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Relative Caregiver Affidavit – A Power of Attorney for Minors

Many families are going on vacation right now.  Some parents with their minor children, but many without.  At least once a year about this time, I have clients or friends reaching out to give someone else a power of attorney for minor children while they are on vacation.

A power of attorney can only be created by a competent adult to give their power to make decisions to someone else.  So, it’s not possible to create a power of attorney for minors.  And guardianships are more permanent arrangements made by the court to give someone the ability to make decisions for another.  However, Missouri does provide for the Relative Caregiver Affidavit under RSMo 431.058.

The Relative Caregiver Affidavit is what most parents are looking for if they are leaving their children temporarily in the care of another.  It allows a relative to make decisions for a minor’s educational services or medical treatment.

So, if you’re going on vacation and leaving your children in the care of another, before you go, take the time to get a Relative Caregiver Affidavit notarized.  You can even find a free one provided by the Missouri Bar online.

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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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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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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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What Controls?

One of the most misunderstood topics of estate planning is what documents control a situation.  I often have people calling asking for a power of attorney, when they truly need to update how an asset is titled, or someone calls asking for a will when they really need to update a trust.  So, hopefully this month I can clarify what documents actually control a situation.  It all really depends on who legally owns the asset.

Titling always controls first.  If there are two people on the asset, then they have access to that asset.  Both signatures might be required, but often times (unless dealing with real estate or vehicles) one person may act without the other.

Often times, I have someone ask me about a power of attorney, but they actually mean another person is on their bank account or asset with them.  In that situation, the solution involves changing how the bank account is titled, not changing the power of attorney.

A power of attorney is when someone has an asset in their name, but a second person uses the document to access the first person’s asset.  The power of attorney may only be used when the person is still alive.  The most common time a power of attorney is used is when an individual is no longer able to make decisions and another needs access to his/her retirement accounts to provide for him/her.

However, if the asset is titled in the name of the trust (not in the name of the original owner), the trust controls.  If the original creator of the trust is not able to make decisions any longer the successor trustee takes over.  The successor trustee will have access to make decisions on the asset.  A power of attorney cannot apply in this situation because the person is not the owner the trust is.

When we start talking about when people pass, there are generally a few different ways for the property to be controlled.  First, again is who is titled on the asset.  If there is more than one name on the asset, the remaining name may be entitled to the asset alone.  It depends on exactly how the asset is titled. Generally, if the asset is owned by (and titled to) a married couple, the asset will automatically pass to the other.  If the owners are not married, it must state the asset is owned by joint tenants with right of survivorship for the asset to pass automatically to the other.

The title might again be in the name of the trust, and again, if that is the case, the trust document controls.  The successor trustee would take control of the assets and distribute or hold them as the trust document dictates.

If the asset does not have another person on the title as a current owner or is not in a trust, a beneficiary designation will control.  This might be a beneficiary deed on the house, a “TOD” or Transfer on Death on a vehicle, or a “POD” on a bank account, but if there is any form of a beneficiary listed, that beneficiary gets the asset.

It is only when there is no trust, other person, or beneficiary listed on the title that the asset would go through probate.  At that point, if there is a will the will would control, and if there is no will intestate law would apply.

While it can be confusing, the first step is always looking at the title.  A trustee will always control if it’s owned by a trust, a joint owner may be control, and only after that a power of attorney, beneficiary, or will.

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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.

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A New Perspective to Estate Planning – Parenthood

My husband and I just welcomed our first child into the world on June 16th. As I was thinking of what to discuss this month, I thought I’d simply share how my new parenthood has made me reconsider our estate plan and the documents I create for my clients on a regular basis.

The first thing that occurred to me is how important a medical power of attorney really is. This was my first experience being hospitalized; while I did not have to use my power of attorney, it was extremely comforting to me to know my husband would be able to make medical decisions if I was unable.

It also made me re-evaluate our trust and trustees. We completed our trust years ago and with the birth of our first born, my husband and I have set aside some time to review our trust and make sure the decisions we made then still are applicable to our new family.

But the most important thing I have realized is how hard it is to choose a guardian. I have always helped my clients sort through the options and generally act as a third party perspective with objective reasons why someone may or may not be a good fit. Well, I now understand on a very personal level why it is so hard. It’s so difficult to find someone who will raise your child the way you want to raise him. Everyone we’ve considered has positive and negative characteristics and it’s so easy to rule someone out because they’re not perfect. As I’ve told my clients in the past, no one can replace them, they’re only able to choose the best option in the worst circumstance.

Parenthood has given me a new perspective and while I’m proud of that third party, objective view, I hope it’s given me an opportunity to better understand the families I work with and the difficult decisions they must face when forming an estate plan.

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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.

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Planning for Minor Children

Starting in Spring I begin getting phone calls as parents plan vacations away from their minor kids. Understandable, parents want to make sure that if something happens to them while they’re on a trip, their kids will be protected. I’ve talked before about planning for minor children, but I thought it was time for a refresher.

I’ll quickly mention again there’s actually two sides to planning for minor children: the physical and the financial. For minors, the court requires a legal competent adult to be in charge of the welfare of the minor child. This is done through guardianship. The court will hold a proceeding to determine who this adult will be. The only way the court will consider the parents’ wishes is through a will. If there is no will, the court will determine on its own who should be in charge of your children. Probably a scary thought if you have differing values from some of your family (or at least it should be).

It can be hard choosing the person who would raise your children if you cannot, but I find this worksheet to be a helpful place to start.

The other side of planning for minor children is financial. If you place more than $10,000 of assets in a minor child’s name, Missouri requires the probate court to be involved. If you have a will, this might specify who is in charge of the assets, but it must still go through the probate court to be valid.

A lot of the clients I see try and avoid this through placing an adult’s name on the assets instead of the child’s. I hope needless to say, this is a very bad idea. First of all, that person then has no legal obligation to use that money for the benefit of the child. Even beyond this, the money is then at risk to any creditors or liabilities they have. But the largest drawback I see with this is that the assets are then subject to that adult’s estate plan (or lack thereof). If that adult becomes incapacitated and unable to access the money themselves, there is no way to legally use the assets for the child. Worse, if that adult passes without an estate plan taking this into account, the money most likely will not go to the child.

I also have some prospective clients who have a testamentary trust. This means the trust is established in their will not by a standalone trust document.  There are two major drawbacks with this type of trust. First, the will must go through the probate court in order for the trust to exist. Secondly, because the trust does not exist until after death it can be difficult to properly title assets to avoid probate.

The other hesitation for many parents is that this plan is only necessary if both parents pass. While this is true, you cannot unfortunately plan on the circumstances surrounding estate planning. It’s much easier to plan in advance than clean up the mess left behind. Planning is much less expensive done proactively and work does not need to be done twice if a plan is established beforehand.

This is why for most young families, even when I get asked about wills, I strongly recommend a trust in addition to the wills.

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Take Control Through Estate Planning

I recently had the pleasure of sitting down with Chris Finny from the Finney Law Office. As Chris was explaining how he helps individuals through difficult events in their lives (car accidents, getting hurt on the job, medical procedures gone wrong) I noticed a common theme. Yes, Chris’s clients have been injured in some form, but the bigger more lasting effect is that they have had control taken away from them. Maybe that’s control of their body, their ability to earn a living, or just the management of their finances. Unfortunately, as I learned from Chris, those who have gone through a personal injury case know how quickly they can lose the ability to make decisions. But through effective legal planning, some of that lose is preventable.

I want to suggest some basic documents everyone should think about, so that if you do experience an injury of that type, your wishes are still the ones that are being considered.

First is a medial power of attorney and health care directive. This allows you to set out your medical wishes if you aren’t able later to communicate or enforce them. It also gives you the power to choose who will help enforce those wishes.

There’s also another power of attorney to cover your financial and legal decisions. I truly consider this one of the most important documents of an estate plan and would highly recommend everyone of any age to have one. Again, in this document, you get to choose who handles your finances and makes decisions for you or your family if you’re not capable of making your own.

And of course, don’t forget about the will. While this is the document where you get to override state law and say where your possessions go, for parents it’s a lot more. This is the ONLY legal way to have a say in who will take care of your minor children.

But if you really want control, a trust really is the most effective and detailed way to do so. A trust gives you the ability to make detailed decisions over your finances and beneficiaries, even allowing you to make sure your beneficiaries cannot touch their inheritance until an age or event you decide.

Without these documents, those left to take care of you will have to go to court to earn those rights, and the court has the final say on who will be making decisions for you. So whether you’ve been involved in a personal injury case or just know it can happen to anyone, take some control now and consider your estate plan today.

Burkhardt Law Firm

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