I don’t have an “estate.” Why do I need estate planning? Estate planning is not just for the wealthy. It is the process of getting your affairs in order so that, in the event of your disability, someone you trust has the legal authority to act on your behalf and, in the event of your death, your assets go to whom you want them to go with the least amount of problems.
Generally speaking, everyone over age 18 needs to consider the possibility that a serious illness or accident could happen to them, leaving them unable to make health care decisions for themselves. This is the primary purpose of a health care power of attorney and health care directive: to make sure that, in such a situation, a trusted person has the legal ability to make health care decisions on your behalf.
Everyone with any type of asset such as a bank account, a 401k, or an automobile should have a durable general power of attorney, which assures that these assets can be accessed for your benefit in case of disability. Everyone with young children should have a willso that they can specify guardians. And, of course, anyone with significant assets will want to make a plan to assure that the right person(s) receives them in the event of their death.
My family member has died. What do I do now? We would be happy to meet with you to discuss what steps you need to take. Unless there is an urgent matter, it is seldom necessary to begin the process immediately. Usually you can take a few weeks to get funeral arrangements made and handle any immediate personal issues. But many matters must be handled within four to six months, and we recommend that you make an appointment as soon as possible, so we can begin guiding you through the process, and making sure that all legal requirements are met. We will advise you on how to handle the different types of assets, what to do about real estate, and how to handle creditors. Most importantly, we will advise you as to whether probate will be required, and, if so, what kind of probate procedure would be best. Finally, we will review what kind of tax issues to expect.
What is probate? Probate is the process of using the courts to manage assets which are in the name of a deceased person. Some assets, such as those where there is a living joint owner (such as a joint bank account), a living beneficiary designated (such as on life insurance policies), or assets in a trust, do not go through the probate process. Usually, probate is held in the district court or the county where the deceased resided at the time of death. Probate courts also handle guardianships and conservatorships for children under 18, or matters for adults who have been found incompetent. Depending on the county, the probate court may also handle adoptions, care and treatment cases and other matters. There are several different types of proceedings in probate and consultation with a lawyer to determine what is the best procedure in your case is advisable. Many people want to avoid the probate process, but there are circumstances where the probate procedure is the most efficient way to handle the estate.
What kinds of probate are there? Every state has their own procedures. In Kansas, you can have a probate with a will, a probate without a will, a refusal of letters, a determination of descent, an informal administration or a simplified estate administration. Most of these procedures need to be started within 6 months of death.
I have a will, that means my estate won’t go to probate, right? No. A will informs the probate court who you have directed to receive your assets after your death and who you have named to be in control of winding up your affairs. If you have assets which remain in your name after your death -- that is, assets that do not have a joint owner, a designated beneficiary or that are not held in trust -- the probate court's assistance is usually needed. Even if there are no assets needing to be probated it is a good idea to file the will “to record” with the courts within 6 months of death.
What is a transfer on death deed? A transfer on death deed, also called a beneficiary deed, is a deed recorded in your county's land records which specifies that, if you still own that particular property at your death, the property is to be transferred to the person(s) named on the deed. Forms are available at an office supply store,but a lawyer should assist in preparing the form, to make sure it is correctly prepared and also to help you consider issues which may arise.
I have my deceased Dad’s power of attorney, why won’t the bank let me write checks on his account?
A power of attorney ends at the death of the person giving the power of attorney with the limited exception of some aspects of health care powers of attorney. A “durable” power of attorney means that the power of attorney does not end if the giver becomes incompetent, but even a durable power of attorney ends at death.
I heard that if I don’t have a Will, the government gets everything. Usually not. If a person dies without a will, the court will follow the laws of intestacy (Latin for “without a last will and testament”) to determine who gets the assets of a deceased person. These laws vary by state and sometimes by whether the asset is real estate or not real estate. In Kansas, for example, a person with a spouse and children would have one-half of the assets pass to the spouse and one-half divided between the children.
Mom’s credit card company keeps calling me. Do I have to pay? In most cases, family members are not responsible for the deceased person’s debts unless a family member co-signed or guaranteed the account, made the charges, or if the debt is secured by an asset in a family member's possession. Spouses can also be responsible for certain types of debts. We will be happy to discuss your responsibilities.
I’m worried about death taxes. “Death taxes” is an invented phrase used to refer to inheritance taxes or estate taxes. Most people do not need to be concerned about either. Kansas has abolished both inheritance and estate tax. The federal government does not impose taxes on estates with less than $11 million. Married couples can combine or separate the amount they leave, within some restrictions. However, if you believe the amount of your assets is near or over $11 million it is important for you to talk to an estate planning attorney for help in managing any potential federal tax exposure. One tax that is often overlooked is the income tax due on funds removed from an IRA, 401k, other retirement plan or annuity. We can explain what to expect and help design strategies to manage these tax issues.
Do I need a trust? It depends. If your beneficiaries may be under 18 at your death, or if they may have minor children at such time, your lawyer will probably create a "testamentary trust" within your will which appoints someone you trust to manage assets of minor beneficiaries, usually until they reach the age of majority in their state. Another common type of trust is the “revocable” or “living trust” (often called a “RLT”), which transfers your assets into a trust with you or you and your spouse as trustees during your lifetime, and contains instructions on managing the assets for your benefit, what to do if you become incompetent, and instructions for distributing your assets after your death. Such a trust means that the assets are owned by the trust and not by you personally, so there are no “assets owned by a dead person” after your death. This means that no probate is required. Before the Federal estate tax minimum was increased to $5 million, trusts were commonly prescribed, especially for married couples, but they are are less common today. There are, however, still many situations where one or more trusts can help you meet your goals. Some of those circumstances:
Should I add my children to my bank accounts? Usually it is better give children access to the bank account with a power of attorney rather than adding them as co-owners because if they should find themselves under financial strain and they are a co-owner on your accounts, there may be a temptation to use your assets. A power of attorney restricts their access to your accounts while you are living. But every situation is different, and this is something you should discuss with your estate planning attorney.
My husband and I own everything jointly. Why do we need an estate plan? Even though you are married, you are not legally entitled to act on each other’s behalf in every situation. At a minimum you should have a health care directive and a durable general power of attorney.
The will says everything is divided equally between the children. Why did the life insurance policy go only to my oldest sister? This is probably because the life insurance policy named only the oldest sister as a beneficiary. Beneficiary designations take priority over provisions of a will.
My deceased spouse left everything to his children. Is there anything I can do? If you did not sign a prenuptial agreement or a waiver you may still be able to claim certain assets (such as 401k plans) or part of the assets, but it is important to act quickly before assets are distributed. You may also be entitled to homestead rights, a homestead allowance or a share of your spouse’s estate. We would be happy to talk to you about your rights and remedies.
Our father died and left everything to his spouse, is there anything we can do? Sometimes no. There is no obligation under Kansas law to leave assets to your children. However, if you feel that fraud was involved or that your father changed an estate plan because of duress, undue influence or diminished capacity, there may be cause to challenge the estate plan. If so, it is important to take action as soon as possible.
The bank says I need some kind of letter from the court before I can have Mom’s CD. What does that mean? The bank is referring to “Letters Testamentary” or “Letters of Administration”. These are the official orders of the probate court designating someone to be in charge of the probate estate of a person who died with a will (Letters Testamentary) or without a will (Letters of Administration). You need to consult with an attorney. Note that a full probate proceeding is not always needed. See the FAQ “what kinds of probate are there?”
The bank says I need a small estates affidavit. What is that? In Kansas, the legislature allows certain property to be transferred by affidavit without going to probate court if the total probate estate is less than $40,000. The Kansas Judicial Council publishes probate forms. You may be able to get a copy of the form from your local law library. Or, you can contact our office to help you with preparing the affidavit. The bank or other entity does not have to accept the affidavit. If that is the case help from the probate court will be required, usually in the form of a “Refusal to Issues Letters” procedure.
What is “living probate”? This phrase is sometimes used to refer the probate court's appointment of a guardian (person in charge of the body) or conservator (person in charge of the assets) for an adult determined to be incompetent. The potential for a living probate can be minimized if there is a durable general power of attorney and a health care power of attorney, or a trust.
I am interested in making a gift to my charity. What is the best way to do this? We have a special interest in charitable giving. We can advise you on what types of assets are best used for lifetime and after death gifts, gifts in trust, or gifts with conditions, and negotiating with a charity about the use of your gift. We can also advise you on using your required minimum distribution from your IRA for a charitable gift.
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