What is Estate Planning?
Estate Planning is not just for the wealthy. We all have an “estate” comprised of the property we own, including vehicles, real estate, bank accounts, personal possessions, etc. An Estate Plan will make sure those assets go to the people or organizations you want and, if done properly, your assets will not need to go through probate.
Why make an Estate Plan?
You plan for the people you leave behind. If you have minor children, you definitely want to pick the people who will raise them if something happens to you. Failure to plan will force your loved ones to make very difficult decisions at a time of great stress and anxiety and impose unnecessary cost and hassle on them.
What happens if I make no plan?
Without your written and legally valid documentation, a judge will decide who will raise your minor children. State law will dictate who gets your property, which will have to go through the probate process. If you are alive but incapacitated, your family will have to seek probate court approval to appoint someone to act on your behalf.
What documents protect me and my family while I am alive?
Every adult should have three documents “just in case.” They are a General Durable Power of Attorney, Healthcare Power of Attorney, and Living Will. The Powers of Attorney enable somebody you trust to make decisions for you and manage your affairs in case of your incapacity. The Living Will specifies how you want to be treated if you are nonresponsive and are not likely to recover. Most people in that situation would not want their life prolonged by extraordinary medical procedures. These documents are valid while you are alive but expire upon your death.
When should I do my Estate Plan?
Now! The process is easy and inexpensive. None of us want to think about our mortality or the possibility of disability. People put off planning because they think they don’t have enough assets, they have plenty of time, they are busy, or they are confused and don’t know who can help them. Don’t put it off. Call us today. The call is free.
How can I get started?
Call Aaron Johnson at (816) 640-9940. It’s that easy. Evening and weekend appointments are available. Our initial meeting can be conducted in person or by telephone or video. The entire process will be so convenient, you will wonder why you didn’t do it sooner!
Watch this short 10-part interview with Brandon Tritten of JBLB Insurance Group about getting started with estate planning:
1. What documents should every adult have just in case they become disabled?
2. What is the difference between a Will and a Trust, and is a Will off the internet good enough?
3. What documents must parents of minor children have to ensure their children are protected if something happens to both parents?
4. What Are Beneficiary Designations and how do they work with an Estate Plan?
5. Should I tell my family about my estate plan?
6. Can I prevent my family from contesting my Will?
7. How do I prepare for meeting with a lawyer about my Estate Plan?
8. Can you describe a Power of Attorney and Living Will in more detail?
9. If I have an Estate Plan, how often should I review it?
10. Why should I make an Estate Plan?
Brandon: Estate Planning…when I hear Estate Planning, Wills, and Trusts, I think of someone nearing retirement or they are in retirement planning ahead. But people in their 20’s, 30’s, and 40’s probably should be looking at this…having those conversations…is that true?
Aaron: The unfortunate truth is we don’t know when our time will be up. There is no set time people should think about it. The moment a person turns 18 there are some documents they should have just in case they become disabled. In fact, I’ve made my children sign a Power of Attorney and a Living Will when they turned 18 because at that point I’m no longer legally able to act for them. So, even if you don’t have any property, every adult should have these documents in case something terrible happens so their family can make decisions for you while you are still alive. [Keep in mind, however, these documents become invalid when you die.]
Brandon: What are some of those documents people 18 and older should have?
Aaron: The basic ones are, General Durable Power of Attorney, a Healthcare Power of Attorney, and a Living Will. Basically an Advanced Directive that says whatever the persons wishes are. Typically it’s, “if I’m in a coma and I’m not going to recover, don’t take extraordinary measures to keep my body alive.” That’s what most people want. The document can say whatever the person desires. Without those documents, the family members will have to go to a Probate Court and have someone appointed to make the decisions. The person chosen may or may not be the one wanting to make the decisions. The best way to control your own fate is take care of it ahead of time. Write it down.
Brandon: Wills versus Trusts…What’s the difference? Do you need both?
Aaron: They do go together. This is a complicated question that usually is decided after a long discussion. For some people a Will is fine. That’s all they need. For many people a Trust is more appropriate. But even if you have a Trust, you also need a Will. They go together. It depends on your circumstances, whether you need one or both. The important thing to know about the difference between a Will and a Trust is property that passes through a Will still has to go through Probate. Property that is dealt with through a Trust does not have to go through Probate. Most people would prefer to avoid Probate. One of the primary advantages of a Trust is the property that is directed by the Trust does not have to go through Probate.
Brandon: Will versus Trust…It doesn’t matter if the person is wealthy…is there a purpose for both of them?
Aaron: Yes, absolutely. They have different purposes. They have different functions. For instance, younger people that have small children – the Will is the document that designates who the Guardian and Conservator would be for the children. They absolutely have to have a Will. But they would probably also want a Trust, so if something happens to both of the parents, there is someone designated to handle the property for the benefit of the children. And with a Trust, you can designate ahead of time at what age you want your children to receive their inheritance. Whereas with a Will, they will receive their money or property when they turn 18. That’s a big factor for people with small children.
Addendum: Another big advantage to a trust is protection for you and your heirs in case of disability or incapacitation. If you, as the owner of the trust, become disabled, the trust will designate one or more people you have chosen to manage your property for your benefit. The trust also may allow the trustee to avoid transferring assets to your heirs if they are disabled and receiving public assistance and inheritance would make them ineligible for that assistance. In addition, if any beneficiary is financially irresponsible or under distress, such as involved in divorce or litigation, the trustee can decide not to distribute assets to that person if those assets would end up in bankruptcy or go to pay a judgment, or just become wasted because the beneficiary is irresponsible. In short, I believe a trust is a very useful tool to address many of the “what ifs” in life.
Brandon: Why should someone call you versus buying a Will online?
Aaron: You can get a lot of things off of the internet. I’m sure you can find a Will. It might even say what you want it to say. You have to make sure it’s executed properly. In Missouri and Kansas and most states, there are requirements for how a Will is executed for it to be valid. You would have to make sure that was done properly. But the problem with anything like that is you don’t receive the advice and counsel of someone who knows the process. So a Will might not be what you need. A Will might not take care of the issues you’re concerned about. I understand people don’t necessarily want to call a lawyer or pay a lawyer, but sometimes if you spend a little money, the result is much better.
Brandon: What advice do you have for someone who has small kids?
Aaron: I wish I could get this message to every parent that has a minor child. If you want a specific person or people to take care of your children if something happens to you, you need to put that in a document that the law will recognize. It’s not good enough to tell your Mom, “hey Mom, if something happens to me, I want you to do this…” Because what will happen without your written legally valid expression of your intention, that issue will be decided by a judge. Depending on your family situation, there might be fights about it. The judge might not choose the route you would have chosen. At the very least, parents of minor children need to have a Will that designates who the guardian and conservator will be.
Brandon: We’ve talked about having correct Beneficiaries, like on a life insurance policy. And having TOD’s and POD’s on your accounts and vehicle. So that’s not enough?
Aaron: Actually, it could be. Depending on your circumstances. I’ve had situations where we have a Will and we do Transfers On Death (TOD’s), Payable On Death (POD), Beneficiary Designations and Beneficiary Deeds. Those documents act so that when someone passes away the property automatically passes to the people designated in the document. For instance, if a couple that has two adult children wants all of their property to be split equally between the two children, we might do a Beneficiary Deed that would say when we pass away, this real estate will be owned by my two adult children equally. If you make sure you include all of your assets (i.e. bank accounts, retirement accounts, investment accounts, cars, real estate, etc.), you could do that. You would also want to make sure that you have a Will so if you miss something, you’ve got it all covered. It is part of the estate planning process…how do we title all of these different assets?
Brandon: Is it good to tell the rest of your family about your Estate Plan?
Aaron: You don’t have to tell them what your plan is, but you do need to make sure someone knows where the documents are and has access to them. If you have people that you trust who are going to be your Trustees or your agents, I recommend giving them a copy of the documents. But your plan can be as private as you want it to be. You do not have to tell family members specifically what you intend. But you do want to make sure that the people chosen to execute the plan after you’re gone know where it is and how to get to it and generally what they might need to do.
Brandon: I’ve heard of people contesting Wills. Is there a way to prevent that from happening?
Aaron: You can’t prevent it from happening, but you can include provisions that penalize family members or heirs that try to contest a Will. The best way, in my opinion, to avoid the ugly fights that can happen is to have a plan that is clearly laid out and properly, legally executed. It’s been my experience that most of the time if the heirs know this is what my Mom or Dad wanted, they will accept it. But if there is no plan or if there’s a haphazard plan, there are many areas that can be contested or questioned. Those are the times when old family disputes can rear their ugly heads again. So in my opinion, the best way to avoid any sort of family battle is to make a plan. Have it written. Have it clear. Make sure that it’s beyond dispute. Then it typically goes smoothly.
Brandon: What kind of discussions or things should someone do to prepare before actually coming to talk to you?
Aaron: Not much. I have a questionnaire I send people because I like them to have an opportunity to think about things ahead of time. It would be nice if you had a general list of your assets (i.e. bank accounts, real estate, life insurance, etc). The main goal is to get you here so we can have this discussion. I don’t want to give you a big to-do list before hand because sometimes it never happens. The to-do list is too intimidating. You might give a little thought to what your concerns are. Jot down what you own. Otherwise, give me a call and let’s set up a visit so we can have that discussion.
Brandon: You mentioned in the beginning, Power of Attorney. In general, what is a Power of Attorney?
Aaron: A Power of Attorney is a document that designates someone to be your legal agent. A General Durable Power of Attorney designates one or more people to be your legal agent to conduct whatever transaction or business you’ve given them permission to do. So a General Durable Power of Attorney essentially gives people the same rights to do what you could do. The reason you need a GDPOA is in case something happens to you and you can no longer manager your affairs. Your bills still have to be paid. Your business has to be taken care of. Somebody has to handle your financial transactions. And if you’re incapacitated, that’s not you anymore. Everyone should have one of those. Same with a Healthcare Power of Attorney. You want someone designated to make healthcare decisions for you if you’re not able to.
Brandon: Let’s talk Medical Directive…What is it? Should I be thinking about that?
Aaron: That’s another one of those “what if” documents people don’t want to think about. Legally, if you don’t state what your wishes are, the healthcare providers are supposed to do whatever they can to keep your body alive. In today’s medical science scenario, there are lots of things that can be done to keep you breathing and keep your heart pumping, even though there’s no quality of life for you. Most people, if they think about that, probably would prefer not to be in that situation. A Living Will (or Advanced Directive) is your clear, written expression of your wish with regard to how you want that to go. Obviously no one is going to end your life prematurely, but there are steps that can be taken to prolong your life, when maybe you don’t want that. So that’s what a Living Will does for you. It gives your family and healthcare providers your direction on how you want that to go.
Brandon: Someone that is younger…30’s, 40’s, even 50’s, there is a lot of life ahead. As things change over the years, how often should you update these documents?
Aaron: Once you have a plan, that doesn’t mean your planning is over. It just means your plan is in place right now. As things change in your life, you definitely need to reconsider your plan. Look it over and ask yourself: “are these still the people that I want to manage my affairs? Take care of my children?” The timing is different for everyone. But every few years it is a good idea to pull it out, glance through it, make sure it still sounds like what you want. Obviously when events happen in your life, that’s the best time to reconsider this. I’m glad you brought that up. It’s not something you put in the drawer and forget about. It’s something you need to reconsider periodically.
Brandon: Is there any other advice you want to share?
Aaron: When it comes to Estate Planning, I’ve found that it’s a topic many people don’t want to consider, but it’s easy. It’s really easy and it’s not that expensive. Everybody needs an Estate Plan even if they don’t have millions of dollars. The reason you do an Estate Plan is because you want the time after your passing to go as smoothly as possible for the people you leave behind. That’s why you do it. It doesn’t cost anything to call me. Most Estate Planning lawyers are willing to take a phone call and not charge anything for a few questions and see if it’s something that you’re interested in. If it is, we can set up a visit. The cost is really insignificant when you consider the peace of mind that comes from it. And probate is not cheap. Most of the time we can avoid probate with a few well-crafted documents and a little bit of planning. My basic point would be, just do it. Don’t put it off.
What is estate planning?
Estate Planning is not just for the wealthy. Believe it or not, you have an estate. Your estate is comprised of everything you own, including your vehicles, home, other real estate, investments, bank accounts, and personal possessions. When you are gone, you probably want your assets to go to the people or organizations you care about the most. If you have minor children, you definitely want to pick the people who will raise them if something happens to you. You also do not want to burden your family with excessive taxes, legal fees and court costs. That is where estate planning comes in!
Good estate planning includes the following:
- instructions for passing on your possessions
- provisions for your care and the management of your affairs if you should become disabled before you die
- naming a custodian and guardian for your minor children
- providing for family members with special needs
- providing for loved ones who may need future protection from creditors or divorce
- minimizing taxes, court costs, and unnecessary legal fees
If you don’t have a plan in place, the law of your state will make that plan for you, and it will not always be beneficial to your loved ones. If you die without an intentional estate plan, your assets will be distributed according to the probate laws in your state. Typically, your spouse and children will each receive a share, but it might not be what you want. If you have minor children, the court will decide who will become their custodian and guardian, and your children will receive their share of your assets when they turn 18. Under some circumstances, your estate must go through the probate process, which can be costly, time consuming, and inconvenient. If you and your spouse should die at the same time and have not chosen a guardian for your children, the court will appoint one without any input from you. Wouldn’t you prefer to have a say in how these things get decided?
A typical estate plan involves a will and/or trust.
- a will provides your instructions for distribution of your assets, but does not avoid probate
- to avoid probate, most advisors recommend a revocable living trust for most situations. Such a trust can avoid probate at death, prevent court control of assets at incapacity, bring all your assets together into one plan, provide maximum privacy, is valid in every state, and can be changed by you at any time.
- Unlike a will, a trust does not have to die with you. Assets can stay in your trust, managed by the trustee(s) of your choice, until your beneficiaries reach the age you wish them to inherit. Your trust can continue longer to protect the assets from beneficiaries’ creditors, estranged spouses, and irresponsible spending.
None of us like to think about our mortality or the possibility that we may be unable to make decisions for ourselves. People put off planning for their estate because they think they don’t own enough assets, they have plenty of time to think about it, they are busy, or they are confused and don’t know who can help them. Failing to plan will force our loved ones to make very difficult decisions at a time of great stress and anxiety. Don’t wait!
You can put something in place now and change it later, which is exactly the way estate planning should be done. Your estate plan should be reviewed and updated as your family and financial situation changes over time. Knowing you have a properly prepared plan in place will give you and your family the peace of mind you and they deserve. This is one of the best things you can do for those you love.
If you live in Missouri or Kansas, give us a call (toll-free 1-877-704-7674) and talk to Attorney Aaron Johnson about planning your estate and preparing yourself and your family for the future!
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