mburkhardt@burkhardtlaw.com | (314) 518-1581

Burkhardt Law

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The Need to Plan – Why Make an Estate Plan?

Every month I try to find a subject about estate planning to clarify and share my insights. After years of writing, it gets a bit harder each month to think of something new. Normally, questions throughout the prior month and weeks give me something to write about. However, this month, there really hasn’t been one subject that’s stood out to me. If anything, it’s been more of a question of why plan at all?

Of course, there are a lot of good reasons, but unfortunately, I’ve been reminded recently that the best reason is you never know. You just never know when you won’t be able to make that plan. Even as I write this, I am waiting for a family member to let me know if I need to rush to the hospital tomorrow for a friend.

I’ve seen children who’ve lost their parents, a wives who’ve lost their husbands, siblings who’ve lost their sisters. No matter the circumstances, the situation is never easy. I’m hopefully that I can help make that hard time a bit easier, but even easier is not having to worry about the law when you’re already mourning or taking care of a loved one. If there’s an emergency, you don’t want to have to find an attorney, you want to be able to act.

You want the right people making decisions. Without the proper documents in place, the court is likely going to choose who can make decisions for you… if anyone does. I’ve gotten many phone calls about someone who is no longer really aware of their surrounds and a loved one wants a power of attorney. At that point, the person can no longer sign a power of attorney and the court must appoint someone. Unfortunately, this is not an easy nor inexpensive process. Often times, the cost prevents a person from going to court and no one is then able to make decisions.

No matter your reason or reasons, the need to make a plan is an important one and shouldn’t wait until the plan isn’t yours to make.

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Why I Don’t Like Wills (But Still Sometimes Recommend Them)

One of my pet peeves is hearing about how because there was a problem with a will a person’s assets went through probate. I hate this sentiment, because it wasn’t a problem with the will, it was a problem with the person’s understanding of wills!

A will is essentially instructions to the court on how to handle the estate of a person who has passed. It is meant to go through probate. It is the only way for the court to verify the will is legally valid, the last created will, and give notice to those who are required to have it under the will. So a will is really a very poor legal document to rely on to transfer assets upon a person’s death.

Now, that being said, I still often times recommend creating a will. But I make very clear to my clients, the will is a back-up to whatever other legal device we are using to transfer assets upon death. Should an asset need to go through probate, wills allow a person to decide where assets should go and change intestate law. This includes leaving money to non-family or charities, as well as, disinheriting the intestate heirs.

A will can also reduce fees in a few different ways. First, it can reduce the signature requirements of all the heirs or people involved in the process, thus reducing legal fees. Secondly, a will can waive bond, which is another place that can cause additional fees. Finally, it can specify the Personal Representative (or Executor) and reduce potential legal fees if all of the beneficiaries of the will do not agree on who the Personal Representative should be.

And finally, for parents of minor children, a will is the only way to state their wishes for guardianship.

So for all these reasons, sometimes wills are necessary. However, I still don’t like them, hope to never need them, and rarely rely on them.

 

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Back to School: Powers of Attorney for the “Adult” Student

My children aren’t even of school age and I’m being bombarded with back to school information. And if you have a child under the age of 22, you probably know in Missouri there’s no sales tax this upcoming weekend (Aug 3rd to 5th) on back-to-school purchases. It’s already that time of year when parents are preparing to send their children back to the classroom. But if your children are heading off to college, decorating and supplying a dorm room might not be the only thing you need to think about.

According to federal laws, once a child turns 18, parents no longer have the ability to make decisions or even access information about the child. So, for those parents, I strongly recommend financial and medical powers of attorneys.

Properly executed powers of attorneys will give parents access to their children’s medical records and also information from the school that the child may not otherwise disclose.

So as you prepare to send your children back to school this year, if your children are college bound, perhaps consider asking them to execute a power of attorney.

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I Don’t Know: Finding a Good Attorney

For many of my clients I am the only attorney they have (and hopefully will ever have) had. But sometime life can require a good attorney and it’s important to know what you want.

As my professors drilled into me, law school teaches you to think like an attorney. It does not teach you the law. That means we come out of law school really knowing very little about what the law says. I am licensed to practice almost any time of law. That being said, I do not and I do not recommend an attorney who practices a large variety of law.

I focus on estate planning. And I say “focus on” very specifically because ethically attorneys are not allowed to claim expertise or a specialty unless they have extra certifications (i.e. certified Elder Law attorneys). I have focused on and helped hundreds of families with estate planning over the last 6 years. That practical experience helps me fit all of my clients with what I consider the best plan for them.

I feel very comfortable in my knowledge basis and am confident in the legal advice I provide. However, I also do not hesitate to say “I don’t know.” There are many types of law I have no practical experience with (patent law being one of them). Elder law is also a very specific and difficult type of law and one that is can cause problems quickly. As such, I don’t attempt it. When I have clients with elder law questions, I am very quick to refer to an attorney who is Elder Law Certified.

In my opinion, any time you have to hire a professional, especially an attorney, it’s best to find one who has years of experience with your questions. But it’s also just as important to find a professional who will say “I don’t know.”

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Don’t Forget…. To Title Your Assets!

I meet with most of my estate planning clients three times and in each of those meetings I (try to) emphasize that an estate plan is truly controlled by how assets are titled. Of course the legal documents are important, I wouldn’t have a job if they weren’t. But the documents I create don’t mean anything unless we know how the assets are titled.

This is because it is really how an asset is titled that determines where the asset goes and if it will have to go through probate.

If there is a co-owner with a right of survivorship (this is generally called Joint Tenants with Right of Survivorship or JTWROS), then the property passes to the co-owner. This is also where trusts fall. In order for the trust to control, the title must be in the name of the trust and the trust must be the owner. The new owner under this ownership will have control and ownership completely outside of probate.

If there isn’t a trust as the owner or there isn’t a co-owner, then you look to see if there are beneficiaries. If there are beneficiaries, then they then own the property. And when I say beneficiaries, I also include Transfers on Death (TODs) and Payable on Death (PODs) designations. Again, these beneficiaries take ownership without probate.

It is only after ownership or beneficiaries that a will would control. If there are no co-owners and no beneficiaries, then whomever would get the property under the will is the new owner. However, a will must go through probate to transfer the property to the new owner.

And finally, if there are no co-owners, no beneficiaries, and no will, then intestate law controls and heirs get the asset. But again, the heirs would have to go through probate to gain access to the asset.

So, do me a favor, if you or a loved one has assets you’re worried about going through probate, CHECK HOW THEY’RE TITLED!

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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.

Burkhardt Law Firm

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