It is a good idea to have a Medical Power of Attorney and Healthcare Directive in place for when the time comes that you are unable to make your own medical decisions.
A Medical Power of Attorney allows you to select a person of your choosing to make medical decisions on your behalf when you are not capable. You may hear this person referred to as an agent. You may even select back up agents in case the person you choose in unable or unwilling to act as your agent when the time comes. In addition to other powers, your agent can be given power to consent to, prohibit or withdraw medical treatment. It is important to choose someone that you trust to follow your instructions even if they would not make the same decisions themselves. This document goes hand in hand with a Healthcare Directive where you can make your wishes clear to the person you have chosen to make decisions for you.
In a Healthcare Directive you can make the job of your agent easier because they will know what your wishes are. It may even help reduce conflict between family members when they can see that the other family member was acting on your wishes and not on their own. If there was no reasonable expectation of recovery from a serious illness or condition would you want life-prolonging procedures to be withdrawn? If so, you can make those wishes known through your Healthcare Directive. If a doctor believes that life-prolonging procedure may lead to a significant recovery would you want your doctor to try the treatment for a period of time but withdraw it if does not improve your condition? Again, these wishes can be placed in the Healthcare Directive so that your agent will know how to proceed in such circumstances. Would you want to be given treatment for pain? Do you wish to donate your organs upon your death? These wishes can also be written into your Healthcare Directive.
Trusts: Do you need a Trust?
Often times people know someone who have a trust and so they think they need one too. Not every estate plan needs to have a trust. Every family has different circumstances, so just because your friend has a trust doesn’t necessarily mean that you need a trust.
There are some benefits of having a trust in addition to a will. Assets held in trust avoid probate. However, a trust is not the only way to avoid probate. Proper beneficiary designations on all assets can also avoid probate. Therefore, if you’re only creating a trust because you think you need one to avoid probate, you might reconsider.
However, if you want to control your money after you’re gone, a trust is the easiest way to do so. If you don’t want your child to receive a big inheritance all at once, a trust can be set up to distribute the inheritance over time, at ages that you decide. You might choose to leave a certain amount upon the child’ s graduation from college, and then give a certain percentage of the inheritance when they are 25, or 30, or whatever age you feel appropriate. If there are drug or alcohol abuse issues, a trust can help control how money is spent for a beneficiary. A trust may help protect assets from a divorce. If you have a child with special needs, a trust is a good tool to provide for your child.
If you have young children a trust can help provide for them and can avoid probate for a conservatorship. A minor can’t just be given all the assets, so by creating a trust, a trustee will be able to distribute money for the child until they are old enough to handle the money themselves.
It generally costs more to set up a trust. If your circumstances warrant having a trust the extra cost shouldn’t deter you. However, if there isn’t as much of a reason to control the assets, and you properly title all assets with beneficiaries, the cost maybe an unnecessary expense.
It is a good idea to speak with an attorney who can ask questions about your family circumstances to help you determine whether or not a trust would be needed to meet your needs and wishes. They will be able to help you understand the pros and cons of implementing different estate planning tools.
What Next? After Executing Your Estate Plan
Congratulations on getting your things in order. The process of estate planning is often one many people avoid because they just don’t want to think about it. You have been responsible and met with an attorney to prepare your estate plan and have signed and finalized all your documents. You may think you’re done and not think about it again. However, there are still some things you should consider after executing your documents.
If during the process of creating your estate plan, you didn’t speak with your family about your plan, now would be a good time. If you speak to them now, there are less likely to be family disputes because everyone is aware of your intentions. It is also good for the family to know there is a plan, so they know to look for it if needed.
When you receive the original documents from your attorney, you should place them somewhere safe. A good idea is a fire-safe if you have one. Be sure that someone you know and trust knows how to get into that safe. A will must be admitted to the Probate court within one year of death. If no one knows you had an estate plan or where to access the will, it will be as if you never created a will and your assets could pass through intestate law. This could mean the people you intended to inherit may not.
You have placed your documents somewhere safe and spoken to your family. What’s next? I would strongly recommend keeping track of how your assets are titled including any beneficiaries. If you purchase a new car you will want to remember to add beneficiaries to your title using a transfer on death designation or TOD. If you purchase a new home, open new bank accounts, get new life insurance, open a new retirement account, etc., you will want to remember to add beneficiaries to those assets so they can avoid going through probate.
If you have any major life changes, divorce, death, etc., it is always a good idea to review your plan with an attorney to make your sure documents don’t need any updates based on those changes. It is always a good idea even without any of those major life changes to review your plan at least every five years.
But Chances Are So Small – Estate Planning – Burkhardt Law Firm
The number one reason I hear for why people they don’t think they need an estate plan is: “Well, my spouse is named as a co-owner on everything I own or is a beneficiary on everything I own and the chances of us dying at the same time is small.” Well, even if you are right and you and your spouse don’t pass at the same time and your beneficiary designations avoid probate, there are reasons why you still need an estate plan.
Things can fall through the cracks, and you may forget to put a beneficiary designation on a new asset, or there may be other unforeseeable assets that don’t have a beneficiary designation and will therefore go through Probate. A will is a good way in those circumstances to be able to tell the Probate court what to do with those assets. A will can waive bond and ask for independent administration which can reduce the cost and time if assets have to go through Probate.
A good estate plan does not only plan for death, it is also a plan for when you are living but incapacitated. An estate plan may include both a medical power of attorney/heath care directive and a financial power of attorney. These documents are utilized while you are still alive.
If you have retirement accounts, your spouse cannot be an owner of your account. They can be a beneficiary, but that beneficiary designation does not give them any rights to access your account or funds from the account until you have passed away. If you to need to access money from your retirement account and are not capable of making financial decisions the only way to do that is through a financial power of attorney. A financial power of attorney will allow someone of your choosing to make financial decisions and access funds when you are not capable. If you do no not have a financial power of attorney, there may be a delay and added cost if someone has to go through the court system for conservatorship in order to access the funds. This is just one of many reasons a financial power of attorney is an important document to make part of your estate plan.
The other document utilized as part of an estate plan during your life is the medical power of attorney/heath care directive. If you are not capable of making medical decisions for yourself a medical power of attorney will allow a person of your choosing to make medical decisions on your behalf. Do you have specific wishes for end of life? Would you want treatments like feeding tubes to be removed if the doctor did not believe you would have significant recovery? It is important to make your wishes known and this can be done through a medical power of attorney/heath care directive.
Even if you are not concerned about assets passing through Probate, I strongly suggest considering an estate plan so that you can have access to funds when needed through a financial power of attorney and to make your end of life wishes known through a medical power of attorney/heath care directive.
When Does a Power of Attorney Start? Springing POA vs. Non-Springing POA – Burkhardt Law Firm
People always have a lot of questions regarding powers of attorneys (POA). It makes a lot of sense. Powers of attorneys are so important because they give access to decisions when otherwise your loved ones may be stuck without access! One of the big questions we always get is the different types of powers of attorney. Specifically, durable powers of attorney and springing powers of attorney. Today we’re picking on springing powers of attorneys and why you may or may not want a power of attorney that’s springing.
To start with we’re talking about a financial POA. This is just a POA that gives someone you choose the power to make financial decisions for you. That power can be springing or non-springing. If the power is non-springing, then the person you choose has the powers you grant them immediately upon the power of attorney document being signed. This means that even if you are capable of signing for yourself the person you choose could sign for you immediately.
If the POA is springing, the person you choose to make financial decisions for you will act only if you become disabled or incapacitated. A medical doctor would need to certify in writing your mental and/or physical condition is impaired to the extent that you can no longer personally make financial decisions for yourself. Only after a doctor certifies you are no longer capable can the person you choose begin using the powers given in your financial POA.
Some people just aren’t comfortable with the idea of someone else signing for them when they are still capable and may prefer a springing POA. However, if the power is springing, and then there is a need for your chosen agent to act, there could be a delay while they try to get a doctor to certify that you are no longer capable. A non-springing power of attorney may be preferred by some people for convenience. If your traveling or just otherwise busy, your agent could sign for you if they are given the power to act immediately.
Many married people will choose their spouse to act for them and are comfortable with their spouse signing for them immediately. The thing to keep in mind if you choose a non-springing power of attorney is that if you choose a successor agent, someone to act for you if your first choice is unable or unwilling, and your spouse becomes unable or unwilling to act, then your successor agent will then have the power to act immediately as well. Therefore, if you execute a non-springing POA, you need to be comfortable with all successor agents acting immediately and not just the first named agent. However, there is some protection in the fact that that a successor agent would have to prove that the prior named agent was unable to act before they could act on your behalf. Regardless of whether you choose to execute a springing or a non-springing power of attorney, you should select an agent that you trust will act in your best interest.
Having a springing or non-springing power of attorney is a big choice and one we spend a lot of time discussing with our clients. So if you’re wondering which is best for you and your loved ones, the best idea is to contact an attorney and figure out your estate plan.
Stop Waiting – Burkhardt Law Firm
I joined Burkhardt Law about 5 months ago, and since joining the firm I have had an opportunity to shadow Martha. I have learned a lot from her in these 5 months. One of the things I have seen while shadowing her is people who wait until it is too late to create an estate plan. Did you know that for a will to be valid you have to have mental capacity when signing? In the time that I have been at Burkhardt Law I have seen Martha have to turn away potential clients because they no longer had mental capacity to execute an estate plan.
Has a loved one recently been diagnosed with an illness that may affect their mental capacity? Their illness may progress faster then you think and it could become too late to execute an estate plan. If your loved one doesn’t have capacity to execute an estate plan and does not have a power of attorney, it may become difficult to access funds they need. If a power of attorney is not in place, a loved one may only be able to access accounts by going to the court and petitioning for a conservatorship. This can take time and there is the added issue of court costs.
I have also unfortunately seen clients come in when they are sick but still have mental capacity to sign, however, they have passed away before coming back in to sign and execute their documents. That is just heart breaking. Don’t wait until it is too late. Benjamin Franklin once said, “Don’t put off until tomorrow what you can do today.” This is excellent advice especially when it comes to creating an estate plan. You never know what tomorrow will bring so be prepared today.
— Lisa Villareal
Grandparent Rights
When clients call with family law issues, I am quick to defer to and refer to a few fellow attorneys I trust and who know family law infinitely better than I ever will. However, one area, I think is important to touch on with regards to estate planning are grandparent rights. Now I try to help my clients plan with ways to encourage visitation when I/we foresee a problem. However, to give you a more educated view on those rights, George Halenkamp of Halenkamp Law was nice enough to put some thoughts together.
One unforeseen circumstance that can dramatically effect estate planning for grandparents is when a child goes through a divorce or has died. Goals can quickly change when this scenario occurs, especially when it comes to visitation with their grandchildren. It seems unfortunate that grandparents would have to go to court just to see their grandchildren, but sometimes grandparents are forced to consider their options.
Under Mo. Rev. Stat. §452.402 (RSMo Supp., 2011), the court may grant grandparent reasonable visitation with their grandchild under the following circumstances:
- When the parents of a child are filing for divorce, grandparents are able to file a Motion to Intervene to request a reasonable period of visitation from the Court or file to modify an existing order;
- When the parent of a child is deceased, and the surviving parent denies the decedent’s parent reasonable visitation with the child; or
- If the child resided with the grandparent for a minimum of six months within the two years from the filing of the petition, and if the grandparent has been denied visitation with the child for at least 90 days.
A common assumption has existed over time that grandparents have little to no chance of being awarded visitation with their grandchildren. This assumption is not necessarily true. It is presumed that parents living together know what is in their child’s best interests, but this is a “rebuttable presumption,” meaning that the burden of proof is on the grandparents to prove that granting them visitation is in the child’s best interest.
How do grandparents show that reasonable visitation it is in the child’s best interests? The answer is complex and fact specific. However, generally speaking, Missouri statutes allow the court to appoint guardian ad litem, order a home study or consult with the child in order to determine the child’s best interests. The court may consider several factors in determining the best interest of the child. Additionally, the court may conduct a further analysis to make this decision, including talking to the child about his or her own wishes.
In many cases, grandparents are a valuable part of a child’s life. While the parents of the child do generally have primary rights to the child, grandparents are place into a difficult situation if an unexpected divorce or death happens. Grandparents do have legal options to consider in certain circumstances. It is always preferable for the relationship to stay outside of the court room. However, grandparents sometimes may not have any other choice but to involve the courts.
Not Just One – Using One Beneficiary, Instead of Multiple
In the past month, I’ve talk to two different clients who have listed one person as a beneficiary on an asset when the asset is meant to go to multiple people or another person entirely. If you have done this, please stop reading, and go change it right now!
Now the most common place I see this is for minor children. Parents will put the person who is supposed to use the money for the child as the beneficiary on life insurance. Now, I really dislike this for two major reasons. First, that person is the legal owner of the money and does not have a legal obligation to use it for the child. Well, if you trust that person enough with the money, hopefully that’s a non-issue. But even if that’s not an issue, what happens if that person inherits the money then dies? Chances are it will not go back to the children, but rather a spouse or that person’s children. Just best to avoid by planning properly for minor children.
The other time I see people do this is for real estate. They want to avoid a beneficiary deed where all the beneficiaries (and their spouses) must sign and make decisions together; instead they put one person on the beneficiary deed and tell them their wishes. But the problem is that person has no legal obligation to share the money as instructed. Further, while there may not be a tax consequence, there are likely extra tax returns that should be filed (which probably won’t be). In the end, it causes a bigger mess than just creating a proper estate plan with a trust.
Finally, the biggest asset this is a problem with is traditional retirement money. Instead of listing all the beneficiaries on an IRA, I had a client only list one sibling and ask them to share that money among all eight siblings. Again, this person has no legal obligation to share, which makes me wary, but even more importantly there is likely to be a tax problem here. Traditional retirement money has not had income tax taken out of it yet and so when the account is liquidated, income tax is paid at that time. So, if a person inherits the retirement money, then liquidates it to divide it, that person will be paying a lump sum of taxes. Instead, by listing all intended beneficiaries, each beneficiary will have the option to retain the retirement money as an inherited IRA, and only pay taxes in small amounts each year. A much more tax efficient option.
So, if you have set up your plan listing one person instead of all the intended beneficiaries, you might want to reconsider your plan and even start thinking about a trust.
A New Year’s Resolution – Don’t Wait to Plan
A New Year’s Resolution – Don’t Wait
We have had the wonderful privilege of being extremely busy since I have returned from maternity leave. I feel extremely lucky and blessed that my clients and those who refer me trust me enough that we had a great 2018 and are looking forward to a full and eventful 2019. So, thank you to all who read this for your continued faith and trust in me.
However, I do have a bit of a request. As we enter 2019, if you hear someone talking about a will or power of attorney, any estate plan, with the phrase “We’ve been meaning to do that…” or anything similar, please interrupt. Now, estate planning is my business, so of course, it’s a bit self-serving. But that really isn’t the reason. I’ve had many acquaintances over the years who haven’t used me for one reason or another, and I understand when that happens. A person can be too close. But even when I’ve been told a potential client has had their plan done elsewhere, I thank them for getting it done. Because it can be too late to plan.
I’ve helped a lot of families form a plan to avoid probate, but this year we’ve also helped many loved ones grieving sort through when a plan wasn’t in place. And I’ll be honest, I prefer the planning in advance. Many times, probate is simple, a few months, everyone getting along, and a magic court order that gives easy access. I try to help it work this way any opportunity I can. That, of course, isn’t all the time. If there are people who need access to funds immediately, families that are more complicated, or just small assets spread everywhere, it can make probate a nightmare. Unfortunately, I also have had to tell many families that with the amount of work (and legal fees) involved, probate just wouldn’t be worth it.
There’s also the call I get on a regular basis, where a loved one wants to help get a person a power of attorney, but there’s a question of capacity. Sometimes, we’re able to proceed, but more often then not, it’s too late. In that situation, the only way to access accounts would be to go to the court and petition for a conservatorship.
I hate those calls where I am the one breaking the news that court is the only way and often not a practical way because of the legal fees. It’s terrible for me, and I’m not the one dealing with the situation. So, do me a favor this year, and if you hear anyone making a resolution to get their estate plan encourage them not to wait!
Trust versus Beneficiary Designations
At least three times a week I am asked the difference between a will and a trust. There are a few differences, but first I always like to point out that a will requires probate to be effective. So, when planning for a client, I don’t often like to compare a will and trust, but rather a trust and beneficiary designations.
You can use both beneficiary designations and a trust to avoid probate, but the main reason a people choose a trust is control. To me, control is the best reason to plan with a trust. Legally, a trust is an entity that separates the control of assets from the use or benefit of those assets.
For families with minor children, I almost always recommend a trust. Without a trust, even using beneficiary designations, you cannot avoid probate. Minors cannot be in control of their own money, so a trust allows a legally responsible adult to make decisions over the assets for the benefit of the children. It then sets up ages or life events when the children get the money.
Another common reason I recommend trusts are when there is real estate involved. In Missouri, if a person has their name on real estate, their spouse also must sign off on any real estate transactions even if the spouse is not on the real estate. So, if a person leaves real estate to someone through a beneficiary deed (the way to put beneficiaries on real estate), everyone on the deed plus their spouses will need to sign for the property when it is inherited. Often, my clients would rather not involve the spouses or even have all beneficiaries make decision on the property. Instead, they do a trust where one person makes decisions on the real estate and multiple people have the use or receive the proceeds.
One of the final reasons clients use a trust is to control how the money is paid out. If a beneficiary is not responsible enough or has an addiction where the money would be harmful if the beneficiary had full access to the money. In those situations, the trust can allow another person to use the money for the beneficiary or to give out money in regular installments like an allowance.
There are, of course, other reasons I consider trusts. Family dynamics, contingencies, real estate. However, when it comes down to it, the reason my clients choose a trust over a will or, more appropriately, beneficiary designations is it gives them control over how the money will be left.
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