories, values and family traditions, so they are passed down to future generations and solidify the legacy that they’ll leave behind (most lawyers don’t think to do this either and we believe Legacy Planning is the most important and meaningful aspect to our process); and

• Implementing a system so you can document your wishes in way that will be legally recognized to detail: (1) your personal property, the stories behind any sentimental items and who should receive them; (2) your final wishes to be remembered by pertaining to your funeral and remembrance services; and (3) Legacy planning and instructions for your chosen individuals to carry out your wishes as you would have wanted, along with letters to your children for all of life's milestones, so your wisdom, values and memory will carry on for generations to come. 

• A system for updating your plan at least every three years to make sure your plan stays up to date as your life and the law changes over time. That way, you can rest assured your plan will work for your family when you need it to (most lawyers treat their clients as a “one and done” transaction, never checking in again and letting your plan go stale).

What If I Didn’t Get a Refund This Year?

Now if didn’t get a refund this year, naturally there aren’t any unexpected funds coming your way to invest in an estate plan. Yet, please know that we hope you walk away with two major takeaways: 1) Estate planning is always a wise investment; and 2) A Family, Wealth & Legacy Plan™, can help you organize your finances (amongst many other things) so you are more likely to get a refund next year, or at least not have a big unexpected tax bill, if that’s what happened this year. During our process, we will also help you get more financially organized than you’ve ever been before, so that you make the very best decisions about the allocation of your resources for yourself and the people you love in future years.  

Estate Planning: The Ultimate Gift You Can Give to Your Family

Among all the ways to use your tax refund, estate planning can ensure that your love and care for your family will endure long after you're gone. It's an act of foresight and planning, that not only secures your family's financial future, but also will help you design and carefully create the legacy that you will leave behind.

At Family, Wealth & Legacy Legal Solutions (FWLLS), located in Oakbrook, IL, we work with clients all over the Chicagoland area and can accommodate Illinois families statewide to create a complete, customized and personal plan that is worth more to your loved ones than any tax refund. To learn more about our planning process, and how we approach estate planning in a drastically different way than the traditional transactional law firm, schedule a complimentary 15-minute call with our office today.

P.S. – If you enjoyed reading this article and made it to the end (I know this was a long one), please leave a comment and let us know your thoughts and your biggest takeaway. If you think your family and friends could benefit, please share it on social media to spread the word.

This article is a service of Family Wealth & Legacy Legal Solutions (FWLLS). At FWLLS, we do not just draft documents; we ensure you make educated, informed and empowered decisions for yourself and the people you love. That's why we offer a Family Wealth & Legacy Strategy Session™, during which you will get educated and begin to prepare to avoid life’s most common legal problems and get a plan in place to make the best possible choices for the people you love. You can begin by calling our office today to schedule a Family Wealth & Legacy Strategy Session and mention this article to find out how to get this $750 session at a significantly discounted rate, or even for free.