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Rockford Illinois Law Blog

Trusts provide several estate planning benefits

There are several reasons why Illinois residents may wish to consider using trusts in their estate plans. Trusts offer testators far more control over how and when their assets will be distributed, which can be an important consideration if their heirs are young, have acted irresponsibly with money in the past or are struggling with alcohol or drug problems. Trusts allow estates to avoid the public and sometimes protracted probate process because assets put into trusts are owned by the trust and not the estate, and they also offer protection should testators become incapacitated.

Trusts are either revocable or irrevocable. Revocable trusts are more flexible as they can be altered or revoked. This type of trust is created while individuals are still alive and is usually created to avoid probate. These trusts are often revoked following a divorce or when significant changes are desired and drafting a new trust would be easier.

When entrepreneurs' personal credit is on the line

Entrepreneurs in Illinois may have a difficult time fully separating their personal finances from those of their business, especially when they are working on starting a new company. For example, while a new business may have no credit history at all, many business owners have excellent credit scores earned through years of on-time payments and intelligent management of debt. Therefore, they may be tempted to use their personal credit as an asset when seeking credit for the business such as a bank loan.

However, business owners should also recognize that using their personal credit to secure a business loan exposes them to a greater amount of risk. Many people choose a business structure during the formation of their companies that protects their personal assets from business losses. When owners choose to put their personal credit on the line for their business, they can in some ways open themselves up once again to risk. For example, a personal guarantee is a commitment to pay back the business' debt in case the company is unable to; this type of guarantee is frequently requested by some lenders. It essentially makes the business owner a co-signer on the business' obligations.

Medical debt top cause of bankruptcy

Of those who file for bankruptcy in Illinois and throughout the country, roughly 66.5% do so because of medical bills. Individuals file either because of the medical debt itself or because of a lack of income caused by time spent out of work. This is according to a study that was published in the American Journal of Public Health. It found that the Affordable Care Act has done little to reduce the number of bankruptcies related to medical costs.

In fact, the percentage of people citing medical debt as the reason for bankruptcy actually increased in the three years after the ACA was introduced. This is because the level of care that people needed was not available or too expensive. Furthermore, most Americans don't have enough money saved up to help them cover the cost of an emergency. A Bankrate survey found that 60% of Americans couldn't cover an emergency expense of $1,000.

Protecting your interests when involved in a boundary dispute

When you buy Illinois property, it's always smart to know as much as possible about what you are buying. One of these things includes knowing where your property starts and your neighbor's property ends. Property boundaries are important, especially when you find yourself in a disagreement over them.

If you are involved in a boundary dispute with your neighbor, you need to know how to protect your interests and your property rights. This type of disagreement is more than just an awkward inconvenience – it can directly impact your property rights. You will find it beneficial to learn how you can effectively resolve these types of disputes and what you need to do to get a definite answer to your concerns.

Tips for new business owners

Corporate workers in Illinois who have considered leaving their job and starting their own businesses are not alone. However, before they leave a source of steady income to pursue their dreams, they should take time to carefully consider certain factors about being a startup business owner.

One of the most important steps individuals should take when they are thinking about starting their own business is to conduct thorough research. In order to make the move from an employee to a business owner as seamless as possible, they should make sure that their business is making sufficient money before they leave the safety of their job. It is also important to add as much as they can to their savings during that time.

What to do about passwords in an estate plan

Many people in Illinois have a number of online accounts with different passwords. During the estate planning process, it's important to make sure those accounts can be accessible to others. Keeping online accounts secure is important, and security experts advise not writing down passwords. However, there needs to be some kind of strategy in place that allows an executor or another designated person to access these accounts.

Writing down those passwords is a possibility, but this is not always very secure. A compromise might be to write them down but place the list in a safety deposit box. The problem is that people may change passwords fairly regularly, and returning an updated list to a safety deposit box every time this happens could be cumbersome. This solution might only work for an estate owner who is willing to make those updates.

Figuring out spousal support when divorcing

Some Illinois residents might be curious about how spousal support works. To avoid negative economic consequences after a divorce, a spouse who earns no wages or less wages may be entitled to financial assistance from the other spouse.

When a couple is divorcing, they first must address property division. After a plan for dividing assets and debts is arranged, there is a clearer picture of whether spousal support is needed. Various factors influence the amount one receives like the length of the marriage, the age and health of both partners, lifestyle during the marriage, non-marital assets and whether the couple has minor children. The ability of the spouse providing alimony to pay is also a factor as well as the needs of the recipient.

Guidelines to follow when filing for Chapter 13 protection

While there are several guidelines that must be met to file for Chapter 13 bankruptcy, there is no income limit to do so. However, an Illinois consumer seeking such protection will need to take a credit counseling course as part of the process. It will also be necessary to create a payment plan that is approved by the trustee, the bankruptcy judge, and the creditors involved in the case.

There are debt limits that individuals must stay under if they wish to file a Chapter 13 bankruptcy petition. The unsecured debt limit is currently $394,725 while the secured debt limit is currently $1,184,200, although both limits will increase for petitions that are filed on or after April 1, 2019. Debtors are generally required to disclose all sources of income and prove that they have filed state and federal income tax forms for the last four years. Failure to abide by one or more of these requirements may result in a case being thrown out or delayed.

Staying logical when buying a home for the first time

Buying a home is an exciting endeavor, especially for you and other Illinois residents who are buying a house for the first time. In addition to finding the home of your dreams or a house that you can turn into that home, you want to ensure that you do not let your zeal get the better of you.

As a first-time homebuyer, you may be at a slight disadvantage to those who have been through this process a time or two. For instance, you may not know that it is smart of think about the future sale of your home before you even buy it, or that sellers may try to make a space look more functional than it really is.

Divorce and claiming dependents with the IRS

Who gets to claim dependents on their taxes can make a big difference after a divorce in Illinois. The person who claims dependents may also get to claim Head of Household status. Dependent status also impacts who gets the advantages of the Child and Dependent Care Tax Credit, the Earned Income Tax Credit and the Child Tax Credit. Often, the terms of the divorce agreement will set out who has the right to claim dependents, but where that is not the case, the IRS has rules that it will apply.

In cases where a non-parent and a parent both try to claim a person as a dependent, the IRS will generally side with the parent and reject the non-parent's claim. Where two parents each attempt to claim a child dependent, the IRS will usually grant the claim of the parent with whom the child lived for more time during the relevant year. When the residency factor does not answer the question for the IRS, the IRS will look to income, and the parent with the higher adjusted gross income can typically claim the dependent.

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