Will – What is it and Why Do You Need One?
A will is a legal document that takes effect on your death. A will provides who will get your property (real estate and other personal property), who will take care of your children or other dependents, and also provides how these things will occur after you die. A will has to be probated by a court of law in the jurisdiction where you had residence. If you do not have a will on your death (or a Trust) then your assets will pass pursuant to the estate inheritance laws of your state, such as Kansas (known as intestate succession).
The person that drafts a will is known as the testator (testatrix for a female). The person who manages the estate upon the testator’s death is known as the executor (executrix). The executor will then work with the probate court (and your local attorney, if you choose to use one), to take an inventory of your assets and then dispose of those assets pursuant to the will’s provisions. The executor deals with any estate taxes and helps pass any real estate pursuant to the will.
In your estate planning through your will, you set forth who gets your stuff, called your beneficiary. You can even set up so that your real estate and other property not just passes to a single person, but can pass to others if the original people cannot take the property, called the contingent beneficiary.
One of the key things for many people is having their children taken care of. Thus, a will allows you to name the person(s) that you want to take care of your dependents (i.e., their guardian). You can name one or more persons to take care of your children; you can even name multiple people to take care of them if the first person declines or is unable (a successor guardian, kind of like a contingent beneficiary).
You can even create a trust for your assets within the terms of the will. In Kansas, this type of trust is known as a testamentary trust. Within this trust, you can place assets for minor children so that they get them at predetermined times instead of all at once when they turn eighteen (this is especially useful for minors that have disabilities). For example, many parents leave assets to children so that they get 25% at age 25, 25% at age 30 and the remainder at age 35. Also, these trusts can be created to provide for the health and welfare of the children prior to age 25, including distributions for college costs.
Just an FYI: you can leave an unlimited amount to your spouse or partner (in most states, such as Kansas) without incurring any estate taxes.
Power of Attorney – Financial
A financial power of attorney is a document that allows another person to act in your behalf (that is, serve as your legal representative) for any business, legal or other financial matter (everything except for medical reasons – see Power of Attorney for Healthcare below). This document is extremely powerful because any action that someone else does on your behalf pursuant to the Power of Attorney is the same as if you did it yourself.
When you create this document, you are known as the principal, donor or grantor. The person that you authorize to act on your behalf is the agent.
A Power of Attorney could be considered a durable Power of Attorney. What that means is that the Power of Attorney continues even though you lose capacity (such as through a health problem, like a coma). For Powers of Attorney that are not durable, they lose their effectiveness once you lose capacity (because the person is essentially stepping into your shoes – if you cannot make the decision yourself, then how could they). Thus, most Powers of Attorney that we draft are durable Powers.
The Power of Attorney can be become effective when it is initially drafted. The other way to create this power is through a “springing” power of attorney. Usually, a “springing” power only becomes effective upon a specified action occurring, such as the incapacity of the principal. The normal way that this is done is by having a doctor (or two doctors) certify that the principal is not able to make decisions on their own (that is, that they don’t current have capacity).
When thinking about your estate plan needs, we recommend that you take time to determine who you want to act on your behalf as your agent through a Power of Attorney. Remember, once it is effective, that person could clear out your bank account and you would have no recourse against them.
Health Care Proxy/Medical Power of Attorney
In Leawood, a durable Power of Attorney should also be drafted for medical decisions (this is sometimes called a healthcare proxy or healthcare power of attorney). These documents allow someone to act on your behalf regarding your healthcare decisions. Some of the things that are included in these decisions are general medical decisions, such as determining which drugs you should take or whether to stop any life support that you are on.
Like a Financial Power of Attorney, a Medical Power of Attorney could either be granted immediately or be a springing power of attorney. Finally, a healthcare proxy is generally drafted in conjunction with any advance directives or living will that you create.
Living Will (Advanced Directives; DNRs) – Leawood, KS
A living will provides what you want to have done in certain healthcare situations. If you are unable to make decisions yourself, due to an illness, then this document tells your healthcare provider what you want to have done. Most living wills provide for food and nourishment to be withheld if you have a terminal illness and are unable to respond. A living will is usually drafted in conjunction with a healthcare proxy so that you can coordinate how you want your care handled.
A DNR is a “Do Not Resuscitate” order. This document should not be entered into lightly and we don’t recommend these for people that are relatively young, except is very specific circumstances (like a progressive terminal illness). What you don’t want to do is create a DNR and then have a health scare, like a heart attack, and not be able to recover from that health scare (most people live years after a heart attack). Thus, a DNR should only be used when you know that it fits your specific health needs.
Revocable Trust – also called a Living Trust
A Trust, in its most simple of terms, is where one person (known as the Trustee) holds the property of another. The person that creates the trust is the Grantor (also sometimes called the Trustor). The Grantor creates the Trust and then transfers property into the Trust so that the Trustee can hold legal ownership to that property.
In estate planning in Leawood, KS, the most common type of trust is a Revocable Trust. These are also commonly called Living Trusts (there is also a subset called a Loving Trust; man, this can get confusing). A Revocable Trust is commonly used as a replacement for a will. This is because a Living Trust does not have to go through the probate process upon your death. By avoiding probate, a Living Trust does not have to incur the substantial costs that go along with probate and also the assets within the trust (whether real estate or other personal property) are not publicly disclosed like those that go through the probate process. A good estate planner will utilize a Revocable Trust for clients that have either substantial estate plan needs like potential estate taxes, real estate holdings, a small business ownership, or other family needs.
A Living Trust is known as revocable because it can be changed at any time by the Grantor. Thus, these types of trusts are created and modified, sometimes many times, prior to death. At death, the terms of the trust become irrevocable – that is, they cannot be changed. Many times, a Living Trust is created for both spouses at the same time. This way, the assets and terms of the trusts can create a single, integrated estate plan to match the needs of the estate as well as providing flexibility for the future. Thus, the surviving spouse’s trust can continue to be modified after the first spouse’s death.
A Revocable Trust can contain the same provisions as those described above in the Will section. The trust can determine the proper person to watch over and take care of your children. It can also determine how to dispose of your assets.
Bypass Trust Example (Bypass Trusts are also called A/B Trusts)
Here’s a good example of a bypass trust. Let’s assume your standard family: Bob and Jane are married with two children. Bob has been very fortunate with his family business and owns over $7 million in assets (but no life insurance, at least not for this family estate planning example). They go to their local estate planning attorney who drafts a Living Trust for them and uses a standard bypass trust provision. Then, unexpectedly, Bob dies in a car accident. Upon his death, his trust will hold the current maximum amount for estate tax avoidance purposes of $5 million (at that time). Thus, Bob’s trust has $5 million, which can be used for Jane’s enjoyment during her lifetime. The family is able to get income each year for their health and welfare. Further, Bob’s trust can be used for their children’s education and other special needs.
Jane still has full access to her own trust of $2 million, which she is able to invest in long-term assets because she is able to live off the income created by Bob’s trust. After many years, Jane gets remarried. Unfortunately, Jane’s new husband convinces Jane to invest in a series of poor small business choices, which uses up all of the assets within her trust. When she dies, there are no assets in her trust. However, Bob’s children still get the remainder of the assets from his bypass trust. This estate plan benefits both Jane and Bob, as Jane has been taken care of for her entire life, but Bob’s children are able to get a nice inheritance from the trust.
Revocable Trusts have a lot of other estate planning advantages as well. Their flexibility is a huge advantage. The estate plan can create trusts for disabled children. You can create a trust for the benefit of a child that keeps their creditors from attaching that money while it is in the trust (called an anti-alienation provision). You can create trusts that benefit charities.
Trusts are also useful tools for estate tax planning; we use them all the times as a key building block to reduce estate taxes.
Some standard Trust Provisions for Leawood Trusts
One of the standard Trust provisions is called the bypass trust. What this means is that the assets of the first spouse to die is placed within the bypass trust and then used for the benefit of the surviving spouse during their life (for their health and welfare, etc.). Upon the surviving spouse’s death, the assets are transferred according to the terms of the bypass trust. Thus, the surviving spouse gets the benefit of the assets, but does not have ownership of the property. For persons with substantial assets, this can be a great benefit in tax planning.
Estate Taxes – Federal and State Tax laws
The Federal and State estate tax laws apply to nearly all of your assets. The assets that are included at your death for federal estate tax purposes are all non-exempt assets, which include any bank accounts, any investment accounts (except annuities), your home and any business assets (plus more). The assets that don’t count are any retirement accounts, like a 401(k) account, Individual Retirement Accounts (IRAs), proceeds from any life insurance policy and most annuities. Amounts given to charitable organizations do not count in determining the tax due on any assets.
In 2015, the estate tax exemption is $5.43 million per individual in Kansas. Thus, a married couple could give away nearly $11 million without paying any taxes on those amounts. In any year, you can give away $14,000 per person. In the example above, Bob and Jane could give away $28,000 per year to each of their two children without using up any of their lifetime estate tax exemption of $5.43 million.
Key Questions Regarding Your Estate Plan
Really, estate planning in Leawood is all about creating an integrated set of solutions that deals with your most important things in your life.
There are some major questions that you need to answer to create a great estate plan.
Who do you want to take care of your children?
Whom do you want to inherit your assets?
If you become incapacitated, whom do you want handling your financial affairs?
If you cannot make healthcare decisions for yourself, whom do you want making medical decisions for you?
Do you want to continue to procrastinate about estate planning?
Do you need legal advice to help you with your estate plan?
We hope that this has been helpful to you in providing the basics of an estate plan and can help you understand your estate planning needs for your family. The documents above are all basic building blocks that help you get what you want – while reducing the difficulties that come with death. Remember, it’s about creating a plan that gets You what You want. It is peace of mind for You.
Probate Estates in Leawood, KS
This page is a description of probate procedures to move property, including real property (i.e., your home) when a person passes away. “Probate” is a court-supervised process of moving legal title from a person who has actually died (the “decedent”) to the person’s heirs. Probate is essential to protect the personal assets in order to pass them to the decedent’s beneficiaries, devisees, and even their creditors. An organized transition of the assets is done after taxes, debts and other procedural processes are conducted.
Is it Really Necessary to Go Through the Probate Process in Kansas?
Yes, probate in Leawood is a necessary part of estate management, unless the decedent did not have any kind of property to be moved at death through probate. A person might take actions with the titles to their property (or life insurance policies) or through certain contracts to stay away from probate while alive, such as the following (view our Alternatives to Wills and Trusts):
- Giving away property;
- Putting residential property in a living trust;
- Setting up joint accounts with right of survivorship;
- Developing pay-on-death or transfer-on-death (TOD or beneficiary actions) designations; and
- Naming beneficiaries of life insurance or retirement accounts (IRAs).
Just how Does the Probate Process Work in Leawood, KS?
The property of the deceased is held and managed by the administrator (i.e., their personal agent) throughout the management of the estate. The personal agent makes distribution of the estate when the court of probate accepts the purchases made and expenses paid and the recommended distribution timetable.
Kansas has several guidelines relating to timelines on exactly how quickly an estate may be closed and circulation made to the successors or recipients. Nonetheless, it typically takes a year or even more to complete the management.
The following are steps in probate administration:
- Employ a legal representative to represent you. Hey, get an attorney already!
- Make an application for Letters Testamentary if there is a will admitted (or secure Letters of Representation without a will).
- Post notification to the creditors of the deceased. The first date that the newspaper has the publication in its starts the time period for creditors to submit their cases to the court and the personal rep.
- Find and appraise the assets of the deceased.
- Conduct the estate and sell any property if funds are required to pay costs.
- Pay debts, taxes, creditor claims, and expenses.
- Prepare a list showing earnings and disbursements.
- Get court approval for distribution and close estate.
Creditors’ Rights and the Inventory of Debts
The probate court functions as an central, organized place where creditors can perfect their claims and look for payment. Additionally, the personal agent can collect repayment of any financial obligations that others had been obligated to repay to the decedent, in addition to seek the recovery of funds owed to the deceased by others.
These claims by creditors and certain allocations to family members (probate laws allow certain persons, such as a spouse, to get property first – such as the home) will be paid by the personal representative before the heirs can get their distributions. If there are not ample assets to pay all claims and allowances, they are paid in proportion by specific concern classifications (for instance, the funeral costs must be paid previously to general claims).
What Taxes are Owed under Kansas Law?
A crucial function of probate is to figure out with certainty any sort of tax responsibility. Our estate planning (trust and will) lawyers can aid you via this procedure. Under Federal and Kansas laws, there are numerous particular issues that can trip you up.
Probate Expenses in Leawood
Probate estates, as a matter of course, includes the repayment of certain expenses. The costs in the typical estate fall under four major categories.
- Bond Premiums: The probate estate could need to pay for a bond for the individual representative to ensure the proper handling of the estate. All distributees of the estate or the decedent in the will may waive the need of a bond if allowed by the court.
- Publication costs: A notice to creditors should be posted announcing that the estate has been opened. A notice is provided to the public of the intent to File a Last Settlement or Statement of Account. This should be published just before the estate can be shut unless it is waived by the heirs.
- Court Costs: Every estate has to pay the court fees.
- Individual Agent’s Compensation and Lawyer’s Charges: our legal representatives will certainly aid you determine the appropriate fees for your estate.
Real Estate Titles in Kansas
The administration of a decedent’s probate estate serves to develop clear title to any kind of property which the deceased might have possessed at death. Real estate passes directly to one’s inheritors if a will is admitted to probate. The individual rep will need to obtain a court order to take possession of, or sell, the real estate unless the will offers the individual rep that authority.
It is not possible to pass the title to real estate unless the property goes through the probate process (or unless other probate-avoidance techniques, such as a Trust, are used). In Kansas, probate usually is opened and carried out and a will certainly could be filed within one year after the decedent’s death.
In a similar way, lenders have been known to open an estate so that they could force the sale of a piece of property within a year of the date of death. Nevertheless, if an estate is probated, the time period where the title to the real estate can be so affected is decreased to about 6 months after the very first publication in a paper of good circulation.
What about the Spouse (assuming no will, of course)?
In Kansas, the partner of a decedent is qualified to certain rights, which include rights in the primary home. The surviving spouse can choose these rights in lieu of what they would receive in a will (or trust, unless they have actually consented to the terms therein).
The spouse has certain rights (known as exemptions) to the house, personal property, one car and other property to help them with the day-to-day living.
What about the Spouse (assuming there is a will)?
If the decedent leaves a will where it gives the partner less than the spousal share, the partner may, within a restricted time, choose to “take versus the will.” The partner could then get the statutory share rather than exactly what was supplied in the will. The court of probate is needed to alert the enduring partner of this right of election quickly after the will is probated.
A surviving spouse can not be simply disinherited unless they have done something specific to release their rights. These rights can be released via a contract (including a specific waiver in a will or a trust), including a divorce decree. Another way is through a prenuptial agreement (not including retirement assets, which must be waived after marriage).
This election for a spousal circulation goes through the claims of lenders and estate expenses, and is in addition to the survivor’s legal allowances and excluded home. Other home gotten by the survivor away from probate from decedent (such as life insurance, joint home and depend on properties) offers to counter against the spousal share.
“Left out” partners, or those which were married after the deceased’s will was performed, may assert an intestate share of the estate. In specific instances, similar provisions are also included for any sort of kids who could have been born after the will was carried out.
Streamlined Probate Alternatives in KS
There is a procedure under Kansas estate regulation that permits a decedent’s estate to be conducted rapidly. Nevertheless, no real property can already existing under this treatment.
Is A Lawyer Necessary in Probate in Leawood?
Yes, you better believe it (what did you think us to say?). A legal representative is needed to stand for the individual agent in both monitored and independent managements in Kansas. A legal representative could assure that all due dates are fulfilled and avoid errors and hold-ups. A legal representative can in some cases aid the process to family members to stop arguments among them over different issues.
Some folks could submit tiny estate sworn statements and letters of rejection for partners, small children, or lenders without lawyers. Yet utilizing a legal representative can avoid pricey errors, specifically if property is entailed.
One last piece of advice. Our highest fees have come from helping people “clean up” estates that they tried to settle without an attorneys help.