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Burkhardt Law

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End of Year: Time to Review your Estate Planning Documents

With the holidays quickly approaching and the year coming to an end, it is a good time for reflection.  Many of us take some time at the end of the year to reflect on the prior year and evaluate goals we set out for ourselves the prior year and goals we hope to accomplish next year.  This is a great time to pull out your Estate Planning Documents and give them a review.  Do your documents still meet your estate planning goals or have your goals changed?

Look at who you have named as decision makers in your estate planning documents.  If you have a Trust, this would be the individuals you named as Trustees.  If you have a Will, this would be those individuals you named as Personal Representatives.  If you have a Financial Power of Attorney, this would be those individuals you named as your attorneys in fact.  If you have a medical power of attorney, this would be those individuals you named as your agents. Are you still comfortable with those people as your decisionmakers?

Perhaps your estate planning documents were drafted many years ago and you named a brother or a sister who have since developed medical or mental health issues that might affect their ability to make decisions for you and you would like to appoint a different person to make decisions.  Or maybe when you drafted your documents your children were minors so they were not named as decision makers, and now they are older, you trust them, and you would like them to make decisions now instead of those other relatives.  Perhaps you named a son-in-law as a decision maker and now your daughter and son-in-law have gotten divorced.  Perhaps you yourself have gotten divorced.  Perhaps there has been a death in the family.  A review will let you reflect on if you are still happy with the decision makers you chose or if maybe its time a change is needed.

Next, I would take a look at your Beneficiaries.  Take a look at your Trust or Will and make sure your beneficiaries named are still the people you want to inherit from your estate when you are gone and that those beneficiaries will inherit in the way you intend.  Perhaps there has been a birth.  If you now have grandchildren that you hadn’t provided for and now wish to do so, you may need to make changes to your estate planning documents to include them.  Perhaps you have had a falling out with a beneficiary and you no longer wish for them to inherit anything.

You may want to keep the named beneficiaries the same as they are, but maybe you want to change how and when they inherit their share.  Maybe your adult child has had relationship issues and you now feel like you need to protect them from themselves or a divorce.  Maybe now instead of them receiving their share outright upon your death, you want it to be held in trust and only distributed to them in small amounts over time.

Once you have determined who the intended beneficiaries are it is important to review your assets.  If you have a trust, you will want to be sure the trust is funded with your assets.  Review bank accounts, brokerage accounts, insurance policies, etc. to be sure the trust is the owner or beneficiary on those accounts.  Make sure you have a TOD (transfer on death) to the Trust on any vehicles.  If you have purchased a new home or refinanced, are you sure your home is still titled to your trust?  If you have a Will, you will be relying on beneficiary designations on your assets to avoid those assets going through probate.  Be sure to review all assets to be sure they have beneficiary designations and that those designations are still what you want.  Vehicles should have a TOD, bank accounts should have a POD (payable on death), and all assets should have beneficiaries named.  If you have purchased a new home, be sure that a beneficiary deed is executed for the new real estate.

If a review of your estate planning documents indicates to you that changes are needed to your documents, you should contact an Estate Planning Attorney who can discuss those changes with you and assist you in making those changes.  An attorney may also suggest additional changes to your documents based on new laws.

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Refinancing with a Trust

Several times in the last year, we’ve had a lot of clients asking about refinancing a property that is held in Trust.  Although mortgage rates have increased from where they were a year ago, rates are still near historic lows and some borrowers may be able to save money by refinancing their mortgage. If you have an estate plan that includes a trust, it also probably includes a special warranty deed that transferred your property to your trust.  You may be wondering if you can refinance your mortgage on property that is owned by your trust.

Real estate held in a revocable trust often can be refinanced.  If the trust gives the trustee the power to mortgage the property, the trustee may be able to sign for the loan.  However, a lender may not be willing to refinance the property held in trust.  If this is the case, the lender may require that the property be taken out of the trust before refinancing.  They may have you sign a new deed transferring property from your Trust back to yourself.

But now comes the important part to ensure your trust is protecting the assets and avoid probate.  If you refinance be sure to review the deed prepared and recorded during that transaction.  If your home is no longer owned by the Trust after the transaction, it is important to contact an attorney who can prepare another Special Warranty Deed transferring it back to your Trust.  If this is not done and you pass away, your property will end up in probate, which is what you were trying to avoid when creating the Trust in the first place.  If you have any doubt at all, how the property was transferred after your refinance closed, an attorney can review to be sure it is still owned by the trust and if not assist you in preparing the deed to transfer title back to the Trust and avoid probate of your property upon your death.

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Using a Will – What Your Loved Ones Need to Know about your Will

In Missouri, a will must be filed within one year of death with the Probate Court.  The court will require the original will be submitted, not just a copy.  Therefore, it is very important after you execute your will that you put the original document somewhere safe.  I would suggest a fire safe.  If you don’t already have one, a fire safe can be purchased fairly inexpensively at stores such as Walmart or online at Amazon.

It is also a good idea to provide a copy to those family or friends whom you have chosen to act as your Personal Representative or Successor Personal Representative.  You may also want to communicate with your loved ones where you keep this important document so that if they need to use it, they will be able to find it in a timely manner.

Did you know that if a will is not filed within one year of death, the will won’t determine who gets your assets?  If probate is not started before one year after the death of the person who made the will, then the Missouri intestacy laws will be used instead of the will.  This means the person’s heirs-at-law will be entitled to inherit from the estate instead of those individuals named in the will.  If one year has passed, a Determination of Heirship can be filed with the court to determine who is entitled to the assets.

Even if there was a will, it will not be followed because it would have had to have been filed within one year from the time of death to be effective.  This could mean that the decedent’s wishes will not be able to be met.  It is a good idea after a loved one passes to consult with an attorney who can help you navigate the process.  Timing is of importance due to the short statute of limitations placed on filing the will with the Probate Court.

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New Real Estate? Don’t Forget About your Estate Plan

During the Pandemic, many people changed the way they work and those changes may have made them rethink where their real estate.  Some businesses changed to a work from home model or a hybrid model of working from home some days and from the office some days.  These changes meant for some they could move further away from their office since they were going to work from home anyway.  Or maybe they were working from home a few days a week.  And some with school age children had to have their children learn virtually from home.

Last year my children went back and forth at different times of the year between all virtual, hybrid, and in-person learning.  My husband began working entirely from home and I was working a hybrid model of a few days at home.  Having 4 people in the house trying to be on phone calls or zoom calls at the same time could be loud and distracting.  My family had been living in a 3 bedroom home, my children’s bedrooms were too small to add a desk, my “office” was set up in our master bedroom, and my husband’s “office” was in the basement but was in an open space with no door to close.

We decided we needed more space in our real estate.  We needed to be able have separate work spaces where we didn’t have to hear each other’s calls and could have quiet to concentrate on our work.  Like many people, who were suddenly spending more time at home, we decided if we were spending so much time at home, we needed more space.  We decided to move into a larger home where I now get my own home office that is not in my bedroom.  I can close the door from the distractions.  My husband also is now able to have his own office as well with a door he can close. My husband spends the majority of his days on phone calls and prior to us moving he constantly had to tell the kids to be quiet.

If you have also moved recently or plan on doing so soon, don’t forget to think about your existing estate plan.  If you have a Trust you may want your Trust to own your real estate.  If you already purchased your home and it was not put in the name of your Trust you should think about calling an attorney who can prepare a Special Warranty Deed, to transfer the ownership of the home from you to your Trust.

If you haven’t already moved but plan to soon and have a Trust, the closing company preparing your new deed should be able to do this.  Just make sure you inform them when completing the closing paperwork.  Some mortgage companies will not allow you to put the deed in the name of the trust at closing.  If this is the case, an attorney should be contacted to transfer the property after the mortgage closing.  If you don’t have a trust and your estate plan consists of putting beneficiary designations on all your assets to avoid probate upon your death, you should contact an attorney after closing to prepare a beneficiary deed for your real estate.  This will allow your real estate to pass to the beneficiaries of your choosing and avoid the need for Probate.

-Lisa Villareal

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A Little Late is Too Late for an Estate Plan

As I prepare for my third child and an expected two months of maternity leave, I’ve been getting a lot of calls for immediate or last-minute help.  While I love helping when I can, often my schedule prevents me from preparing legal documents last minute, especially right now.  A full estate plan normally takes six to eight weeks to complete.  And on top of that, with something so important, I really don’t believe it should be rushed.

Now, in the 10 or so years I’ve been practicing, I’ve had to pass on my condolences to several families.  But the worst scenarios, which I’m grateful, have only happened two or three times, is when we’ve lost a client after beginning their estate plan, but before they can sign.  Unfortunately, if a legal document is not signed, it’s unenforceable.

We often will also get phone calls from an individual’s family about the individual needing an estate plan.  However, after a few questions, we find out the person is no longer able to sign.  If a person already is not capable or aware of their surroundings, a totally different process is needed, and an estate plan or power of attorney is simply not possible.

These are truly some of my least favorite calls to receive because there often isn’t much we can do.  So, as you think of an estate plan, don’t wait because if something happens (i.e. your attorney goes out on maternity leave) and an emergency comes up, there may not be time for creating or updating legal documents.

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Relative Caregiver Affidavit – A Power of Attorney for Minors

Many families are going on vacation right now.  Some parents with their minor children, but many without.  At least once a year about this time, I have clients or friends reaching out to give someone else a power of attorney for minor children while they are on vacation.

A power of attorney can only be created by a competent adult to give their power to make decisions to someone else.  So, it’s not possible to create a power of attorney for minors.  And guardianships are more permanent arrangements made by the court to give someone the ability to make decisions for another.  However, Missouri does provide for the Relative Caregiver Affidavit under RSMo 431.058.

The Relative Caregiver Affidavit is what most parents are looking for if they are leaving their children temporarily in the care of another.  It allows a relative to make decisions for a minor’s educational services or medical treatment.

So, if you’re going on vacation and leaving your children in the care of another, before you go, take the time to get a Relative Caregiver Affidavit notarized.  You can even find a free one provided by the Missouri Bar online.

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Graduation Season – A Time to Plan for the Future: Power of Attorney

It is graduation season!  For many parents, graduation season is in full swing.  You may have a high school or a college graduate.  Graduation ceremonies may look a little different this year due to COVID-19 regulations and policies in place at different schools.  However, it seems like many schools have found ways to celebrate their graduates even if it looks a little different this year.  Congratulations to you and your graduate.  Graduation time is a time of reflecting on all a student has accomplished up to that point but also a time for looking towards and planning for the future.

This is a great time to talk with your graduate about the importance of planning for their future, including a discussion about estate planning for the graduate.  Many graduates are above the age of 18, meaning that legally mom and dad cannot make all the same decisions for their child as they could when they were a minor.  This summer would be a perfect time to set up a free consultation with an attorney regarding financial and medical powers of attorneys.  Without properly executed powers of attorneys, parents may not be able to access their children’s medical records or assist in making medical decisions in an emergency.   Parents would also not be able deal with financial decisions or sign legal documents on their child’s behalf without financial powers of attorney.  So while your celebrating graduation and preparing for the next chapter whether that be preparing to start college or entering the workforce, I recommend meeting with an attorney to discuss powers of attorney for the new graduate.

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My dad just left a few small assets. Do I have to go through Probate?

If a person passes away leaving assets without beneficiary designations, there is a court process called Probate. Probate allows for a personal representative to be appointed by the court to access those assets and distribute them to those entitled to them.  Who is entitled to those assets will be determined by the deceased individual’s will.  If the deceased individual did not have a will, who is entitled to those assets is determined by the intestacy laws of the state where the deceased person resided at the time of their death.

In Missouri, whether the deceased person had a will or not, if the assets are less then $40,000.00 you may be able to avoid the longer, more costly probate process.  You may be able to file a small estate affidavit with the court.  This process is faster and less expensive then if a full probate is required.

For example, assume your dad had a retirement plan, life insurance policy, bank account, and a car when he passed.  If the retirement plan and life insurance policy had beneficiaries, the retirement account and life insurance would not need to go through probate.  Assets that have beneficiary designations can avoid probate.  However, your dad forgot to add beneficiaries when he got a new car and opened a new bank account.   If the car’s value and bank account total less than $40,000.00, you may be able to use a Small Estate Affidavit to access the bank account and car.

In addition, to the Small Estate Affidavit, the court may require additional information as well.  If there was a will you will need to provide the court with the original will.  You will also need a copy of the death certificate, information about the heirs and those named in the will if there is a will (may need full legal name, address, social security number, date of birth, and date of death if applicable), and proof of values of the assets.  For the car, the car title would be needed that would include the vehicle identification number and for the bank, a bank statement showing the account number and balance of account would be needed.

Different states have different laws and even different counties may have different rules and procedures, so it is always a good idea to meet with an attorney.  The attorney can help you determine what court procedure is needed in your situation and can help you navigate the process.  My husband’s uncle recently reached out to me because his father passed away and he was trying to fill out court documents that he had found online and had a few questions for me.  I don’t practice law in the state where his father passed away but just from asking him a few questions, I was able to determine he was trying to fill out forms for the wrong county and also had forms for the wrong court process.  I suggested that he contact a Probate attorney in the city where his father had passed.  Losing a loved one is stressful enough, an experienced attorney can help you navigate the legal process.

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What is the Best Estate Plan? Different Estate Planning Options

Often when I help clients form an estate planning options, they need to decide if a trust is the best for their loved ones.  And for many reasons the trust can be the best option.  However, what’s right for one client may not be the best for another.

I was just speaking with a client yesterday and their estate planning options were either beneficiary designations or a trust.  Both had benefits and disadvantages.  The client wanted to know which plan would be best for them.  In the end I recommended a trust because they had multiple children.  However, a trust isn’t automatically “better” than another plan. While a trust has many advantages and many great reasons to use one, a trust can make things more complicated.

For very simple estate plans, i.e., there’s one adult beneficiary who’s good with money, the appeal of using beneficiary designations can be the simplicity.  A trust upon someone’s death often requires a new tax ID number, separate tax filings, and can require interpretation or assistance in making sure all the terms are met.  Beneficiary designations, on the other hand, only require a death certificate. So, a trust can be overly burdensome, especially for simple plans where the people involved may not have a lot of experience with legal documents.

However beneficiary designations have a lot of downsides.

  • First, you have no control after you pass. The money goes to the beneficiary and that’s it.  You can’t tell them what to do or not do with it.  If you have minor children or someone who is bad with money, even just wanting something specific with real estate, beneficiary designations may not be a good plan for you.
  • It’s also much harder to plan for contingencies. Many beneficiary designations only allow a primary beneficiary.  So, if something happens to that primary beneficiary and you don’t (or can’t) update your plan, that asset will end up in probate.
  • Another major problem is that there’s no one person in control. Each beneficiary receives their share, so any expenses that are paid are paid by an individual, not the estate or by everyone.  That person then needs to work with the other beneficiaries to pay bills and make sure everyone pays their share.

So, when deciding between estate planning options, there’s advantages and disadvantages to trusts and beneficiary designations.  It’s best to evaluate your options, knowing the good and bad of all possible estate plans, then choose based upon your family and which path will be easier for your loved ones.  Maybe that’s simple beneficiary designations or maybe that’s a trust.  A good estate planning attorney can help you explore all the estate planning options and help decide what’s right for you.

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Reviewing Your Assets – Not Just a One Time Thing – Burkhardt Law Firm

As you begin filing your annual taxes or as you are waiting on that refund check, use it as a reminder to also review your assets.

For many people, one of their main goals when they created their estate plan was to avoid probate.  However, if a trust was part of your plan, did you know your trust only controls assets that are in the name of your trust? If you don’t have a trust, do all of your assets have the correct beneficiary or beneficiaries?

Usually if you have an estate plan you will also have a will that will tell the court what to do if an asset doesn’t have an owner or a beneficiary listed.  However, in Missouri, wills have to go through the probate court and can be a long process.

To avoid using the will, and be sure that your assets avoid probate, it is important to make sure you fund your trust or place beneficiaries on all your assets.  You may have done this right after you executed your documents.  However, our assets change over time and it is important to frequently review your assets and make sure any new assets are titled properly.

  • Have you recently purchased a new home?
  • Did you purchase a new car this past year?
  • Did you change jobs and get a new 401K?
  • Did you take out life insurance since you last reviewed your estate plan?
  • Did you open up a new savings account at the bank?

Every time you obtain a new asset you want to be sure the owner or beneficiaries of those new assets match your estate plan.

Burkhardt Law Firm

Phone: (314) 518-1581
Email: mburkhardt@burkhardtlaw.com
Address:
2333 Grissom Dr., Suite 107
St. Louis, MO 63146