Do I need a will
Are there other reasons for parents to have wills?
What's a personal representative?
What does a will do?
What happens to our property if my spouse and I are both deceased?
What is a trust?
Why should I have a trust?
How do I get my property into the trust?
What if I acquire new property?
How do I deal with my property once it is transferred into a trust?
What happens with my trust after I die?
What happens with my trust after my spouse dies?
What is a durable power of attorney?
Is a durable power of attorney the same thing as a living will?
What's the difference between a will, a living will and living trust?
What if I move?
Estate Planning for Empty Nester's
Do I need
a will?
Yes, every parent of a minor child should have a will.
A will allows you to designate whom you want to raise
your child if both you and your spouse (or your child's
other parent) are deceased. The probate court will defer
to your wishes in appointing a guardian (or guardians)
for your child. Without a will, the judge will make
this decision for you.
Back
to Top
Are there other
reasons for parents to have wills?
Yes. A will allows you to specify how
your property should be distributed. Without a will,
your property is distributed according to your state's
"intestacy" laws. (If you die without a will,
you are intestate.) These laws may provide a very different
plan from what you have in mind.
Back
to Top
What's a personal representative?
In your will, you name someone to be your personal representative.
Generally, the spouse is the first choice, to be succeeded
by one or two others. The personal representative is
responsible for getting your will admitted to the probate
court so that your wishes are carried out.
Back
to Top
What does a will not do?
A will won't help you avoid probate. Probate is a court
process by which your property is re-titled in the names
of your loved ones. It can be protracted and costly.
A will doesn't help you avoid estate taxes. Estate
taxes are assessed against your "gross estate",
i.e., everything that you own (including proceeds from
life insurance policies you own) minus everything you
that you owe. You are entitled to exempt a substantial
amount of property from estate taxes.
Because a will is a "testamentary" document,
it is effective only upon your death.
Thus, it is of no benefit if you become incapacitated.
You will need other documents like durable powers of
attorney and a trust to deal with incapacity.
Back to Top
What
happens to our property if my spouse and I both are
deceased?
The court that appoints the guardian(s) of your child
will also select a conservator to manage his or her
property. Conservatorship is cumbersome; court permission
is required before many purchases may be made. An annual
accounting statement must be filed with the court.
Your child is a minor only until he or she is 18. Thus,
all of the property managed by the conservator must
be distributed outright to your child at age 18. If
the amount of property you leave, including life insurance
proceeds, is considerable, your child could receive
a huge sum of money at an age when he or she is not
prepared to manage it responsibly.
Back
to Top
What is a trust?
A trust is a legal entity that owns your property. As
"grantor", you establish the trust. You would
also serve as "trustee", which allows you
to control how the trust property is used for the trust
beneficiaries, you and your family.
Back
to Top
Why should
I have a trust?
There are many reasons for parents to have trusts. During
your lifetime, it is a backup plan for your incapacity.
Your successor trustee will be able to use your property
to provide for your health care and support while you
are incapacitated.
A trust allows you to specify how your property will
be used to support your family after your death. Your
can enumerate detailed powers and duties of the successor
trustee.
With a trust, you can specify at what age(s) your child
will receive their inheritance so that he or she is
financially responsible enough to manage a large sum
of money. For example, many parents allow the trustee
to give their child one-third (1/3) of the trust principal
at age 30, another one-third at age 35 and the balance
at age 40. The parents who have the foresight to plan
this way ensure that their children will have money
for a college education, a down payment for a house,
money for a wedding, investments, etc.
Back
to Top
How do I get
my property into the trust?
Once you have the Decree and birth certificate, you
should take them both to the Social Security office
nearest you. A complete listing is available in the
blue pages of the telephone directory.
Back
to Top
What if I acquire
new property?
If you buy a new home, it will need to be transferred
into your trust. New investments will need to be titled
in the name of the trust, as will any other property
you acquire. You should keep the funding letter in a
safe place so that you know how to transfer newly acquired
assets into your trust.
Back
to Top
How do I
deal with my property once it is transferred into a
trust ?
Although your property will be owned by your trust,
you may continue to deal with it as you did when you
were the owner, as long as you follow trust guidelines
for use of trust assets. In general, you may use your
property for the support, education and maintenance
of the standard of living of yourself and your family.
You retain total control over your property. Of course,
you may also change or entirely revoke your trust at
any time.
Back
to Top
What
happens with my trust after I die?
Upon your death, your successor trustee
(usually your spouse) manages your property for the
support and maintenance of your children and spouse.
With certain limitations, your spouse has discretion
to use the property as he or she sees fit.
Back
to Top
What happens with my trust after my
spouse dies?
The trustee you have designated to succeed
your spouse continues to manage your property for the
benefit of your children. As mentioned above, your property
won't be distributed outright to your children until
they reach the ages prescribed in your trust agreement.
Back
to Top
What is a durable power of attorney?
Although it is hard to imagine when you're
young, at some point in your life you may be incapacitated
and unable to make decisions regarding your personal
care and finances. Through a durable power of attorney,
you appoint someone to act on your behalf if you are
incapacitated. Most people have a "springing"
power of attorney; it's not effective until they are
incapacitated.
Back
to Top
Is a durable power of attorney
the same thing as a living will?
No. A living will is now called a "health
care directive". The directive informs your family
and physician of your wishes concerning life support
in the event that your condition is terminal and you
are unable to express them yourself.
Back
to Top
What's the difference between
a will, a living will and a living trust?
A will is a “testamentary” document, i.e.,
it takes effect only upon your death to transfer your
property and to designate guardians for your children.
A living will informs your family and physician(s) what
to do regarding life support if your condition is terminal
and you are unable to make this decision yourself. A
living trust is a trust established during your lifetime
to own your property and provide for its use to support
your family.
Back
to Top
What if I move?
In Kansas and Missouri, there are statutes
that recognize the validity of a will executed in another
state, as long as the will was valid in that state.
Under the Uniform Trust Code your trust agreement is
governed by the law of the state designated by the trust
document. If your agreement is valid in that state,
it should be valid even if you move. (The UTC has been
adopted in many states, including Kansas.) To be safe,
you should have your documents reviewed by an estate
planning attorney in your new state.
Back
to Top
Estate Planning
For Empty Nester's
Take a few minutes to answer five questions about your
estate planning needs. You may be surprised at how easy
and inexpensive estate planning can be.
Do I Want to Avoid Probate?
One issue that arises frequently is avoiding probate.
Probate is a court-supervised process that re-titles
the assets of someone who has died in the names of their
beneficiaries. It can be slow and expensive.
Some people think that titling property jointly in
the names of parent and child (this is called "joint
tenancy") is the best way to avoid probate. This
is usually a bad idea, for several reasons. For example,
because joint tenancy gives a child partial ownership
of the property, the child's interest could be taken
in a lawsuit or bankruptcy.
There are many better ways than joint tenancy to beat
probate. A "transfer on death" deed will transfer
title to a home. Although signed by the parent during
life, it does not take effect until death. The deed
automatically transfers the property to the child at
the parent' s death, avoiding the need for probate.
Because the child has no interest in the property while
the parent is alive, the child's creditors cannot take
the property in a lawsuit or bankruptcy.
The transfer on death technique is not limited to real
estate. Title to a vehicle may contain a transfer on
death designation. Stock certificates also pass by transfer
on death. A "pay on death" designation can
be used on bank accounts and other accounts that do
not already offer a beneficiary designation.
Do I Need a Will?
Unfortunately, the transfer on death and pay on death
techniques don't work with all assets. For example,
household goods, furniture, jewelry, etc. must be transferred
by a Last Will and Testament. Although the property
transferred by Will must be probated, the amount of
property subject to the probate proceeding can be minimized
if most property is titled in the transfer on death
and pay on death form.
Most wills leave all property to the surviving spouse
and, if the spouse is predeceased, to the children in
equal shares. The survivors decide how to divide the
property. However, a specific item with sentimental
value can be left to a particular child by writing out
a list that is attached to the Will. The list can be
changed at any time and simply re-attached to the Will.
Do I Need a Trust?
Trusts are not just for the wealthy. There are many
good reasons to have a Living Trust (sometimes called
a Revocable Trust.) A Trust is a great way to avoid
probate because it automatically transfers property
to beneficiaries at the death of the owner of the Trust.
If your estate is large enough, trusts can also prevent
huge sums of money being wasted as estate taxes. This
technique is valuable to married couples who can double
the amount of property they can pass to their family
without paying estate taxes.
Trusts help you to plan for incapacity. Americans are
living longer than ever and they often need assistance
in later years in managing their affairs. When property
is in a Trust and the Trust owner becomes incapacitated
or disabled, a backup Trustee (for example, an adult
child) manages the property for the benefit of the owner.
A Trust is an excellent way to avoid an expensive and
cumbersome court action called a conservatorship. Upon
the incapacity or disability of the parent, the child
automatically steps in to manage their property. No
court action is necessary.
What’s a Durable Power of Attorney?
A durable power of attorney is a notarized document
by which you appoint someone else to manage your affairs
for you if you were incapacitated or disabled. Everyone
should have one. If you were disabled or incapacitated,
the person(s) you appoint would have very broad powers
to do nearly anything for you. A Durable Power of Attorney
can help your family avoid having to file for guardianship
over you.
A durable power of attorney can operate alone or in
conjunction with a Trust. Some powers authorized by
a durable power of attorney are not listed in a Trust.
For example, a durable power of attorney could authorize
someone to admit you to a hospital or a nursing home.
This type of power would not be contained in a Trust
because trust powers extend only to the assets owned
by the Trust.
Why Should You Have a Health Care Directive?
A health care directive (formerly, a “living will”)
allows you to legally bind your family and physicians
to your decisions about the use of life support when
it is the only thing keeping you alive. Most of us have
strong opinions about this issue, but a health care
directive is the only way to make sure our wishes are
followed.
I offer a free consultation to evaluate your estate
planning needs. I never recommend more than what you
really need and my fees are very reasonable. Please
call me at (913) 671-8008 or contact me at info@kevinwkenney.com. I am licensed in both Kansas and Missouri.
Please contact us for an affordable comprehensive plan
that will give you peace of mind that your family is
well taken care of.
Kevin Kenney 913-671-8008
Back
to Top |
