Frequently asked Kansas and Missouri Estate Planning Questions
Probate is the court and process that looks after people who cannot make their own personal, health care, and financial decisions. These people fall into three general categories: Minor Children (under age 18 in most states); Incapacitated Adults; and Decedents who have died without legal arrangements to avoid probate. Probate proceedings can be expensive and time-consuming. Additionally, the court proceeding and associated documents are all a matter of public record. Many people choose to avoid probate in order to save money, spare their heirs a legal hassle, and keep their personal affairs private. However, estate planning is not a one-size-fits-all process. Whether it makes sense to design an estate plan for probate or to avoid probate can only be determined during an initial estate planning consultation.
Joint ownership of assets is very common between spouses. In Kansas, this is known as Joint Tenants with Rights of Survivorship (JTWROS). In Missouri, this is known as Tenants by the Entirety (TBE). Whether JTWROS or TBE, both share the advantage of avoiding probate at the death of the first spouse. However, the surviving spouse should not add the names of adult children or other relatives to their assets. Doing so may subject such assets to loss through the debts, bankruptcies, divorces, and/or lawsuits of any additional joint tenants.
This fundamental estate planning legal document allows the maker of the Last Will (known as a “Testator,” if male or a “Testatrix,” if female) to provide for the orderly disposition of their assets “subject to probate” under the supervision of an independent probate judge. Accordingly, Last Wills do not avoid probate, they require it! Also, Last Wills have no legal authority until the maker dies and the original Last Will is delivered to the Probate Court. Still, everyone with a minor child needs a Last Will to nominate the “backup” parent for such child if orphaned. Also, if you want to protect any inheritance “for” or “from” your heirs, then “Testamentary Trust” provisions in your Last Will can be customized accordingly.
A “Living Will” is oftentimes confused with a “Living Trust” (also known as a “Revocable Living Trust”). The former allows you to document your wishes now regarding the end-of-life decisions, if you cannot communicate them yourself. The latter allows you to control the management of your assets outside of probate, if you become incapacitated and at death. By the way, we do not use a “Living Will,” per se, in our practice. Our “Advance Health Care Directive” is a two-page document. The first page is the “Health Care Treatment Directive,” which takes the place of the “Living Will,” and the “Durable Power of Attorney for Health Care Decisions” follows as the second page. We also include an “Anatomical Gift Declaration” to clarify those decisions and a standalone “HIPAA Authorization” to provide clear access for trusted agents to doctors and medical records.
“Intestacy” means that you failed to create your own estate plan by design, so you are stuck with state law to determine your estate plan by default through probate. Every state has laws providing for the “intestate succession” of assets in the absence of a Last Will. Basically, your estate is distributed to your “next-of-kin” and, if none, then your estate may “escheat” to the state itself. That is right. The state where you live could inherit everything, if no relatives can be found within the statutory degree of kinship. [Note: that is rarely an issue, as relatives tend to express an interest in an estate!]
You may avoid probate on the transfer of some assets at your death through the use of beneficiary designations. In fact, in Kansas and Missouri you can transfer virtually any asset, with the exception of “tangible personal property” (think “ceramic bullfrog” collection) without probate by beneficiary designations. Whether a “Transfer on Death Deed” for Kansas real estate, a “Beneficiary Deed” for Missouri real estate, “Pay on Death” for your checking account, “Transfer on Death” for your brokerage account, and beneficiary designations for life insurance and retirement funds, all that is needed to effect their non-probate transfer is your death certificate. That noted, like most things in life and the law, this approach is not an estate planning panacea. There are potential downsides to consider and we can review them in an initial consultation.
If you are a Kansan or a Missourian who has reached age 18, then you need both a “Durable Power of Attorney for Health Care Decisions” and a “General Durable Power of Attorney” (for Financial Decisions). These fundamental legal documents allow you to appoint someone you know and trust to make your personal, health care, and financial decisions when you cannot. If you are incapacitated without these legal documents, then by default you and your family will be forced into a probate proceeding known as a “Guardianship and Conservatorship” that we call the “Lawyer Full-Employment Program” in our office. Why? Because the process requires three attorneys at a minimum! Aside from paying for the attorneys, it also exposes your personal situation, medical condition(s), and finances to the public record. Ultimately, if the probate judge (one of the three attorneys) rules that you are “legally incompetent” to make your own decisions, then the judge will appoint someone of his or her choosing to make your decisions under the ongoing supervision of the judge. So, when do you needs these legal documents? Right now, before you become incapacitated by an injury or illness.
This is an agreement, a contract really, with three parties: the Trustmaker, the Trustee, and the Trust Beneficiary. For example, many married couples in long-term marriages create a single joint trust with the husband and wife serving as all three parties to the agreement. As Trustmakers, Trustees, and Beneficiaries, the husband and wife design and create their trust, manage all the assets transferred to the trust, and have full use and enjoyment of all the trust assets as beneficiaries. They also designated a Successor Trustee to step up to manage the trust assets for them, if both are spouses are incapacitated or deceased. Distribution provisions in the trust also control the management and distribution of assets to Successor Beneficiaries upon the death of the surviving spouse. The distribution can be unique to each Beneficiary (e.g., different arrangements for those with “special needs,” creditors, or spendthrift tendencies), to protect the inheritance “for” and “from” them as appropriate. Finally, a “fully-funded” Revocable Living Trust can help you accomplish all of this and avoid probate, too.
Whether you are young or old, rich or poor, married or single, an Revocable Living Trust may be an appropriate estate planning approach for you. However, only through an initial consultation can we help you determine if it is the most appropriate “legal medicine” to help you protect everyone you love and everything you have.