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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.

 

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Don’t forget Fido! Planning for Pets

I grew up in a St. Louis County with about 17 pets. I’ve always loved animals and have almost always had a dog. About 8 years ago, I adopted a second dog, Brooke. She’s a beautiful, intelligent, high energy cattle dog mix. Brooke also is what I refer to as my special needs puppy. She has extreme anxiety which causes her to attack other dogs. Now, this is a major problem when you have two dogs. So when Brooke is around our other dog, Morgan, she has to wear a muzzle. She’s also on Zoloft.

So, you may be wondering why I’m writing about a dog in my estate planning blog. Because of Brooke’s needs she cannot be kept with other dogs. And if something happened to my husband and I, while our son is the main beneficiary of our trust, we wanted to make sure Brooke would be taken care of.

Now, some are extremely skeptical of making provisions for pets in a plan, but when you have needy pets or your pets are that important to you, it can be an important part of a plan. Now there are multiple options (trusts, gifts, etc.), but I think the important aspect of planning for a pet, is just to consider your pet and if it’s appropriate to include them as part of your plan. Does your pet have a place to live? Do they have extra needs or expenses you would want to make sure were provided? If so, you might want to make sure you have a plan in place for your pet.

It doesn’t have to be your whole estate, and it certainly does not need to be a large amount of money, but some pets do need a plan.

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Right of Sepulcher – Final Arrangements – Burkhardt Law Firm

As we discuss wills, trusts, and other estate planning documents, many people have questions on their final arrangements. A lot of people are content to let their loved ones make arrangements, but many others have very specific wishes and ask to put these wishes in a will.

Unfortunately though, while you can place those wishes in a will (or better yet a power of attorney), Missouri does not have a legal document where one can place their wishes and require them to be followed. Instead, Missouri allows for the right of sepulcher.

The right of sepulcher is a power you give a person to allow them to make decisions over your final arrangements. This includes burial, cremation, etc. However, it does not require them to follow your specific wishes. Often times, I will include the right of sepulcher in the power of attorney and include the wishes. However, if the agent under the power of attorney chooses to disregard the wishes, they may.

Because this power is so general, I strongly recommend pre-arranging your funeral, cremation, burial, etc. While your agent would not be required to use those services, having the planning done (and perhaps already paid for) is the best way to ensure your wishes are followed.

Many local funeral homes would be happy to discuss your options and find a way to meet your wishes. If this is an important issue to you, I would strongly recommend beginning this process today and considering it as part of your estate plan.

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April 2017 – Make a List: Personal Property Distributions – Burkhardt Law

I’ve recently been listening to an interesting podcast, and while there are a lot of interesting themes, I, of course picked up on the probate issue. Essentially, a man with some mental health issues (most likely depression) commits suicide after having told his intentions to leave his gold bars to non-family. After he passes, there of course is no will and the gold bars can’t be found.

Now at first, this was just a sad story to me reiterating the need for planning. When you have loved ones who aren’t legally related that need becomes even more important. In this case, it led to theft, charges of grand larceny, and just hard feelings. So please, encourage your loved ones to make a formal estate plan.

You’ve probably heard your own stories about similar situations. When I really began to think about it, the more interesting estate planning lesson here is regarding the gold bars. And the lesson applies not only to gold bars but any personal property: family heirlooms, guns, jewelry, tvs, etc.

You’ve heard the saying “Possession is nine tenths of the law” and I find that to be very true within estate cases. Personal property does not have a legal title. Instead, it’s owner versus owner. Each have to prove how they own it and often there is very little real proof. So it normally comes down to each’s word. And unfortunately, if someone illegally obtained something, they probably won’t admit it and may still retain possession.

To fix this, many people would like to put items in a will. However, you still have the first problem. If an asset disappears before the will goes into effect, then there’s nothing for the will to control. Just like in the podcast, when the gold bars disappeared, it wouldn’t have mattered if the will said otherwise. You also have a second problem of how a will is put into effect. As I’ve said many times, a will goes through probate. And for assets that do not require a legal title transfer, it is not worth the cost of probate to transfer assets that do not require probate. So listing the assets in the will is generally not practical. In addition, if you would like to change where the assets go, a new will is required. Again, just not practical.

Instead, I recommend one of three different options. The first two normally are not practical for most. Either lock the assets up or give them away. If the assets are restricted then all heirs can go through the property together and assets are less likely to “disappear.” Or if it’s important that an asset goes to a particular person, giving it to them in advance is a way to guarantee they get it.

However, for most of my clients, they are still enjoying their assets and still want access. So, the third option is what I advise most of the time. Make a list with your beneficiaries. If everyone is involved and everyone knows what should happen and has already had their say, then less is likely to go wrong. This doesn’t guarantee there won’t be theft or hard feelings, but it’s most likely the best option.

So, in addition to making a formal plan, discuss those personal items and make a list. Then talk about that list with your beneficiaries and make sure everyone knows the plan. The plan plus a little bit of transparency often makes the plan a lot more practical.

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March 2017 – I Don’t Have an Estate to Plan – Burkhardt Law Firm

One of the most frequent questions I’m asked is how much money does a person need before making an estate plan. But truthfully, an estate plan very rarely is about the money. It’s much more about ease. If there is money planning makes sure it transfers effectively (both in time and cost), but it’s really about providing for both the person making the plan and their loved ones.

The less money you have, the less you are able to waste on attorneys and the court system. The first place this really matters is if you can’t make your own decisions anymore and you’re incapacitated. If you don’t have a power of attorney, no one has access to your bank accounts, social security, pensions, etc. If you cannot access them yourself and there is no power of attorney, someone must go to court through a conservatorship proceeding. This can be expensive, a few hundred to a thousand plus dollars. Because of this, it’s often not worth the proceeding just to access a small bank account. Instead, most people then have to wait until someone has passed to access these accounts. That means it’s a huge financial burden for the person taking care of you. A power of attorney very easily and cost-effectively prevents that issue.

I get phone calls on a regular basis about someone who can no longer access their own accounts and want a power of attorney. But by that point it’s too late and they’d have to go to court, but it’s just not worth the money. So planning in advance really can solve a major problem and heartache for those taking care of you.

The other situation most people think of is when they pass. If people don’t have a lot of money, they often don’t think it’s worth spending money in advance to make sure the assets are passed to the family. But when there isn’t a plan and ANY money is left behind, it can cost hundreds to thousands or more for that money to go to whom it’s intended. Wouldn’t you agree it makes more sense to do it in advance for often times much less money and definitely more ease?

It breaks my heart when I have a family call who needs access to the few hundred or thousand dollars a loved one has left, but it would require dozens of hours of attorneys fees to access. It’s a problem very easily prevented with a proper plan.

So, next time you hear someone say “I don’t have an estate to plan” please realize it’s not about the size of the estate, but often times much more about the need.

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Awkward Discussions

Over the years I’ve had many people ask me how to approach the topics of wills, trusts, and difficult end of life decisions (medical, funeral, etc). Understandably it’s a topic normal people don’t sit around and discuss. Unless of course you’re an estate planning attorney. But I did say normal.

Either people don’t want to discuss the topic themselves or they feel intrusive and pushy bringing it up to loved ones. Even I have been in the uncomfortable position of being near someone I care about and worrying if they had properly protected themselves. So how do you start a discussion on estate planning with your parents or loved ones?

Well, if I had that answer, I might have already retired. But a few tips to begin the conversation and make it a bit easier:

Tell them about this great blog you read. Find a neutral topic to introduce the subject. Don’t just jump in with “you need a will.” Bring up an article or whatever has made you think about it in the past. Refer to your attorney friend or the recent celebrity who lost millions by the lack of planning. If they are open to the topic, then you can get more personal and really talk in detail. If they seem hesitant, don’t force the issues, but just mention it every once and a while without focusing on them.

Talk about yourself. So let me be clear. This is not about you. If you are talking about a plan for another, do not make it about yourself. However, people plan for their loved ones and so if you open up about your concerns, then you might get them to talk about their own concerns and plans.

Don’t focus on death. In my meetings, I rarely use the “D” word. There are a thousand ways to talk about it without using the word itself. Instead focus on love. The real concerns are either making sure wishes are followed or making sure the ones left can focus on the family.

Be honest. There is a reason you are reading this blog. You’ve either done your own planning or your thinking about someone’s plan. Chances are it’s not about you. You’re trying to make another’s life easier. Let that come through as you bring up the topic. Make it about the big picture concerns and why you’re trying to discuss it.

Truthfully, there’s just no magic conversation. However, with a bit of tact, compassion, and understanding there’s a way to bring it up and be respectful about a potentially uncomfortable subject. And don’t forget, I’m always a phone call or blog post away when those discussions lead to questions.

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Lineal Descendants Per Stirpes

There is a common legal phrase in the estate planning world: “Lineal Descendants Per Stirpes” or “LDPS.” And there’s a few reasons I am writing about it today. First, I use the phrase on a very regular basis, so it’s an important concept. But secondly, it has uses outside of just a legal document, like a will, and can help avoid probate if a person’s estate plan does not include a trust.

Lineal Descendants Per Stirpes allows an inheritance to automatically pass to a person’s descendants. This is extremely useful if there are multiple beneficiaries and their children should receive their share if they are not alive. Essentially, if a person is listed as a beneficiary and they pass, with the LDPS designation, their share automatically is divided to their descendants.

There are a few uses for the Lineal Descendants Per Stirpes designation. The first is within wills and trusts. Using LDPS allows for a long list of contingent beneficiaries without naming them all. Generally, I prefer using specifics, however, in the case of grandchildren or nieces and nephews who may not be born yet, the LDPS is a great way to provide for contingencies.

Even more importantly than within a will or trust, LDPS is a great way to provide for contingencies on a non-probate transfer (TODs, PODs, beneficiary designations, etc.). For example, a car uses the TOD designation, but does not allow for contingent beneficiaries. Using LDPS after the beneficiary would allow it to automatically transfer to that person’s children if the original beneficiary passes.

Lineal Descendants Per Stirpes is a mouthful and a fairly complicated legal tool, but it has significant uses in an estate plan. If you have questions on how to use LDPS in your plan, please feel free to give us a call.

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Who Owns Your Property? Missouri Ownership

As I repeatedly tell my clients and have probably written many times in the past, titling is key to an estate plan. This specifically relates to ownership of an asset and who and how an owner is listed on that property. Recently, I had a client ask for a bit more information on what the different types of joint ownership are and she suggested I share that in my blog. So here you go.

In Missouri there are three types of joint ownership. The first is “Tenants in Common”. This is the default ownership for multiple owners unless you specific otherwise. This means that the owners each own their share as an individual. If one owner dies, their share passes as they designate. This could necessitate probate if proper planning has not occurred. This form of ownership also does not protect the owners from the creditor of any other owners. So if one owner owes money or is sued, that debt could be imposed upon the joint property.

“Joint Tenants with Right of Survivorship” or “JTWROS” is the second form of joint ownership. If property has this designation, it means the property will pass to the last surviving owner upon the other owner’s death. This is a great way to avoid probate if the surviving owner is meant to receive the entire property. However, this is not always the best solution. For example, if the children are listed as JTWROS, but the grandchildren should inherit their parent’s share if the parent passes before them, it may defeat the intent. This ownership also exposes the property to the each individual’s owner liability like Tenants in Common (where the property may be subject to the other owner’s debts).

Because of the liability risks Tenants in Common and JTWROS cause allowing one owner’s creditors access to the assets, I often consult against these forms of ownership.

However, the final form of ownership, “Tenancy by the Entirety” does not have this risk. In Missouri, Tenancy by the Entirety is the only form of ownership where the creditors of one owner may not access the joint property. This ownership can only be between a husband and wife. Further, the property has to be titled during the marriage. If the asset is titled in the owners’ name before the marriage, the property has to be retitled to obtain Tenancy by the Entirety.

While this might give you a guide to how your assets are titled, the best way to guarantee your assets are in a form of ownership that meets your needs is to consult with an attorney.

Burkhardt Law Firm

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