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Burkhardt Law

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What Type of Estate Plan Do You Need? Choosing the Right Estate Plan

When I work with clients, I see so many different family types and not everyone has the same needs. There are some generalities that I use to guide what plans the different type of families need. For instance, I think most families with minor children need a trust. However, even then, not all clients fall into those generalities. That’s why it’s so important to evaluate each family’s need individually through a consultation. However, even at the end of the consultation, I think it’s extremely important for a client to understand and choose their own estate plan. Part of this is understanding the documents and how they work, which I’ve explained many times. But another large part of choosing the right estate plan is knowing the different considerations that go into the plan.

One of my first questions when sitting with a new client is always about their family and who we’re planning for. The more complicated a family is (i.e. step-children, half-siblings, etc) the more likely a trust or a more complicated plan will be needed to ensure things go where they are intended. Missouri law only provides for a very traditional family and even then isn’t often what clients would want. Thus, legal documents are needed to change these “default” laws and the more certainty a client needs of where assets will go, the more complicated the documents get. It’s also important to know if there is anyone who would potentially challenge a plan.

But the biggest question and concern for me is if there is a need for control. This normally applies because there are minor children who cannot legally handle money for themselves. However, if there’s a beneficiary who just makes bad financial decisions or has a substance abuse problem a trust might also be necessary. There’s also a limited ability to keep spouses or in-laws away from a plan if they could potentially cause problems through a divorce or other issues.

Finally, assets also are an important part of deciding a plan. If there are extremely limited resources, it’s hard to justify the expense of a more complicated plan, but it might also be worth it if any of the above are concerns. However, the type and location of assets also may make a trust worth it or not. For instance, with real estate anyone listed on a beneficiary deed plus their current spouse must sign on any sale of that real estate. That can cause major problems if there are multiple people involved and not all work together. The need for one person to make decisions on real estate may be enough to justify a trust. However, on the other hand, if most of the assets are liquid (retirement money, bank accounts, etc.) and it’s simply a matter of dividing money, then a trust might be overly complicated.

There are so many factors that go into what kind of plan fits a family. However, the more you know about the process and why a particular plan might be right, the better decision you can make for your loved ones.

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Being a Parent: Planning for Children

When I first began my law firm, I started estate planning thinking of my brothers and sisters, nieces and nephews. Then when I had my first born almost three years ago, my perspective changed dramatically. Now as we prepare for our second child, I thought I would take a moment and reflect on how our estate plan has (and hasn’t changed) since children have come along.

The benefit of drafting your own legal documents is you can think ahead and prepare them for changes in the future. So, our documents from five years ago included provisions for future children. However, anytime a new addition is added to the family, the estate plan needs to be reconsidered.

This might mean a completely new structure. Going from a will to a trust. But it also means updating children’s names and very simple updates to make sure everyone is included.

It’s also an opportunity to make sure the people handling money and in charge of the children’s well-being are still appropriate. We had the trustee and guardian decided before Duncan arrived, but it’s amazing how the logically decision became so much harder once my son was actually here. In the end, I believe we made the right decision and we have not changed it. However, it’s mainly because I realize there is no right answer and no one can truly take our place if we aren’t here to parent. We can only choose and hope the transition would be as easy as possible.

Finally, it’s also a great time to review assets and make sure all assets will avoid probate and are included in your plan. If you’ve never talked to a financial advisor, it’s a great time to review life insurance as well as planning for the children’s future with 529s or other investments.

Now, I know many of my clients have children that are all grown up. However, those grownup children might have to start thinking about their own children. So, even if you’re not preparing for your own minor children anymore, it’s worth mentioning to your children for your grandchildren.

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When Do I Need to Review My Estate Plan?

Recently, I’ve reviewed a lot of estate plans to see if they need to be updated. Many plans don’t need any adjustment, but more often than not, I suggest an updated document or slight revision that changes everyone. Now, without an attorney’s review, it’s hard to know if your documents would serve their purpose through incapacitation or death. However, there are a few times when it’s worth asking that attorney.

First, any major life change. A marriage, birth, divorce, or death. All are times when you should review your plan to make sure an update isn’t need to match the change in your life.

Also, rather obviously, is when you want different people to be in charge. Often times, a plan is created for young children and at some point those children grow up and are the best people to make decisions. Or family dynamics and relationships change and other loved ones would be better at decision making.

Another large part of a plan is asset titling. So as assets change, grow, and decrease, it’s also appropriate to adjust your plan based on those assets. Any time there’s been a lot of changes to your assets it would be smart to review your entire plan to make sure things still work the way you think they do.

Whenever I work with clients for a plan, I try and include contingencies for if a plan is not reviewed. However, I also tell clients to focus on the next five years. So, if you were thinking for the next five years, it makes sense to review a plan every five years. If there haven’t been any major life changes, relationship shifts, or much asset movement, then it may not be necessary. However, tax law does change frequently and it’s worth a quick check to make sure nothing new applies to you.

These are great guidelines on when you should be reviewing your estate plan and when to think about updating. But if you’re not sure what your plan says or how it works, it’s always a great time to review to make sure your plan does what you think it does.

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Decisions, Decisions – Burkhardt Law Firm

When forming an estate plan there are several important decisions necessary. The first is simply, what type of plan do I need? What documents are appropriate? This is a decision I would recommend discussing with an attorney, but anyone over the age of 18 needs a power of attorney. Then it’s important to look at how you will avoid probate and if you need a will or a trust. But no matter the type of plan or documents there are some basic decisions you might need to make.

Who will be making medical decisions for you if you cannot? Do you have a backup?

What medical decisions would you want for yourself? Anything specific that you would want communicated?

Who will be making financial decisions for you if you cannot? Do you have a backup?

Do you want the person making financial decisions to have immediate decision making power? Or do they need a doctor to verify you can’t act for yourself?

Who will be making decision over any businesses you own?

Who will be taking care of the welfare of any minor children?

Who will be taking care of the financial decisions for any minor children?

Do any of your beneficiaries need age or income limits for when or how much money they will receive? If so, what ages or how much is appropriate?

The list could go on and on regarding the decisions you’ll find yourself making when forming an estate plan, but these are a great place to focus and give shape to your plan.

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Managing the Loss of a Loved One: Legal Steps to Consider

After the loss of a loved one, there’s so many things to manage: emotions, family, expenses. It can be absolutely overwhelming just knowing where to start.

While the loss can be overwhelming, there’s very few things that need to happen quickly. The more important aspect is to handle things efficiently and take the time to grieve. When ready these tips are good items to begin with:

1 – Don’t Touch Money without Knowing the Consequence

Most inheritances do not have a tax consequence. But do you know which do? There could be a tax consequence (especially with the potential tax reforms) you aren’t sure about. So, before you take money out of an account, it’s really important to know if there will be a tax consequence. I would strongly recommend talking to a licensed financial advisor before moving money around. Specifically, retirement money can have tax consequences and those should always be determined before moving it.

2 – Don’t Pay Unnecessary Bills (unless you want to)

In most circumstances, you are not responsible for the debts of a person who has passed. So, unless you want to (and some people do), it’s not necessary to pay all of your loved one’s bills. However, any assets that you will be keeping (house, car, etc.), you should continue to pay. This would include loans, utilities, and insurance among others. Also, if your name is on the debt, credit cards for instance, you will be personal responsible for the bill and you should pay that debt.

3 – Tax Filings and Advice

There will often be an income tax return to file and could be money from retirement accounts that will require tax advice. Because there are strict deadlines with tax filings and the transfer of taxable money, a licensed CPA should be a priority in those first few weeks.

4 – Accessing Assets

Before knowing how to access a specific account or asset, you must know they exist. So the first step is making a list of all the assets. A bank statement is a great place to start. It will show any incoming money and outgoing expenses which may provide insight on where assets are. Any type of statements you can find are going to be very helpful.

The next question then is how do you access these accounts and assets. The simple answer is the holding company will tell you. Hopefully, it’s as simple as a death certificate. More often it’s a court order. If you are told you need a small estate affidavit, letters of administration, or letters of testamentary, it’s time for probate and if you’re in St. Louis County that means starting with an attorney.

5 – The Will

If there is a will, the will must be admitted into court within one year of the date of death. This means it really isn’t something that needs to be addressed quickly. However, if you have not found yourself in need of probate within the first several months, it should be a priority to admit it into probate court within that first year. If the will is not admitted, even if it is “filed” with the court, within that first year, it will no longer control.

Hopefully this list is a helpful place to get started. Remember, very few things take priority over mourning and family and loss, but we’re here to help as you need it.

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Post Car Crash: Own Your Medical Care

Unfortunately, it’s the time of year where weather can be unpredictable and ice happens.  As such, we get an influx of clients wondering what they should do when they’ve been in a car crash?  Well, truthfully, I don’t know!  When my clients call me with these questions I send them to one of the wonderful personal injury attorneys I know.  But, it’s always helpful to know what to do, so one of those wonderful attorneys was kind enough to share his experience with us.  A word of advice from Chris Finney with Mutrux Finney, P.C.

 

Bam! You’re hit. It’s miserable. You’re in a car crash and your car is damaged. You’ve got aches and pains. It is incredibly inconvenient and disruptive. Thankfully, you are not catastrophically injured.

Over the days, the aches and pains get worse. So what do you do? Start with these 5 steps and you’re on your way to getting yourself healed up and cared for.

  1. See a doctor.

Yes, it seems clear enough but you must see a doctor. If you don’t have a primary care, go to urgent care. You absolutely must make sure any potentially life altering injury is diagnosed and/or ruled out. Just a headache that’s bothering you? May be an arterial dissection that could result in a stroke. Don’t think it will happen to you? Ask our client who had headaches post-crash (one he walked away from) that caused a stroke within 18 hours because he suffered a tear in an artery running to his brain. This is a risk in whiplash cases. He can’t see in his left eye anymore. Stomach pain that just won’t go away or hard to breathe? Could very well be a non-displaced rib fracture that didn’t present on the initial x-ray that may show up due to post-crash calcification. Unsure as to what all this means? That’s why you should see the doctor within 24 hours post-crash.

  1. Be honest.

It is incredibly important that you are completely and utterly honest with the doctor about the car crash and your injuries. If you are not feeling pain, then say so. If you can’t remember what happened, then say so. You will likely be up against a multi-billion dollar insurance company after your crash. They have Special Investigative Units (S.I.V.) specifically designed to root out fraud and malingering. They are more sophisticated than you and have much more experience than you. You cannot trick them so start off on the right foot and be honest. Tell your doctor the truth. Do not exaggerate. Ever.

  1. Be assertive.

You absolutely must advocate for yourself. If you do not assert yourself in your medical care, you will be stuck with chronic pain and issues down the road. Doctors are busy. Nurses are busy. Focus on what you can do to help yourself and get their attention. Make eye contact with them and inform them of the issues you are having and ask them what the treatment plan is and the reasoning behind it. Far too often, patients just accept what they are told and don’t understand why they didn’t get the treatment they needed or why they were sent to this physical therapist or chiropractor. As the injured party, you must ask why you only got an x-ray and no MRI. Why are you being prescribed these pills? What are trigger point injections? You should be asking these questions. We consistently see clients needing MRIs to diagnose their back and neck injuries but are only being told the x-ray is fine and then 8 weeks later getting an MRI showing a huge herniation. Patients do not know the difference between the two and it can cause an injury to persist undiagnosed for much longer that needed. Assert yourself with you medical care. No one else is going to do it for you.

  1. Be Clear.

It is not your doctor’s job to read your mind about the car crash and your injuries. We see medical records on a daily basis that do not reflect what the client/patient reports. This is not always the patient’s fault, but you need to do what you can to minimize this risk. So you must be very clear with the doctor about your symptoms. Do not rush through filling out your paperwork in the waiting room. This will become part of your medical records on which your doctor will rely on and the auto insurance company will scrutinize for any discrepancy. The best way to address this is to take your time on the intake forms. If something doesn’t accurately describe how you feel, write in the answer. You are not confined to the pain meter or the a-f answers on the page. Be clear and write in what and how you feel. Also, clearly let the doctor know, both in person and on the intake forms, when, where and how this injury occurred. Failing to mention a crash is a case killer. You must take your time and be clear. This is your physical health we are talking about here.

  1. Follow through.

This one may be the most frustrating for everyone—the patient, the doctors, the rehab team, the lawyers, etc… When an injured party fails to follow through with the prescribed care, it is nearly impossible to get the person back to pre-injury status. Small injuries that are not taken care of become large injuries over time. It is like a small leak in your basement—if you don’t take care of it early and completely, it will turn into a massive foundational problem. It is the same with smaller back and shoulder problems. If you don’t follow through on the care, they become chronic issues. Doctors are not prescribing treatment for the fun of it—it has a purpose to get your up and running again. Make sure you follow through on your treatment. Undoubtedly, things come up and appointments must be cancelled. That is understandable. But reschedule them. The typical scenario is when someone begins to feel a little better, they stop getting therapy for a couple weeks and then go cut the grass and BAM! The pain is back. You’ve just made it that much harder to get you what you deserve. That insurance company will be all over you, calling you a liar, a cheat and a fraud. So follow through.

Conclusion

These are just the 5 most important steps we’ve come up with through our experience. The overarching theme is that you absolutely must take ownership for you and your health. Following these 5 steps will help you do that and get you on the road to a proper, healthy and quick recovery.

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Who Cares? Why You Care About an Estate Plan – Burkhardt Law Firm

If you’re reading this, I hope I have given you insight on why an estate plan is important. However, I’ve been dealing more and more with probate and cases where there was no plan. Each time, I’ve had to be the person giving bad news. Normally, that bad news takes one or two forms. Often times, it actually involves both.

The first round of bad news, generally is that the assets will have to go through probate. One of the main problems with probate is that there are costs that will have to be paid for before the assets can be accessed. So, the person eventually receiving the money probably will have to find at least $500 before probate can even filed. This includes attorney fees, court filing fees, and often a bond.

In addition to having out of pocket expenses, the probate process normally takes months. Depending on the type of probate proceeding, this can range from a few months to several months and often times I tell clients to plan on at least a year. At some point during those months, some money may distributed from the estate, but generally its months before any money leaves probate.

Also, another huge complication with probate is if there are creditors of the person who passed. If there are creditors, opening a probate estate gives them access to any money they can prove they are owed. This may not present a problem, but may allow creditors to take all the assets before the heirs receive any money.

Finally, one of the last problems with probate is that all heirs will be involved. This can cause major problems if the heirs were not intended to be involved. The heirs will at least have to be notified and the court likely will also require their signatures on many of the filings.

Having that many people involved can cause more problems and time delays, but it’s an even bigger issue if the assets are not going where expected. If the house was supposed to go to one child, then must be divided between all five it can be a large shock and loss. Because a will may only be submitted within a year of a person’s death, if the will disinherits people or gives a specific asset to one person and it is not admitted into court within that year, the asset will not to go the intended person.

It’s also common for a person to list one person as a beneficiary on an asset with the intention that beneficiary distribute that asset to multiple people. Beyond potential tax consequences, the beneficiary also has no legal obligation to distribute that asset as intended. I’m sure you can imagine the emotional and financial problems that can cause.

To properly ensure probate will be avoided and assets go where intended, it’s so important to set up a proper estate plan. If you (or someone you know) isn’t sure they are avoiding probate and assets will be going where intended, it’s time to check on your estate plan!

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What Do You Want? Medical Powers of Attorney and Health Care Directives

I talk about estate plans on a daily basis, which natural involves talk of loss and dying, but there’s still one conversation I find hard: medical wishes. The end of life medical decisions have to be the most emotional and difficult to make. However, because of that I believe it’s one of the most important conversations to have and an important document to execute.

In Missouri, most legal practitioners offer an advance medical directive with a medical power of attorney in one document (the Missouri Bar even offers a free version here). The medical directive, similar to the living will, states what a person’s wishes are if they cannot make medical decisions for themselves. While there is a standard form most people choose, please realize there are options out there. In St. Louis, I see a lot of Catholic clients and there are different medical decisions people make based on faith. If that or another aspect of medical choices are important to you, then this is a document you should put serious consideration into.

The power of attorney portion, gives another person the ability to make these medical decisions. Most times, the power of attorney will have the ability to over-ride or to choose to follow the instructions in the medical directive. Because of this, it’s so important to choose someone who would make decisions in a way you would respect or ask. I often refer to this person as your medical advocate, because they will be the person making sure your medical wishes are followed.

Another very important part of these documents is the HIPAA authorization. If you’ve regularly visited the doctor before, you’ve probably heard of this, but the HIPAA authorization is what allows the person of your choice to access your medical information. Obviously, this is vital for whomever is making medical decisions for you. However, you can also specific certain people, which is so important if you do not have a traditional family structure and you want partners, step-children, friends, etc., to know what is happening medically.

Now, all of these documents are extremely important to make sure the right people have access. However, these documents only give access and don’t guarantee the decisions you want. Conversations with loved ones are the best way to make sure people understand the choices and can walk away from the experience feeling like they helped, rather than feeling guilty.

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Different Probate Options

When I work with clients, my goal is often very simple: Avoiding probate. However, I believe it’s also important to have a backup plan that includes providing for probate in the most efficient way possible. In order to do this, having an understanding of the different probate cases is important.

For adults unable to make their own decisions or for minors, the court may appoint someone to be in charge of their money through a conservatorship. The court may also appoint someone to be in charge of their physical well-being through a guardianship. These proceedings are only avoidable if an adult had the mental capacity and executed a power of attorney in advance. For minors or adults with special needs, a conservatorship or guardianship will be required. For these situations, a will is the only place to legally designate a future guardian and conservator.

On the other side of probate is when a person passes with assets left in their name alone and without beneficiaries. In these situations, there are a few different proceedings in Missouri.

After a year has passed since a person’s death, the heirs may also file a determination of heirship. Another simplified proceeding, this simply produces a court order effectively giving title to the legal heirs. Because fewer documents are required than other proceedings, this can give access quicker and generally less expensively. Unfortunately, the major downside to this probate process is the assets are given to the legal heirs under intestate law which may not have been the intention. In addition, the court requires a list of all assets going through the determination of heirship and would not give access to unknown assets.

Another option is the small estate affidavit. For estates under $40,000.00, this includes subtracting debt, the court may issue a certificate based on this affidavit. This allows the person signing the small estate to collect the listed assets. While this is a simplified option giving access to assets often within a few months, you must know and have statements for the assets. Because there are normally fewer documents require, it again is often also much less expensive than other probate proceedings. In addition, some counties will allow an individual to file these affidavits without an attorney. Unfortunately, St. Louis County does require an attorney.

Finally, the last option is a full probate proceeding. If a company says you need “Letters” this is what they are referring to.   The proceeding begins by issuing the Personal Representative (or Executor) Letters of Administration or Letters of Testamentary. These Letters allow the Personal Representative to call companies to gather information and assets for the heirs or devisees of a will. Generally, these proceedings will take a minimum of 7 months and can take years. It also gives an open court case for creditors. It is most likely to be the most expensive, but if the assets exceed $40,000, it has been less than a year since the death, or there are unknown assets, this is the only option.

So, how does this effect an estate plan? For small estate affidavits and a full probate proceedings wills can be admitted. However, a will can actually (nominally) increase the court fees. But a will can also waive bond (another expense) which may not always be done otherwise.   If a specific person should be appointed Personal Representative or intestate law is not the desired outcome, a will is always going to be necessary. But knowing the different methods of probate and potential fees should also help decide a backup to the main estate plan.

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Blended Families – Accidental Disinheritance – Burkhardt Law Firm

This week I presented at a personal finance college class and a topic that always seems to engage the students is what I refer to as accidental disinheritance. Unfortunately, I’ve seen this come up in several instances, but the most common occurs in blended families.

Husband and Wife both had children before they were married. Because they’re married, they’ve set up all of their assets jointly or have their spouse as the beneficiary on their individual assets. This is normal for most families, but the outcome isn’t always as expected.

When Husband passes, everything passes to Wife as intended, but it’s when Wife passes, that the family realizes things weren’t set up as intended. When Wife received the assets, Wife did not include H’s children as beneficiaries or did not put down beneficiaries at all. In either situation the outcome is the same, Husband’s children are not included. According to Missouri law, a widow’s assets go to her children alone, step-children are not included in intestate law. So, Husband’s children don’t even have a legal right to challenge Wife’s estate unless they were included in her will. And even if they are in the will, if she listed her children as the only beneficiaries, the beneficiary designations control over the will.

I like to believe in these situations that if Wife were informed, she would do everything correctly and Husband’s family wouldn’t have need to call me. But, of course, I get the phone call after the fact, and Wife has passed accidentally disinheriting Husband’s family. Or in some situations, Husband and Wife have met with an attorney and have set up their plan, but because they don’t fully understand the mechanics of the documents things go wrong.

For this reason, it’s extremely important that clients understand their documents and how they work. Especially in blended families, where when things go wrong, accidental disinheritance can happen.

 

Burkhardt Law Firm

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