Coronavirus pandemic should spur family talk about financial planning, too
Families can end up losing their homes, for example, if they fail to complete the legal paperwork to ensure their property is transferred to intended beneficiaries. One Englewood resident advises communities hardest hit by the virus to make use of affordable and/or free legal resources to help with the process.
The coronavirus pandemic that’s hit Black and Latino families especially hard has forced an uneasy conversation about death and dying. But it should also include a conversation about what happens after the worst happens. Are wills — and more importantly — trusts in place? What happens to a family home, for example?
Families who prepare for the worst can keep their homes out of probate and avoid the lengthy time, expense and bureaucracy it can entail. And there are affordable or free resources available to help everyone navigate the financial planning landscape.
Englewood resident Earline Alexander said the recent COVID-19 deaths of her father-in-law and his brother within two weeks heightened her awareness of getting her affairs in order.
“Even though they were in their 80s and had underlying health conditions, had this pandemic not come along, I believe they’d still be with us,” said Alexander, who retired from a career as a director and manager of nonprofit and government agencies.
Having a last will-and-testament will not keep your estate out of what can be a long, costly and complicated probate process. To keep the family home out of probate court, with its potential for family feuds, homeowners must set up an alternative planning tool like a trust or a Transfer on Death Instrument, or TODI.
A homeowner needs two witnesses’ signatures and a notary public’s seal to file the TODI with the county recorder of deeds, and it needs to be filed while the homeowner is still alive to be valid.
Alexander took advantage of two programs aimed at helping people hardest hit by COVID-19 and anyone looking to ease their family’s inheritance experience:
- A nonprofit legal aid organization — the Center for Disability & Elder Law at 206 W. Randolph St., Suite 1610 — that offers free estate planning for homeowners with incomes below 150 percent of federal poverty guidelines, roughly a $19,000 yearly income for a single person or $32,500 for a family of three.
- And Cook County’s lowered fee — $48 instead of the usual $98 — effective through Sept. 30, to file the TODI.
“Now, I feel like I can pass when the time comes and know that I have things in place,” Alexander said.
An attorney at the Center for Disability & Elder Law helped Alexander apply for property tax exemptions and to create a will, a TODI and advance directives including power of attorney.
“I was able to determine what would happen to me, who would help take care of my financial matters, how I wanted to be buried and all the other details,” Alexander said.
“While I’m living or when I’m no longer here or if I’m here and not capable of handling matters, I can designate whoever I want to handle things — and how I want it handled,” said Alexander, who is planning a new career aimed at reducing the African American infant-mortality rate by setting up doula childbirth services and educational programs on breastfeeding, childhood learning and yoga and meditation practices in underserved neighborhoods.
“The stress that my family would have had to go through while I am living or no longer here, has been relieved,” she said.
Families can end up losing their homes, for example, if they fail to complete the legal paperwork to ensure their property is transferred to intended beneficiaries.
Amanda Insalaco, the attorney leading the Center for Disability & Elder Law’s Housing Preservation Project, said that if a person living in the deceased person’s house is not listed on the title, he or she cannot take advantage of property tax exemptions, refinance the mortgage to avoid foreclosure, draw from the equity to make repairs or create an estate plan for the property.
“Fortunately, a Transfer on Death Instrument is a powerful and extremely cost-effective tool that homeowners can use to prevent these complications,” she said.
It’s also important that the homeowner and the beneficiary make sure no one else’s name is listed on the house deed, that no liens are outstanding on the property, and that the beneficiary listed in the TODI has no legal actions pending, said Tiffany Smith, the Chatham neighborhood strategy coordinator for the nonprofit Neighborhood Housing Services, which works with the Center for Disability & Elder Law.
An example would be a trust set up specifically to cover property taxes for five years. That’s because a beneficiary younger than 65 would lose the senior homeowner’s exemption.
“We’ve seen houses go into delinquency on unpaid property taxes and then punitive interest rates start to pile up for the overdue taxes,” Smith said.
Smith said it’s a tough conversation for many families.
“Your house is probably your biggest investment,” said Smith, who is one of seven second-generation homeowners who live on the same block in Chatham. “We tell homeowners, ‘Be realistic in your conversation with your children.’ Our children are not equal in how they can maintain a house. It’s not a reflection that you didn’t raise your children well. One might be a traveler. Don’t leave the house to that kid.”
For homes that end up in probate, the process often takes at least a year.
That’s because a family who fails to keep their home out of probate by setting up a trust and other tools, like a TODI, must pay a $475 court fee just to get the probate process started, then hire a lawyer, pay $250 to publish a public notice covering a six-month period for anyone to file a claim against the estate, and, during that time, maintain the property and pay any outstanding mortgage, utility bills and property taxes.
If a family cannot continue to pay the bills or maintain the property, the situation can spiral into the property being abandoned and eventually sold off at a Cook County tax sale.
“It’s important for the homeowner who has invested an entire lifetime of payments into the property to make sure it goes to the person or people the homeowner chooses,” said Caroline Manley, executive director of Center for Disability & Elder Law.
It’s especially key because experts predict foreclosures will soar once coronavirus pandemic relief expires.
Sandra Guy is a freelance writer.
- Chicago Volunteer Legal Services, www.cvls.org or (312) 332-1624, provides free legal services to low-income people and the working poor, including estate planning. For anyone who has inherited a home that’s in foreclosure, there’s also a hotline at (312) 332-8785 or online at https://www.cvls.org/get-legal-help/how-to-obtain-our-help/
- The Center for Disability & Elder Law, cdelaw.org, (312) 376-1800 from 9 a.m. until noon Monday through Friday, is a not-for-profit organization that provides free legal services to low-income Cook County residents over age 60 or of any age with a permanent disability.
- The center’s Housing Preservation Project provides free legal assistance to senior homeowners with issues such as title correction, property tax matters, foreclosure and building code violation defense, and succession planning, helping to ensure seniors’ ability to age in place and transfer their homes. https://www.cdelaw.org/housing-preservation-project
- Legal Aid Chicago, legalaidchicago.org, (312) 341-1070, helps low-income people for free with legal needs, including advanced directives and property transfers such as health care and property powers of attorney, Living Wills and Transfer on Death Instruments.
- Justice Entrepreneurs Project, info.jepchicago.org, (312) 546-3282, a Chicago Bar Foundation-sponsored incubator for attorneys who offer cost-conscious full-representation or limited-scope legal help to Chicago-area residents.
Within JEP’s network
- Jessica Bell, principal attorney at Bell Advocate LLC, offers estate-planning help at her office at 9987 S Throop St. www.belladvocate.com or (773) 234-2052.
- Shunté Goss at Shunte S. Goss, www.shuntegossesq.com, focuses on estate planning and family law. She can be reached at (708) 794-8559 or email@example.com
- Anthony M. Abu-Ezzi, practicing as Ezzi Law, handles estate planning (wills, trusts, powers of attorney, special needs trusts), probate, adult guardianship, small business and corporate formation, and disability law. He can be reached at (929)-322-3994 or Tony@EzziLaw.com
- Illinois Legal Aid Online, IllinoisLegalAid.org, a non-profit that provides online resources to people to handle legal issues and paperwork. Sub-link for estate planning: https://www.illinoislegalaid.org/legal-information/estate-planning