2023 Kansas City Favorites Winners Announced By The Kansas City Star

Heritage Law LLP is honored to have been chosen as a Kansas City Favorite in Estate Planning for 2023. We received the Gold Star Award in the Estate Law category, announced on June 29th, 2023, by Kansas City Favorites and The Kansas City Star for 2023. Over 95,000 votes were cast by 37,000 plus unique visitors.

Emily, Bethany, and the entire Heritage Law LLP team are grateful for the opportunity to serve our clients and our community. We want to thank all of you who voted for us in 2023. It means a lot to us.

You can read the entire Kansas City Favorites 2023 issue online.

Click Here to Read Oline.

Kids Graduating High School? Why You Should Include Estate Planning in the Preparation

Your child is entering the world of adulthood, so what does that have to do with estate planning?  At 18, medical and financial decisions are no longer made by the parents.  They are made by your child, alone.  So if your child ends up unconscious from a car accident or some other reason, you won’t be able to authorize medical care or access their bank accounts without a court order or a power of attorney. 

Here are some things to consider taking care of before you send your kid away to college:

●       A HIPAA Authorization: The Health Insurance Portability and Accountability Act was designed protect a patient's privacy. Consider having your child signing an authorization so that—just in case—any necessary doctors can talk to you about your child's condition, care, and treatment.

●       A Durable Financial Power of Attorney: This is a legal document that allows you to take care of your child's checking or savings accounts, pay bills, etc., if the child's unable to—whether due to illness or even just location (for example, if the school is on the other side of the country). 

●       A Durable Power of Attorney for Healthcare: Like the financial version, this allows you to handle medical decisions for your child, if your child is unable to do so.

Using Missouri's Small Estate Procedure for Estates of Less Than $40,000

The bad news is that probate is no fun, time-consuming, and expensive.  The good news is that Missouri law provides a simplified process for estates of less than $40,000.  This procedure allows heirs to collect the decedent's property using an affidavit as described in Missouri Statute 473.097.  Unlike in Kansas, this procedure can be used for both personal and real property (e.g. real estate).  The following conditions must met:

(1) the entire estate must be worth less than $40,000 (subtract debts and liens from the value);
(2) 30 days must have passed since the decedent passed away;
(3) unless excused by the Court, a bond must be secured; and
(4) when required, notice must be published to potential creditors.

Any distributee may then prepare an affidavit stating whether the decedent had a will and describing all of the decedent's debts, liabilities and assets.  The affidavit must also include information regarding the persons entitled to receive the estate property along with facts establishing their right to the same.  

The affidavit must be filed with the clerk and, if approved by the court, the court will issue an order allowing the affiant to collect and distribute the estate property.  If necessary, the affiant may liquidate all or part of the decedent's property to pay debts and/or distribute assets.

If you find yourself with a small estate in Missouri, Heritage Law is happy to help you navigate this process and file the necessary paperwork.  

3 Reasons to Set Up a Trust For Your Kids.

When most people think about Trusts, they think about the ultra-wealthy.  But they are wrong.  You don't need a lot of money to fund or manage a trust, and there are many benefits of using one.  Here are just a few:

1.  Minors can't inherit money.  Because minors can't inherit money, the most seamless way to give minors money is through a Trust.  You can set up the Trust to pay for the education and maintenance of young kids and, when they turn 18, you can start to distribute assets outright.

2. Your kids can receive their inheritance over a period of time.  There are lots of statistics showing how unearned money spends differently than earned money.  Whether the money comes from an inheritance, the lottery, or some other source, if the recipient didn't earn it, statistics show they will spend it more quickly and possibly more frivolously.  A good way to prevent this from happening is to set up a Trust for your kids.  Through the Trust, you can direct that the money gets dispersed over a period of time- e.g. 1/4, at age 25, 1/4 at age 30, 1/4 at age 35, and 1/4 at 40 (or however else you choose).  

3.  Their inheritance will be protected from creditors or failed marriages.  Life doesn't always go as planned and if your kids have financial troubles or a bankruptcy, you don't want their entire inheritance wiped out.  You can avoid this by putting the money in a Trust because, so long as the money hasn't yet been distributed, it should be protected.  Likewise, many young people find themselves in a failed marriages.  Money held in Trust won't be split two ways if your kids get divorced.

These are just some of the reasons to set up a Trust for your kids.  We are happy to sit down with you to discuss the pros and cons during a complimentary consultation.

You May Be Able to Avoid Probate if You Live in Kansas and Have a Small Estate (less than $40,000)

If you are the heir to a small estate in Kansas, you may be able to avoid probate and obtain your loved ones assets (usually bank accounts) without spending a lot of time or money.  If the decedent's probate estate is worth less than $40,000, the successor or successors of the decedent may obtain the assets by preparing an affidavit. See K.S.A. 59-1507b.  To be effective, the affidavit should include the following: 1) a certified copy of the death certificate; 2) a verification that probate has not been filed; 3) a verification that all of the decedent's unpaid debts have or will be paid; 4) a description of all beneficiaries under the decedent's will (or legal beneficiaries if a will does not exist); and 5) a description of all probate assets.  There are strict time requirements for this as well as probate, so seeking the advice of an attorney is recommended.  

Do Your Old Estate Planning Documents Need a Review?

While a good estate plan will stand the test of time, there are triggering events that may warrant a review.  This post highlights some, but not all of those triggers.  

1.  Laws have changed.  With the ever-changing federal estate tax exclusion amount, it is possible your old estate plan was designed to mitigate federal estate taxes that are no longer relevant.  For example, in 1997 the exclusion amount was a meager $600,000 and amounts over that were taxed at 55%.  With the estate tax exclusion now over $10M per person, your tax-strategy might be very different.

2.  Your wealth has grown significantly.  If you had significantly less assets when you created your estate plan, you may want to make changes to your plan.  For example, did you chose your brother as your trustee?  That might have made sense when you had considerably less assets, but now it may make more sense to hire a corporate trustee to manage your estate.

3.  Your children are no longer children.  Did you create an estate plan with directions for a testamentary trust to pass assets to your minor children?  If yes, you likely want to revise your will and possibly create a revocable living trust.

4.  You got a divorce.   Obviously if your spouse is now an ex-spouse, you don't want him or her inheriting your assets.  Your estate plan will definitely need to be revised.

5.  You have grandchildren and you want to pay for their college, fund their business, or help them buy a house.  An estate plan can provide for these things and much more.  You can put assets in a trust and designate that your trustee manage the money and pay for your grandchildren's expenses as you direct.

The above list includes just some of the common triggers we see for estate plan revisions.  If you have an old plan and would like a review, give us a call.  

Want to Disinherit Your Spouse? In Kansas, it’s Not as Easy as You Think.

Because marriage is considered a partnership under Kansas law, the law provides a minimum amount of assets that the surviving spouse can claim against the estate of the deceased spouse if the will and other non-probate transfers provide less. The amount of property the surviving spouse is entitled to is called the “elective share” and is determined based on the length of the marriage.  The surviving spouse must claim the elective share by petitioning the court, because it is not automatic. 

Pursuant to K.S.A. 59-6a,202, the following chart shows how the elective share is calculated:

Length of Marriage:                                       Elective Share:

Less than 1 year                                             Supplemental amount only

1 year but less than 2 years                           3% of the augmented estate

2 years but less than 3 years                         6% of the augmented estate

3 years but less than 4 years                         9% of the augmented estate

4 years but less than 5 years                         12% of the augmented estate

5 years but less than 6 years                         15% of the augmented estate

6 years but less than 7 years                         18% of the augmented estate

7 years but less than 8 years                         21% of the augmented estate

8 years but less than 9 years                         24% of the augmented estate

9 years but less than 10 years                        27% of the augmented estate

10 years but less than 11 years                        30% of the augmented estate

11 years but less than 12 years                        34% of the augmented estate

12 years but less than 13 years                       38% of the augmented estate

13 years but less than 14 years                       42% of the augmented estate

14 years but less than 15 years                       46% of the augmented estate

 15 years or more                                             50% of the augmented estate

The “augmented estate” consists of most of the decedent’s assets and is defined as “the sum of the values of all property that constitute the decedent’s net probate estate, the decedent’s non-probate transfers to others, the decedent’s non-probate transfers to the surviving spouse, and the surviving spouse’s property and non-probate transfers to others.” K.S.A. 59-6a, 203. 

Practically speaking, this means that one spouse cannot simply write the other spouse out of his or her will because to do so would be to deprive the other spouse of what he or she is legally entitled to – their elective share.  However, spouses may waive their elective share by a prenuptial (before marriage) or postnuptial (after marriage) agreement.  Certain requirements must be met for a waiver to be legally valid.  For example, the surviving spouse must have had full knowledge of the decedent’s estate and the rights he or she was giving up.

If you find yourself in a situation where your deceased spouse wrote you out of the will or otherwise deprived you of your elective share, you should contact an attorney and act quickly by filing a petition for your elective share within six months of your spouse's death.   

Why You Should Consider a Spendthrift Trust

There are many tools that can be used when putting together your estate plan. One such tool is a trust.

A trust is a fiduciary arrangement, established by a grantor or trustmaker, which gives a third party (known as a trustee) the authority to manage assets on behalf of one or more persons (known as a beneficiaries).  Since every situation is different, there are different types of trusts to ensure the best outcome for each beneficiary. One type of trust, known as a spendthrift trust, is commonly used to protect a beneficiary’s interest from creditors, a soon-to-be ex-spouse, or his or her own poor management of money. Generally, these trusts are created for the benefit of individuals who are not good with money, might easily fall into debt, may be easily defrauded or deceived, or have an addiction that may result in squandering of funds.

Spendthrift Trust Basics

A spendthrift trust is for the benefit of someone who needs additional assistance managing or protecting his or her money.

The spendthrift trust gives an independent trustee complete control to make decisions on how the funds in the trust may be spent and what payments to or for the benefit of the beneficiary are necessary according to the trust document. Under a spendthrift trust, the beneficiary is prohibited from spending the money before he or she actually receives distributions. These restrictions prevent the beneficiary from squandering their entire interest or having it garnished by the beneficiary’s creditors.  The trustee controls the assets in the trust, including managing and investing the funds, once the trust is made irrevocable. Most trusts become irrevocable after the grantor has passed, but some are irrevocable from the start.

Creating a Spendthrift Trust

A spendthrift trust is created essentially in the exact same manner as any other trust. However, the vital difference of a spendthrift trust is that the trust instrument must contain the right language to invoke the law’s protection. A knowledgeable estate planning attorney can provide guidance on how to best structure this provision, so it meets your family’s needs.

Like any trust, the benefits of a spendthrift trust can help avoid the delay and expense of probate as well as provide tax benefits and peace of mind. 

Estate Planning Help

Creating a spendthrift trust is invaluable because it can give you peace of mind that your loved ones will be taken care of after your passing. If you are considering creating a spendthrift trust, or have any other estate planning questions, contact us today to explore your options.

Planning for Blended Families: Second or Later Marriages and Divorce of Beneficiaries

A brief look at statistics reveals that family structure has dramatically changed over time and that there’s an astonishing variety of family structures out there. Everything ranging from the “traditional” nuclear family to blended families of step-siblings and half-siblings headed by parents in a second or later marriage.

Most of us want to take care of our spouse, our children, and maybe the rest of our family too. But, letting everyone else work out the details after you are gone or incapacitated means chaos, and, sadly, the risk of a family being torn apart.

It’s not just your immediate marriage that you should be concerned about – the marriages of every beneficiary named in your plan can affect your estate planning.

Proper estate planning can alleviate your concerns about your unique family situation, giving you the confidence and peace of mind that your wishes will be carried out. 

Why does this matter for your estate planning? Since not all families are alike, you can’t rely on an off-the-shelf estate plan or make assumptions based on other families’ experiences. Work with an experienced estate planning attorney to understand the obstacles and opportunities available to you and your family.

Assessing Your Family’s Needs and Challenges

First things, first. You need to have honest conversations with your spouse about your goals for the future, your existing finances and how you would like your assets to be distributed. While these conversations have the potential to be emotionally-charged and difficult – for instance, what if your husband’s oldest son can’t manage his finances, but he is in denial and he refuses to talk about his son’s past business mistakes? You need to air your concerns in a safe context. Sweeping problems under the rug will all but guarantee hurt feelings and negative financial ramifications later.

One big concern will likely be to make sure that each spouse’s portion of the estate goes to each desired beneficiary. In other words, if you have a child from a previous relationship, that child’s inheritance needs to be protected even if the child’s parent is the first spouse to pass away. For instance: after the first spouse dies, what if the surviving spouse amends the documents to remove whomever he or she wants from the inheritance, including the deceased spouse’s children? Your children need fairness, as do your spouse’s children.

Get creative when planning. Seek guidance from professionals who have worked with families like yours in the past. Be open to different solutions; likewise, think about contingencies and ask “What If?” a lot. By examining all your fears and similarly exploring possible solutions, you will be more likely to find a better plan that will give you more peace of mind.

Finally, recognize that estate planning is a fluid process. The plans you make today (or within the next three months, let’s say) will likely need to be revised and amended as the years pass. For instance, over the next decade, your wife’s oldest daughter might start a business, marry and have two children: your plan should then be updated to reflect her new financial reality and challenges.

Tools and Solutions

Let’s explore some useful tactical information:

Beneficiary Forms

Do you have a significant amount of wealth in your retirement accounts and life insurance policies? The beneficiary designation controls these assets, not your trust or will, so these designations need to be coordinated with your overall estate planning.

Think about your estate planning as a whole as well as these separate accounts. For instance, you may wish to allow your estate to pass to your children while providing a death benefit through a life insurance plan for your surviving spouse. However, do not name minors as beneficiaries, since they are not legally able to control assets. If you do, the court may appoint a guardian to manage the asset until the child turns 18. We can discuss strategies that will allow your spouse or children to receive benefits from your retirement account and life insurance policies without court intervention.

Advanced Health Care Directive

A health care directive gives you the opportunity to name a trusted family member to make decisions about your health care, should you not be able to voice your opinion. Keeping your health care directive up-to-date is always helpful for your physicians and other medical professionals in the event of an emergency. This is also a chance to discuss your feelings about burial arrangements, organ donation, and end-of-life care with your new spouse.

Power of Attorney for Financial Affairs

Similar to a health care directive, a power of attorney gives you the opportunity to name a trusted family member to manage your legal decisions and financial affairs should you not be able to do so. If you have already named a power of attorney, including a previous spouse, make sure that you revoke him or her before naming your children, new spouse or another trusted individual as your agent. It is also a good idea to keep your power of attorney “fresh” by renewing it every so often since powers of attorney that are older than a year or two might not be accepted by a bank or third party when needed.

Trusts

Trusts are probably the most flexible estate planning tool out there. If you haven’t had yours looked at in the last four years, it’s probably worth a review. If it’s been longer than 10 years, it almost certainly needs a complete overhaul, because there have been so many changes in laws over the last decade.

It might make sense to create a trust that benefits your spouse during his or her life while ensuring that those assets ultimately end up with the beneficiaries you choose. Additionally, you may want your children to receive your separate property (like a family heirloom or ancestral lands) at your death while other property remains in the trust until he or she passes, at which time whatever is left will go to your children. Creating these trusts involves multiple considerations, so it’s best that we talk before you decide the best path forward.

Every family, blended or otherwise, presents its own set of challenges, both personal and legal. We can guide you and your loved ones through the process, discuss your wishes, and help you effectively plan for the future. Call us today to discuss estate planning for your family, and we will be more than happy to answer any questions or concerns you might have.

Talk to Your Family over the Holidays about Your Estate Plan

Many of us labor a lifetime to build up our assets and fight for causes that matter to us. Few things are more fulfilling than the thought of sharing wealth and legacy with our family.

Of course, it’s impossible to plan for every eventuality, but careful planning can mitigate against the two primary risks.

a)    Your intentions regarding your estate weren’t made clear, resulting in the potential for costly, time-consuming conflict.

b)    Your family did not understand or share your wealth management vision, resulting in the possibility of asset dissipation.

The good news is both of these issues can be prevented through honest communication with your family now. While it’s not necessarily comfortable to broach this topic, a family gathering at the holidays might be the best time to have a conversation with your children and loved ones about your estate plan.

Why it’s important to talk to your family

Passing along our wealth is one thing, but what about passing along the values of work ethic and generosity that enabled us to acquire and grow that wealth in the first place? Too many fortunes built by one generation are lost by the next, not due to bad luck or the IRS, but due to a lack of understanding of wealth management and preservation. Also, when your family doesn’t appreciate the rationale behind your estate planning choices like the use of lifetime trusts, this lack of understanding can lead to conflict and resentment among family members. In a worst case scenario, your heirs end up suing one another. No one relishes the idea of family being torn apart over antiques, heirlooms, or who gets the house on Long Island. Nevertheless, it happens far more often than anyone cares to admit.

Should you tell your children about their inheritance?

The question of whether to tell the children about their inheritance is the subject of ongoing debate. Many people express concern that this information might reduce a child’s work ethic or make them feel otherwise entitled, killing their motivation to seek a career and a “normal” life. Depending on the child’s temperament, this might be a legitimate point. On the other hand, inexperience and lack of understanding about wealth can result in a quickly lost inheritance, only because your heir didn’t know what to do.

The best path for most of us is a “happy medium,” sharing your plan in general terms with your heirs, without necessarily telling them the dollar values. You might even entrust some heirs with some responsibility for investment and entrepreneurial opportunities now before they inherit anything. This way, they begin to share your guiding values, and they are therefore better prepared to handle, manage and even grow their inheritance when they ultimately receive it.

Communication now prevents conflict later

You have put careful thought into which assets go to which beneficiaries and why. But, when the details of a plan are sprung on people, especially during a time of grief, differing opinions can create conflict. If your family unexpectedly discovers upon your death that there is a significant amount of money to be distributed, and you haven’t shared your rationale behind the decisions you’ve made, then you’ve set the stage for conflict and infighting – possibly even a costly and lengthy lawsuit.

To overcome these challenges, frame your estate planning around your guiding principles, communicate your intentions thoroughly in the trust, and explain your vision clearly to your trustees and beneficiaries while you’re still around to explain things. By attaching your values to your estate planning and involving your family in the process, your estate plan now becomes a family plan, minimizing the risk of conflict.

What should you discuss at the family meeting?

Once you’ve committed to discussing your estate planning with your family, what should you share specifically? Should you detail the entire plan with them, or just an outline of it? Should you go into detail about who gets what?

The specifics of what should and should not be discussed about your estate will depend on your family, your circumstances, and your overall level of comfort with how much knowledge they possess. You don’t necessarily have to violate your privacy, and there’s typically no need to reveal specific dollar amounts at this meeting. One big caveat - if there’s anything in your plan that might stir controversy, concealing it now serves to invite conflict later. Thus, a good basic rule of thumb is to share as much as is necessary to get everyone on the same page.

Tips for a successful estate planning family meeting

When you hold your family meeting, a bit of awkwardness is to be expected at first—after all, no one in your family (presumably) is likely eager to discuss what will happen when you die. Likewise, you need to be prepared to talk through some of the choices you’ve made that are likely to generate some pushback. However, the end of the meeting is often more comfortable than the beginning. The following guidance can help you get there.

•       Plan the meeting after the holiday, if possible. If you’re gathering the family at a holiday like Thanksgiving or Christmas, try to arrange the actual meeting to take place after the holiday itself, so a potentially uncomfortable conversation doesn't spoil any planned festivities.

•       Invite your financial advisor, estate planning attorney, and accountant to be in attendance. (More to this point momentarily.)

•       Schedule the meeting in a quiet place that encourages candid conversation. A public place is probably not appropriate for this discussion. Your financial advisor or estate planning attorney might have access to space if you need it and prefer a “neutral” site over your living room.

•       Arrange for child care. This meeting should be an adults-only gathering so everyone can participate without distractions from babies and children.

•       Set an agenda. Encourage open conversation, especially on any controversial points, but have a clear list of points to be covered, so you don’t forget anything in the midst of emotional moments.

•       Set a start and stop time. This step will help the meeting stay on track without meandering away from the main points. If something significant comes up, you can always continue the discussion later.

•       Strike an inclusive tone. While you should not suggest that your decisions are open to challenge or discussion (it is your estate plan after all), try to convey that you are inviting the family to share your vision and goals. If you can get them on board with you at the outset, the risk of disputes will be significantly reduced later.

Why involve your financial advisor, attorney, and accountant?

Some people might have misgivings about having a third party advisor present at an otherwise private family gathering, and it’s certainly not a mandatory step. However, you might want to consider inviting your financial advisor, estate planning attorney, or accountant to the meeting for the following reasons:

•       The presence of your financial and legal team can add a sense of authority to the conversation, reinforcing that your choices have not been arrived at lightly.

•       With your permission, your team can review the structure of your estate plan with your family, highlight its benefits, and make the meeting easier for you to conduct.

•       In some cases, there might be questions from your family. Your team can, with your permission, answer questions, especially those of a technical nature.

Tailor the role of your financial advisor, attorney, and accountant in your family meeting to your specific needs. Whoever you include can give a brief presentation of your estate plan as part of the proceedings, or simply be on hand to clarify points. When appropriate, someone from your team can even act as a facilitator or moderator for the meeting itself.

We are here for you

In whatever way you choose to address this sensitive subject with your family, remember that we are here to help, from a full review of your estate plan to offering guidance on how to include your loved ones in a family vision for your estate. When you’re ready, call us for an appointment to discuss your needs.

Four Reasons Why Estate Planning Isn’t Just for the Top 1 Percent

There is a common misconception that estate plans are only for the ultra-rich - the top 1 percent, 10%, 20%, or some other arbitrary determination of “enough” money.  In reality, nothing could be further from the truth. People at all income and wealth levels can benefit from a comprehensive estate plan. Sadly, many have not sat down to put their legal house in order.

According to a 2016 Gallup News Poll more than half of all Americans do not have a will, let alone a comprehensive estate plan. These same results were identified by WealthCounsel in its Estate Planning Awareness Survey. Gallup noted that 44 percent of people surveyed in 2016 had a will place, compared to 51 percent in 2005 and 48 percent in 1990.  Also, over the years, there appears to be a trend of fewer people even thinking about estate planning.

When it comes to estate planning, the sooner you start the better. Below are four reasons why everyone - no matter what income or wealth level - can benefit from a comprehensive estate plan:

1. Forward Thinking Family Goals: Proper estate planning can accomplish many things. The first step is to ask what your goals are. They may include caring for a minor child, an elderly parent, a disabled relative, or distributing real and personal property to individuals who will appreciate and maintain these assets prudently.  Understanding what your family wants and needs are for the future is a great starting point for any estate plan. If you can sit down and spend time planning your vacation, you can do the same for your estate. Your future self, and your loved ones, will thank you.
2. Financial Confidence Now and After You Are Gone: One immediate benefit of having a finished estate plan in place is that you will likely feel in control of your finances, possibly for the first time ever. Many people experience a new sense of discipline in maintaining their finances which can help with saving for retirement, a big purchase, or other goal.  In addition to the personal benefit of financial control, an estate plan allows you to dictate exactly how and when your heirs receive an inheritance. This is particularly important for minor heir or those who need additional guidance to manage their inheritance, like a disabled child.
3. Identify Risks: An important aspect of a good estate plan is to mitigate against future and current risks. One example is becoming disabled and unable to support your family. Another is the possibility of dying early. Through an estate plan you can chose who will be in control of your personal assets, instead of the court appointing a legal guardian who will cost money and be a distraction for your family.  While contemplating these types of risks is never fun, preparing ahead of time ensures your loved ones will be prepared if an unfortunate tragedy occurs.
4. To Maintain Your Privacy: In the absence of an fully funded, trust-based estate plan, a list one’s assets are available for public view upon death. This occurs when a probate court needs to step in. Probate is the legal process by which a court administers the deceased person’s estate. A solid estate plan should generally avoid the need for involvement by the probate court, so your family’s privacy can be maintained.

The Bottom Line: Seek Professional Advice

There are numerous benefits to working with a professional team when it comes to estate planning. Estate planning attorneys, financial advisor, insurance agents, and others  have a broader and deeper knowledge of money management, financial implications, and the law. When you work with a qualified team to implement an estate plan you can rest easy knowing your family will be taken care of no matter what happens in the future.

Not Just Death and Taxes: 5 Essential Legal Documents You Need for Incapacity Planning

Comprehensive estate planning is more than your legacy after death, avoiding probate, and saving on taxes. Good estate planning includes a plan in place to manage your affairs if you become incapacitated during your life and can no longer make decisions for yourself. 

What happens without an incapacity plan?

Without an incapacity plan in place, your family will have to go to court to get a judge to appoint a guardian or conservator to take control of your assets and health care decisions. This guardian or conservator will make all personal and medical decisions on your behalf as part of a court-supervised guardianship or conservatorship. Until you regain capacity or die, you and your loved ones will be faced with an expensive and time-consuming guardianship or conservatorship proceeding. There are two dimensions to decision making that need to be considered: financial decisions and healthcare decisions.

●      Finances during incapacity

If you are incapacitated, you are legally unable to make financial, investment, or tax decisions for yourself. Of course, bills still need to be paid, tax returns still need to be filed, and investments still need to be managed.

●      Healthcare during incapacity

If you become legally incapacitated, you won’t be able to make healthcare decisions for yourself. Because of patient privacy laws, your loved ones may even be denied access to medical information during a crisis and end up in court fighting over what medical treatment you should, or should not, receive.

You must have these five essential legal documents in place before becoming incapacitated so that your family is empowered to make decisions for you:

1. Financial power of attorney: This legal document gives your agent the authority to pay bills, make financial decisions, manage investments, file tax returns, mortgage and sell real estate, and address other financial matters that are described in the document.  

Financial Powers of Attorney come in two forms: “durable” and “springing.” A durable power of attorney goes into effect as soon as it is signed, while a springing power of attorney only goes into effect after you have been declared mentally incapacitated. There are advantages and disadvantages to each type, and we can help you decide which is best for your situation.

2. Revocable living trust: This legal document has three parties to it: the person who creates the trust (you might see this written as “trustmaker,” “grantor,” or “settlor” — they all mean the same thing); the person who legally owns and manages the assets transferred into the trust (the “trustee”); and the person who benefits from the assets transferred into the trust (the “beneficiary”). In the typical situation, you will be the trustmaker, the trustee, and the beneficiary of your own revocable living trust. But if you ever become incapacitated, your designated successor trustee will step in to manage the trust assets for your benefit. Since the trust controls how your property is used, you can specify how your assets are to be used if you become incapacitated (for example, you can authorize the trustee to continue to make gifts or pay tuition for your grandchildren).

3. Medical power of attorney: This legal document, also called a medical or health care proxy, gives your agent the authority to make healthcare decisions if you become incapacitated.

4. Living will: This legal document shares your wishes regarding end of life care if you become incapacitated. Although a living will isn’t necessarily enforceable in all states, it can provide meaningful information about your desires even if it isn’t strictly enforceable.

5. HIPAA authorization: This legal document gives your doctor authority to disclose medical information to an agent selected by you. This is important because health privacy laws may make it very difficult for your agents or family to learn about your condition without this release.

Is your incapacity plan up to date?

Once you get all of these legal documents for your incapacity plan in place, you cannot simply stick them in a drawer and forget about them. Instead, your incapacity plan must be reviewed and updated periodically and when certain life events occur such as moving to a new state or going through a divorce. If you keep your incapacity plan up to date and make the documents available to your loved ones and trusted helpers, it should work the way you expect it to if needed.

How to Select a Successor Trustee

If you have a revocable living trust, you probably named yourself as trustee so you can continue to manage your own financial affairs, but eventually someone will need to step in for you when you are no longer able to act due to incapacity or after your death. The Successor Trustee plays an important role in the effective execution of your estate plan.

Responsibilities of A Successor Trustee

At Incapacity: If you become incapacitated, your successor will step in and take full control of your trust for you - making financial decisions involving trust assets, even selling or refinancing assets, and other tasks related to your trust’s assets. Since your trust can only directly control assets that it owns, it’s vitally important that you fully fund your trust. Your successor may also be involved in paying bills and helping to ensure you get the care you need.

After Death: After you die, your successor acts just like an executor of an estate would - takes an inventory of your assets, pays your final bills, sells assets if necessary, has your final tax returns prepared, and distributes your assets according to the instructions in your trust. Like incapacity, the successor trustee is limited to managing assets that are owned by the trust, so fully funding your trust is vitally important.

Your successor trustee will be acting without court supervision, which is why your affairs can be handled privately and efficiently - and probably one of the reasons you have a living trust in the first place. But this also means it will be up to your successor to get things started and keep them moving along.

What You Need to Know: 

Your successor will be able to do anything you could with your trust assets, as long as it does not conflict with the instructions in your trust document and does not breach fiduciary duty.

It isn't necessary for the successor trustee to know exactly what to do and when, because your attorney, CPA, and other advisors can help guide him or her, but it is important that you name someone who is responsible and conscientious.

Who Can Be Successor Trustees

Successor trustees can be your adult children, other relatives, a trusted friend and/or a professional or corporate trustee (bank trust department or trust company). If you choose an individual, you should name more than one in case your first choice is unable to act.

What You Need to Know:  

They should be people you know and trust, people whose judgment you respect and who will also respect your wishes. 

●       When choosing a successor, keep in mind the type and amount of assets in your trust and the complexity of the provisions in your trust document.

●       For example, if you plan to keep assets in your trust after you die for your beneficiaries, your successor would have more responsibilities for a longer period of time than if your assets will be distributed all at once.

●       Consider the qualifications of your candidates, including personalities, financial or business experience, and time available due to their own family or career demands. Taking over as trustee for someone can take a substantial amount of time and requires a certain amount of business sense.

●       Be sure to ask the people you are considering if they would want this responsibility. Don't put them on the spot and just assume they want to do this.

●       Trustees should be paid for their work; your trust document should provide for fair and reasonable compensation.

We can help you select and advise your successor trustees. 

How To Choose a Trustee

When you establish a trust, you name someone to be the trustee. A trustee does what you do right now with your financial affairs - collect income, pay bills and taxes, save and invest for the future, buy and sell assets, provide for your loved ones, keep accurate records, and generally keep things organized and in good order.

Who Can Be Your Trustee

If you have a revocable living trust, you can be your own trustee. If you are married, your spouse can be trustee with you. This way, if either of you become incapacitated or die, the other can continue to handle your financial affairs without interruption. Most married couples who own assets together, especially those who have been married for some time, are usually co-trustees.

You don't have to be your own trustee. Some people choose an adult son or daughter, a trusted friend or another relative. Some like having the experience and investment skills of a professional or corporate trustee (e.g., a bank trust department or trust company). Naming someone else as trustee or co-trustee with you does not mean you lose control. The trustee you name must follow the instructions in your trust and report to you. You can even replace your trustee should you change your mind.

When to Consider a Professional or Corporate Trustee

You may be elderly, widowed, and/or in declining health and have no children or other trusted relatives living nearby. Or your candidates may not have the time or ability to manage your trust. You may simply not have the time, desire or experience to manage your investments by yourself. Also, certain irrevocable trusts will not allow you to be trustee due to restrictions in the tax laws. In these situations, a professional or corporate trustee may be exactly what you need: they have the experience, time and resources to manage your trust and help you meet your investment goals.

What You Need to Know

Professional or corporate trustees will charge a fee to manage your trust, but generally the fee is quite reasonable, especially when you consider their experience, the services provided, and the investment returns that a professional trustee can deliver.

Actions to Consider

●       Evaluate if you are the best choice to be your own trustee. Someone else may do a better job than you, especially in investing your assets.

●       Name someone to be co-trustee with you now. This would eliminate the time a successor would need to become knowledgeable about your trust, your assets, and the needs and personalities of your beneficiaries. It would also let you evaluate if the co-trustee is the right choice to manage the trust in your absence.

●       Evaluate your trustee candidates carefully and realistically.

●       If you are considering a professional or corporate trustee, talk to several. Compare their services, investment returns, and fees.

We can help you select, educate, and advise your successor trustees so they will have support and know what to do next to carry out your wishes. Give us a call today.

Estate Planning: Why Me, Why Now, and Is a Will Enough?

You have worked hard for years, have family members and friends you care about, and have approached a time in your life when “estate planning” sounds like something you should do, but you are not exactly sure why. You may feel that you are not wealthy enough or not old enough to bother or care. Or you may already have a Will and feel that you are all set on that front. Whatever your current position, consider these common misconceptions about estate planning:

You have worked hard for years, have family members and friends you care about, and have approached a time in your life when “estate planning” sounds like something you should do, but you are not exactly sure why. You may feel that you are not wealthy enough or not old enough to bother or care. Or you may already have a Will and feel that you are all set on that front. Whatever your current position, consider these common misconceptions about estate planning:

1. Estate planning is for wealthy(ier) people.

False. Anyone who has survived to age eighteen and beyond has likely accumulated a few possessions that are of some monetary or sentimental value. While things like your home, your car, and financial accounts are self-evident assets, that collection of superhero figurines or your iTunes library also deserve proper attention. There is no minimum asset value required to justify having a Will, especially since there are many low-cost options, including estate planning attorneys who will not charge an arm and a leg for a basic Will.

2. Estate planning is for old(er) people.

False. Tragedy can strike at any moment, and it is best to have your affairs in order so as not to put your loved ones in a financial or bureaucratic bind while they are grieving. Young parents should ensure that proper guardians are in place to take care of their children if they are no longer around, lest the children end up with the most irresponsible member of the family or, worse, a complete stranger.

3. Estate planning means having a Will.

False. Having a Will is smart because it puts you in charge of the disposition of your assets. A Will allows you to pick your executor, designate the guardians for your minor children, and name any individuals and charitable organizations as beneficiaries of your estate. If you were to die without a Will (i.e., intestate), the law of the state where you reside at your death would govern who receives what part of your estate, who administers your estate, and who takes care of your children. There are some situations where state law may override the provisions in your Will (e.g., a spouse’s elective share), but for the most part, you are in the driver’s seat.

However, a Will is only one tool in the estate planning toolbox. There are other vehicles that allow you to remain in control of your possessions and family’s future during life and upon death. Depending on your situation, a Will alone may not be the most efficient or the most cost-effective means to achieve your goals.

Upon your passing, your Will has to go through probate – a process whereby a court reviews your Will and determines its validity. It is a lengthy and often costly process in many states to begin with and can become even lengthier if a Will is contested (e.g., on the grounds that someone coerced or cajoled their way into an inheritance). The delay in disposition of your assets and the accompanying legal costs may put your family members in financial straits. If your goal is to ensure that your survivors’ cash flow is uninterrupted after your death, it would be wise to incorporate a trust or a life insurance policy into your estate plan. These assets are considered “non-probate” – they pass outside of your Will.

There are other non-probate assets that may constitute a part of your estate. For example, a joint tenancy arrangement on your home, IRA, and payable-on-death (POD) or transfer-on-death (TOD) accounts designate specific beneficiaries upon your death, and the assets pass to them without the delay and cost of the probate process. If your Will provides for a different beneficiary of your IRA account or another non-probate asset, it will be superseded by the beneficiary designation form on file with that account’s or asset’s administrator. Therefore, it is wise to review all of your beneficiary designations periodically, but certainly upon life-altering events like marriage, birth of a child, or divorce.

You are neither too young nor too poor to engage in estate planning! Just remember that a Will may be a necessary, but not the only means to plan your estate in an efficient and cost-effective manner. Keep on top of your assets, and your survivors will have another good thing to say about you at your memorial.

As always, we’re here to provide assistance and explain your options. Call our offices for an appointment today--(913) 359-9513