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Burkhardt Law

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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.

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Planning for Pets – Burkhardt Law Firm

I know so many people who with more time at home during the pandemic have adopted a new pet.Villareal Dogs

Maybe its their first pet, or maybe it is an additional pet for the family. For many people, they love their pets so much, sometimes as much as their human children.  I know my in-laws have 8 dogs, all poodles and chihuahuas (well I think it is 8, I can’t keep track as they are always rescuing more all the time, so hard to keep track) (pictured are two of their furry children), and pretty sure they love their pets as much as their children.  They barely leave town because they have so many dogs to care for.  We have to go to them to visit because they just can’t leave their beloved dogs.  So what would happen to their dogs if they could no longer handle their own finances or if they passed away?  Many times when a pet owner passes away, their pets end up in a shelter and sometimes end up being put down.  Did you know when you’re planning for your estate that you can also plan for your pets?

You can plan for your pets for when you’re still living but just not making your own financial decisions.  If you have a financial power of attorney executed, naming someone you trust to make financial decisions for you when you are no longer able, you can grant your agent the power to take care of the financial expense of caring for your pets.  We draft our documents to include the power for your agent to pay the costs and expenses associated with the care of your pets.

Planning for your pets after you pass is also possible.  Some clients choose to include provisions in their trust that provide who they would want to care for their pets when they are gone.  They may list backup caretakers for the pets as well incase someone they chose is unable or unwilling to care for the pets.  We have even had clients designate who the Trustee should contact to arrange for the care of their pets if they can’t find a proper home for the pet or pets.  You can even have your Trustee distribute money to the pet’s caretaker to help cover the cost of providing care for the pets.

-Lisa Villareal

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A Time to Plan – Burkhardt Law Firm

As I sit and reflect on the last year, brainstorming for helpful topics, I’m left with one main thought.  It’s time to plan.  We’ve spent the last year much more isolated from friends and family, and, for many of us, faced with loss of loved ones or the reality of health issues.

This year, Burkhardt Law Firm has helped many families form plans and many people navigate probate when there was not a plan or when things fell through the cracks.  I’m always so grateful that our clients trust us with their loved ones and something that is rarely fun to discuss.  That being said, I see so many families put off making an estate plan.

One of the saddest moments in my job is when we have a client pass.  I hate losing someone I’ve come to know and learn about their lives and loved ones.  We’ve lost a few clients this year and my heart is truly with their friends and family.  And while losing a client is the sad part of my job, often it’s also rewarding in seeing those friends and family navigate the loss with grace and knowing that I made a difficult time easier.

On the other hand, we also get calls from potential clients’ families when they never took action and moved forward with an estate plan. This is truly the worst part of my job.  Telling someone, who is already suffering a loss, that we didn’t help the person who was passed.  Then that someone has to figure out what to do next.  Often, this involves probate.  And while I appreciate the trust in guiding someone through probate, I so wish we could have made a hard time easier by having helped with an estate plan.

My days are generally filled with conversations getting to know people and their loved ones.  I truly love my job, my clients, and my co-workers and am thankful for a different, but still great year.  I sincerely look forward to more of these conversations in 2021.  My wish for your and your loved ones is for a very Happy New Year.  And perhaps as part of that New Year, an estate plan or a update to your estate plan.

 

 

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Flexibility during a Pandemic – Burkhardt Law Firm

As we have endured this pandemic in the last several months, I am so grateful that we have not had to quarantine due to exposure and that none of my immediate family has experienced COVID.  That being said, I know at times my schedule has had to be more flexible with two little ones at home and myself and my husband still working full time.  This has required me to ask my clients to be more patient and flexible.  I sincerely dislike inconveniencing anyone and most specifically my clients.  As such, I wanted to extend a very sincere thank you to all of my wonderful clients who have had the grace to be flexible and patient in the middle of this pandemic.

This pandemic has changed the way many of us are living our lives and most of us have never lived through something like this before.  It may have gotten you thinking about what would happen if you got sick with this virus or some other illness.  Who would make medical decisions for you or financial decisions for you if you were not able?  You may be thinking that you no longer want to put off planning for those unexpected situations.  I know now more than ever, people are concerned about getting things in order, and we want to be here for you to help get your estate plan in order.  However, we want to help you do so in a safe manner.

Our normal process for estate planning involves three appointments. The first appointment is a consultation to learn about your family and assets and determine what documents you need to be part of your estate plan.  During the second appointment, the drafting appointment, we sit down and go over each of the documents in your plan in more detail to customize your documents based on your needs and wants.  After this second appointment, we prepare drafts and send them to you for your review.  This gives you time to go over the documents again and determine if any changes need to be made or if you have any questions.  Then, we have a shorter, final appointment to make things official with you signing your documents.

To reduce the amount of time you need to spend in our office, we are now offering video or phone call appointments for the first 2 meetings. This way, you can come to the office only one time, for the final appointment to sign your documents.  This is the shortest appointment.  We provide witnesses and a notary in our office who practice social distancing and wear face masks when meeting with clients.  In addition, we are giving more time in between appointments to allow time to sanitize any surfaces that clients touch.  We have sanitizer available as well as clean pens set out for each signing.

With cases across Missouri rising, we have suspended in person meetings as much as possible while trying to have remaining flexible to meet your needs.  By having the first two meetings done virtually or over the phone, we can still help protect you without having to delay getting the process started.

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Guardians – A Tough Decision for an Estate Plan

For a long time I delayed executing my own estate plan because I got hung up on one thing, but one very important thing, who would take care of my children if something were to happen to both my husband and I.  For families with minor children choosing guardians can be the most important and hardest decision to make when working on an estate plan.  When thinking about your will, you have to decide who you want to act as personal representative of the estate, who the beneficiaries of the estate will be, and who will be appointed guardian of minor children.  That last part can be the hardest, as it is so hard to imagine anyone replacing your role as mom or dad.  No one can truly replace you, but you can consider many things when making that difficult choice.

When we first started brainstorming guardians and who we wanted to raise our children if something were to happen to us, we thought of those whom we are closest with and also more importantly, whom our children are closest with.  We thought of my parents.  Although our children are also close with my husband’s parents, they live out of town and we don’t see them as often as we would like.  My parents live less than a ten-minute drive from us, so naturally my kids are vey close with them because we are able to spend a lot of time with them.  If something were to happen right now, I would love my parents to be there for the kids.  However, it is important to look further out.  Would my parents be able to care for the kids until they were old enough to be on their own?  With our parents getting older we didn’t know that we could answer yes to that last question.  Losing parents would be hard enough on our kids, and we would want to give them as much stability as possible, so we decided for us, our parents may not be a good long- term option.  With that in mind we were able to cross both sets of grandparents off our list of possible guardians.

Next, we looked at our siblings, our children’s aunts and uncles.  My husband and I each have two siblings, so this gave us four more options to consider.  How can you choose between sides of the family?  We considered everything from mental health, medical health, relationship history, financial responsibility, location, life- style choices, and again relationship between them and our children.  We ultimately ended up choosing the sibling who lives nearby, has children that are close with and close in age to our children, and even lives in the same school district as us, so that our children wouldn’t have to be uprooted from their school community.  That sibling doesn’t always make same the parenting choices I would, but ultimately, I know that my children would be taken care of, and would feel loved under their care as the guardian.

What I realized, was part of my delay was from not having what in my mind was the “perfect” choice for a guardian.  Because again, how can anyone replace me, as mom?  All the uncertainty of the current pandemic definitely gave me the urge to make a decision and get things in order.  You never know what is going to happen and having a plan in place will make things easier on everyone.  And although this kind of decision definitely warrants taking time to think about, it probably shouldn’t take 10 years like it took me!  Luckily, nothing happened to us during that time, but you never know and at some point you just need to make a decision.  Documents can always be redrafted at a later time if after further thought you change your mind.

-Lisa Villareal

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Another Reason for a Trust – Multiple Beneficiaries

There are many reasons to use a trust to avoid probate rather than simple beneficiary designations.  I often use them if the beneficiaries are minors or need someone else to control the money.  Trusts can also be used to simplify real estate or just have one person in charge when someone passes.  But recently, I’ve encountered a few clients where I’m recommending a trust for another reason: multiple beneficiaries on different assets.

If you have one person as a beneficiary on your retirement money, another on your life insurance, and another on your investment accounts there can be problems.

First, you aren’t guaranteeing any of these beneficiaries money, let along a specific amount of money.  For instance, if you are 65, most of your money probably is in your retirement account.  So, you may think that beneficiary would be getting a substantial amount of money.  However, if you live another twenty years, that money will transition slowly from your retirement account to other assets, such as your investment account.  As this happens, if that investment beneficiary is different than your retirement beneficiary, your investment beneficiary may be getting much more than you originally planned and the retirement beneficiary may get much less.

And that is if you’re in charge of the money.  If you think of it, you may be able to adjust beneficiaries to account for that discrepancy.  But think of how much worse it is if by the time this is happening, you’re no longer capable and your power of attorney is making decisions for you.

In that case, your power of attorney must think about where to pull money to pay bills and expenses.  If they don’t know or don’t understand the nuances of what beneficiary is on which account and how much you would like that beneficiary to get, there is no way they can follow through on your plan.  This means they would really just be figuring out the best way to take care of you.  Then, unknowingly, they could be pulling money from an account and a beneficiary you don’t want them to touch!

Or the asset listing a beneficiary may not even exist by the time you pass.  A life insurance policy may lapse, or a home may be sold.  If those were the only assets designated to a beneficiary, then the beneficiary would end up with nothing.

A much simpler way to provide for multiple beneficiaries, would be a trust.  Within a trust you can turn the amounts you want beneficiaries receive into percentages.  This ensures that any money left will be divided amongst all your loved ones and no one will be accidentally disinherited.

In addition, a trust would allow someone you trust to focus on the best financial decision for you without having to worry about beneficiaries.  This would allow them to make better decisions and save them the worry of a beneficiary suing them for pulling money from an account that benefited the beneficiary.

Trusts have many other benefits as well, but with complicated plans, like multiple beneficiaries, a trust can make things a lot more simple.

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My Parent Passed Away Without a Will – Burkhardt Law Firm

Last month we talked about the legal process about what happens if you do not have a will.  But what do you actually do when you lose a parent and they passed without a will?  How do you gain access to their assets and determine who should get them?

The first step is gathering a list of your parent’s assets, financial statements, and tax records.  Financial statements often indicate ownership of the account.  If an account has a joint owner listed or has a POD, payable on death, then that asset will transfer to the person named and will not need to be probated.  If you locate their car title it may also list a joint owner or a TOD, transfer on death.  Again, if a joint owner or TOD was listed, this asset would avoid probate and can be transferred without the probate court and without a will.

If all of the assets you locate have a joint owner or a beneficiary designation, you will not need to go through probate.  However, if you find assets that did not have a joint owner or a beneficiary designation, you may petition the court to open a probate estate to handle those assets.  In that situation the beneficiaries would be determined by the state intestate law of the state where your parent died or owned property.

If you will have to probate assets and you have siblings, you may want to try to agree on the person you want to be “in charge” of your parent’s estate. That person would be the one to hire an attorney and petition the court to open a probate estate.  You will want to hire an attorney that practices in the county and state where your parent died or where they owned property.  The attorney will be able to assist you in getting the court to appoint you as personal representative or administrator of the estate. Your attorney will be able to determine which probate process will be needed based on the circumstances. Keep in mind, that in some counties, only an attorney may file a petition with the probate court.

To open a probate case, you will need the full legal name, address, date of birth, and social security number of each of the heirs. Your attorney will also need to know what assets are to be probated and the value of those assets.  A copy of the death certificate will also be required when your attorney files the petition.  If you have all this information gathered when you meet with your attorney, it will help get the process started sooner. Once your attorney has met with you to determine which probate process is appropriate, they will be able to walk you through the rest of the probate process and let you know what to expect.

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What Happens Without a Will – Intestate Law and Probate

If all of your assets have beneficiary designations, you may be able to avoid the long process of probate.  However, if any assets do not have beneficiary designations, a probate process may be necessary.  If you have a will, you will have more control over how probate works.  You will be able to let the judge know who should get any assets that remain without beneficiary designations.  Without a will to tell the judge who you want your assets to go to, the judge will apply the state intestate laws to determine who will get the assets.

Without a will under Missouri law, the surviving spouse will receive everything if there are no surviving children of the person who passed.  If there are surviving children and all of them are also children of the surviving spouse, the surviving spouse will get the first $20,000 in value of the estate, plus ½ of the balance.  The children then get the remaining half. If there are any children who are not also the children of the surviving spouse, then the spouse will inherit ½ of the estate and the children will receive the other 1/2.  If there is no surviving spouse, then assets would be distributed equally among decedent’s children or their descendants.  If there are no descendants, then to the father and mother. If no parents survive, then to brothers and sisters or their descendants in equal parts. If there is no spouse, no descendants, father, mother, brother, sister, or their descendants, then to the grandparents, uncles, and aunts, or their descendants. If no blood relatives can be found, then the property goes to the state.

Without a will, a relative who is estranged could receive benefit from your estate.  In a will, you can specifically disinherit a relative if you choose to do so.  You may also choose to leave assets to a close friend, a favorite charitable organization, or your partner whom you are not legally married to.  Those people would not inherit from your estate without a will because they are not a spouse or blood relative.

Another reason to avoid intestate laws is the added time it could take to probate the estate.  Our firm has had experience probating an estate where the surviving relatives were cousins, some of them even being as distant as cousins twice removed.  And there were over 25 of them!  When an estate passes to relatives this distant, the relative may not even know the decedent.  This can often make it harder to get everyone to sign documents that would speed up the process.  It could lead to the need for a hearing that will cost even more money and time!

A will can tell the judge who you want to get your assets.  A will can waive bond to save some of the costs associated with the probate process and you can also request independent administration that can help speed up the process.  A will helps put you more in control of who gets your assets and how the probate process will work.  If you want the control of what happens to your assets when you die, you should contact an estate planning attorney who can help your loved ones avoid a long and expensive probate process.

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Who Should I Choose to Make Decisions?

When you are ready to create an estate plan, there are many important decisions to make.  One of the most important decisions you will have to make is who will make medical and financial decisions for you.  And if you have children you will also need to choose someone to act as guardian if something happened to both you and your spouse. It is a tough decision.  And it should be. The person you choose will be able to make very important decisions.  You may choose the same person to make both medical or financial decisions or you might decide to choose one person to make medical decisions and a different person to make your financial decisions.  You will also want to come up with backup options in case the person you choose is unable or unwilling to serve when the time comes.  So, you may be wondering, how can I make such a hard decision? How do I choose who will make my medical and financial decisions when I no longer can?  Here are some things to consider when trying to decide who should be making these decisions on your behalf:

Start by thinking of who possible options are. Think of your relatives who you trust. Maybe it is your spouse, your sister or brother, your adult children, or your favorite cousin.  If family isn’t an option, because they are not a part of your life or if you just don’t trust their decision making, you can always look outside of your family. Some people don’t realize that it doesn’t have to be family.  If you’re more comfortable with your best friend making decisions and they would be willing to do so they could be an option as well.  Maybe you don’t have a family member or friend that would be a good candidate. Another option would be for an independent party to act for you.  Banks, financial companies, and even accountants can take the role of a Trustee.  This option does cost money so may not be the best option for all families.

Now that you have some people in mind, start by asking yourself some of the following questions about each person you are considering:

Do you think they would make the same decisions you would make? And if not, do you trust that they would still follow your wishes.  Maybe they wouldn’t make the same decisions that you would make for yourself, but you still know you can trust them to do what they believe to be in your best interest. That maybe that is enough for you.

Do you think the person is mentally and emotionally capable of making those decisions?

Is their age or physical limitations of concern?

Are they local? With technology today, your decision maker doesn’t necessarily have to live locally but if you have two really good options and one is local and the other is not, you might decide to go with the one who is local for convenience.

Do they make good financial decisions?

Are they responsible?

Are they organized?

Do they have time?

Does the person have expertise in managing finances or the health care field? While it is not necessary for the person to have such expertise, it may help you in your decision making. For example, if your brother is a doctor and your sister is a financial advisor, maybe it makes sense for your brother to make your medical decisions and your sister to make financial decisions.

It is important to speak with an estate planning attorney who will be able to ask questions about your family and individual circumstances to help you make the decision best for you.

Burkhardt Law Firm

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