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

Burkhardt Law

By

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.

By

Decisions

When you begin an estate plan you are trusting and asking a lot of a few people to implement your plan. Often that can be overwhelming trying to choose the person. But it can be even harder if you have limited family or family that is not appropriate for the decisions they would need to make. A few things to help consider your options:

First, consider the role you are asking them to take. Are they handling money? Taking care of the kids? Making medical decisions?

Would they make the same decisions you would make?

Are they mentally and emotionally capable of making those decisions?

Is their age or physical limitations of concern?

If they are only making decisions on one part of your plan, will they work well with the others making decisions for you?

If they are not local, will that cause problems? Would it be difficult to deal with real estate? Are they interacting with the court?

How will they interact with your family or the others involved? Will they communicate adequately? Will they handle problems fairly and diplomatically?

But what if you really don’t have the option of families or friend fulfilling this role? It is possible for an independent party to act for you as at least a trustee. Banks, financial companies, and even accountants may accept this role. Often in an estate plan, professional advice is required, so hiring a professional trustee may make sense. It also puts a neutral third party in the role of the decider and can prevent family disputes and complications. However, professional services of course cost money and may not be practical for all families. As such, it’s very important to discuss options with an estate planning attorney and make the right decision for you.

By

Do You Need a Will?

Many times a potential client calls asking about a will and when we sit down for a consultation, they’re shocked to find out a will doesn’t accomplish what they want. Because this happens on such a regular basis, I thought I would go over what a will does and doesn’t do and when you might need a will or when you might need something more.

First, a will does not avoid probate. In order for a will to be effective, the court must verify the will and give all potential heirs an opportunity to contest the will. As such, assets passing through a will must go through court and may take months to years before they can be accessed. If your goals are to avoid court and hassle, then a will alone will not do this and you want to consider non-probate transfers.

But, maybe most importantly, if you have minor children you need a will. This is because a will is the only place to tell the court who you want to be guardians for your minor children.

However, even if you do not have minor children, I often recommend a will for a few different reasons. While the will may not be your main device to leave money to your beneficiaries, it is a very important back up. If you forget to put a beneficiary on an asset or put an asset in a trust, it will go through probate and a will can make that process easier a few different ways. First, if your beneficiaries differ from intestate law, if will ensure your assets go where you wish. Secondly, no matter whom your beneficiaries are, it can allow probate to proceed more quickly by allowing independent administration and waiving a bond. A will also allows you to choose who is in charge of handling your assets and acting for your beneficiaries as the personal representative or executor.

So while there are a few situations where you need a will, there are many more where you may not need one, but it would be beneficial.

By

Who Has the Power: Attorneys-in-Fact, Personal Representatives, Guardians, and Trustees

Estate planning can be complicated. In addition to different ways to structure a plan, multiple people can be involved. Most of the time, the people making decisions within the different documents are the same person. However, they don’t have to be. As such, it’s important to understand what the different positions and documents require.

Attorneys-in-Fact – This person can also be called an Agent, but it’s the person acting through a Power of Attorney. Their power either begins immediately or when a person is no longer able to make decisions for themselves. However, this power ends with the person creating the document (also known as the principal) dies. The attorney-in-fact can have many different responsibilities, but I generally divide it into two categories. The first being responsibility over the principal’s assets which remain in the principal’s name and legal decisions. The best example of this is generally making decisions over insurance policies or retirement accounts. They must use these assets for the principal’s benefits. The second category is medical decisions. The attorney-in-fact has the power of what treatments the principal should receive, may sign off on medical waivers, and will make the final decision on end of life treatment.

Personal Representative – Previously called an executor or executrix, this is the person acting under an individual’s will. When acting as a personal representative (or PR), that person will have to locate the will and deliver it to the probate court. They will then be responsible to the court to determine what assets must pass through probate with an inventory and accounting of those assets. The PR will have to determine what to do with assets, pay any creditor claims, and is responsible for all filings submitted to the court. At the end of the probate matter, the PR will also be the one who divides the estate to any beneficiaries.

Guardians – For many families, this is the most important role. This is specified in the will and is vital for determining who is responsible for minor or incompetent children. The court has the final decision on who a guardian will be, but a parent’s will and wishes are often respected.

Trustees – A trustee is the person responsible for enforcing the terms of the trust.   Essentially this means that when the principal is no longer able to make decisions (or chooses not to), the trustee will take control of any assets held in the trust’s name. At that point they will use the assets for the person who created the trust. When the principal passes, the trustee will be responsible for either distributing the remaining assets to the beneficiaries or managing the assets for the beneficiaries. This position can last for multiple years and generations.

All of these roles require a person to act in the best interests of the principal or the beneficiaries, but there can be very little oversight. A lot of responsibility and power comes with attorneys-in-fact, personal representatives, guardians, and trustees and there is definitely the ability to abuse the power. As such, it’s extremely important to choose the right person for each role and most importantly choose someone who can be trusted.

By

What Probate Actually Means

Most people don’t understand what probate is and in most of my client meetings I explain what probate actually means. Very simply probate is the court proceeding assets go through to be transferred out of a deceased person’s name. That’s about the only simple thing about probate.

The first thing to know is not all assets must go through probate in ordered to be transferred effectively. If done correctly, an asset with another’s name on it or with beneficiaries listed should not have to go through probate. Beneficiaries are generally automatically done on retirement plans or life insurance policies, but most assets can have a beneficiary listed. On vehicles they’re called “transfer on deaths” (TODs) and on bank accounts they may be stated as “payable on death” (POD). Any asset that has a competent, living adult listed as a beneficiary or co-owner should (for the most part) avoid probate.

However, when plans haven’t been made and beneficiaries haven’t been listed, that’s when the probate court gets involved. Even if there is a will, those assets must go through probate.

There are many different ways for assets to go through probate, but the two I use most often are the small estate affidavit and the full probate proceeding.

A small estate affidavit can be used when the assets that do not have another person’s name on the title or as a beneficiary total $40,000 or less. This process has minimal expenses, but can take a few months to complete. If real estate is involved, any proceeds from a sale may be held in escrow for a year from the date of the deceased’s death. However, attorney’s fee and court fees are much less than full probate. A full probate proceeding, at a minimum, takes 7 months, but often time takes much longer. There are also minimum attorney’s fees based on the size of the estate.

In both proceedings, an attorney is required to file the initial paperwork with the court. Thus attorney fees and court fees start at the very beginning. For a small estate affidavit the assets must be listed in the initial filing and if the value is not known, an appraisal may be necessary. Once the court has accepted the filing, a bond may be required. A bond is like an insurance policy ensuring that the creditors and heirs or beneficiaries of the estate will receive what is legally theirs. The bond amount will be dependent upon the amount of assets and can be very expensive or hard to obtain for some families. If the deceased had a will, this requirement can be waived in the will.

In a full probate case, the next step is for the court to appoint a personal representative. This is the person, also known as an executor, who is responsible for selling and distributing assets. The court may grant independent administration where the personal representative may make some decisions without court approval or it may proceed with supervised administration where the court’s approval is required for any action by the personal representative. Supervised administration will often take more time and cost more in attorney’s fees. Independent administration can also be authorized through a will.

If the assets are over $15,000 of value, publication is also necessary to inform creditors and potential heirs of the probate estate.

Next in the full probate proceeding, the personal representative is required to file an inventory detailing all of the assets, which again, often includes appraisals. Once the inventory has been filed, assets may be sold. Six months and ten days after the first publication the estate may be settled by accounting for any debts that must be paid and the amounts owed to the beneficiaries of the estate.

In either proceeding, there are a ranging set of fees, due to the court, attorneys, bonds, publication, appraisals, etc. It’s generally worth avoiding when possible through advancing planning with an attorney. However, it’s obviously not always possible to avoid. So, if you’ve lost someone and have assets that are still in his or her name, probate in some form is likely necessary.

If you think probate is necessary, there’s often no rush (certainly not once the court is involved). The main date to note, is that a will must be admitted to probate within a year of death. So, if there is a will involved, I would recommend reaching out to an attorney well before that year has passed. However, for most families, probate may be considered on your timeframe. With that in mind, I recommend reaching out to an attorney with any questions, but waiting until you are certain there are no other assets in the deceased’s name before filing with probate.

By

Your Online Estate Plan

Recently, a friend and owner of an IT company (Michelle Herring of CMIT Solutions of St. Charles and Chesterfield), passed along a question she encountered. What do people do about their online accounts when estate planning?

First, I just have to say, I loved that she mentioned this. In a world where more and more of our world is online, it’s a real problem. Even for older families this presents a real issue. Mom now does all of her banking online and doesn’t receive paper billing. How do the kids know what bills are due and what’s already been paid? For those of younger generations constantly on Facebook or even LinkedIn, what happens to those accounts?

Unfortunately, this is the new frontier of estate planning, meaning the laws haven’t caught up with reality. Many (if not all) of the online accounts you use require you to accept a user agreement stating you will be the only person using the account. This means you’re technically violating your agreement with that company if you give another person your password.

Even more of an issue, many online entities have no set policy (and certainly not consistent across companies) of what happens after a user passes: Is a court order required? Can a trust access the account? Does a power of attorney give access?

Few websites truly plan for their user’s eventual (and guaranteed) non-use. There has been discussion that some online entities will or have settings that allow you to give another person access to your account if you don’t log in within a specific amount of time or other forms of estate planning within your online account. After some searching, I could not find these settings in a few of the bigger sites (feel free to share if you do).

So what do you do? There are a few options. Some practical and some not. First and probably the most “legal” (but also probably the least practical) is to keep a list of all your online accounts, so your estate can contact the company and follow the given procedures of that company (if there are any). But really, who has time to create a list and then the hassle of your estate trying to contact and comply with several (plus some) different companies.

Another option is to create a list of all of your accounts and passwords. Either written somewhere or in a document. Hopefully, you can figured out why I don’t recommend this. While it gives your estate access to your accounts, it may inadvertently give access to others as well.

The best solution I’ve seen so far (also recommended to me by CMIT Solutions… seriously, check them out) is to use a password storing cite such as LastPass or KeePass. These applications are secure mobile databases that allow you to store your passwords online on an encrypted site. Essentially, you only have to remember (or share) one password and you have a list of all your online accounts with the passwords. An added feature of LastPass (I installed it over the weekend) is that you don’t have to manually enter the list. As you visit the websites, LastPass will give you the option to save the site and the password.

All of these options have their downfall, but no matter how you plan for your online world, it’s important to consider and plan for as well.

By

Even The Simpsons Worry About Guardianship… Do You?

This week when I turned on the television to watch two of my favorite shows, I got caught thinking about work. Maybe it was a theme within FOX, but both The Simpsons and Bones revolved around issues of estate planning.

The episode of The Simpsons didn’t involve any big discussions or much deep thought (though I know that comes as a surprise). The whole episode shows Marge and Homer Simpson trying to find guardians for their children. While their problem is finding anyone who wants their kids (see the clip below) most people face the harder decision of finding someone they trust to care for their kids.

Bones took the issue more seriously (again, big surprise), it also presented the subject with much needed humor. As I discuss this subject on a daily-basis, I very much appreciated a popular media tackling the matter and presenting it in (as much as possible) a positive light.

As I watched, the lawyer in me laughed at the two extremes Booth and Bones presented. A good will does not need to be 312 pages, but in turn should also not be hand-written on a sticky note. Further, when you have a complicated family or sizeable assets or just want to avoid the courts, a will probably will not accomplish your goals. Revocable trusts are a great option for most families (even if you’re not a genius scientist with best selling books).

However, I winced at the proposition Booth presented of leaving his girlfriend assets and trusting her to be fair to his son. This is something I advise people on a regular basis. Never create any legal document expecting everyone’s best behavior. If you could do that, then why create the legal document to begin? If you want to leave something to your children, leave it to the children, not another person. If you leave it to the guardian/parent/partner, that person has no legal obligation to use it for the children.

In reality I probably winced at the majority of Booth’s sentiments. Especially, that preparing for death is inviting it. Unfortunately, death is a fact of life and can be extremely difficult on those who are left behind. When someone isn’t prepared in advanced, they also leave behind a tangle of assets that the court has to sort out. This leaves their loved ones not only in with emotional grief, but very likely legal grief as well.

Even if I disagreed with some of the characters throughout Bones and wouldn’t recommend Homer & Marge’s style of picking guardians (finding random strangers), I appreciated FOX and both shows tackling a hard subject. In doing so it raised some important questions and hopefully will get some families talking. It’s at least gotten me to do so.

Burkhardt Law Firm

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