Estate Planning

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Per Stirpes vs. Per Capita Distribution…

Per Stirpes vs. Per Capita Distribution in a Will

                One of the obvious benefits of having a will is you get to name the beneficiaries of your estate.  When I sit down as an estate planning lawyer St. Peters to meet people, they almost always have an idea of who is going to be their beneficiaries.

However, one thing that they often struggle to decide is how to divide their estate if one or more of their beneficiaries die before they do.

There are two options.  The first is called “per stirpes” distribution and it means that if a beneficiary predeceases, their share goes to their survivors equally.  The other option is called “per capita” distribution and it means that if a named beneficiary predeceases their share is then split only between the other name beneficiaries.

Let’s look at an example:

Sam and Sally have three children, Samuel, Sarah and Samantha.  They each create wills that leave everything to the other spouse and then to the children in equal 1/3 shares, per stirpes. Sam passes away and then Sarah passes away five years later.  Five years after that Sally dies.  Her will controls the distribution of her estate and because she chose per stirpes distribution, Samuel will get 1/3, Samantha will get 1/3 and Sarah’s two children, will each split Sarah’s 1/3 share and each will get 1/6.

With a per capita distribution scheme, under the same example Sarah’s 1/3 would be split between her brother Samuel and sister Samantha.  Sarah’s children would therefore receive nothing and Samuel and Samantha would each split the estate, ½ each.

You can see how the slightest change in one word (“stirpes” or “capita”) can result in a big change.  Therefore, when I counsel clients I discuss these different options thoroughly and ask about their relationship with grandchildren, the health of their children and any potential problems that could develop within the family (which we want to avoid) if one scheme is chosen over the others.

There’s not really a right or wrong way to choose which distribution you want in your will or living trust.  Based on my years of practice, I would say per stirpes is the choice of 90% of clients over per capita.  Most people think that’s the fairest way and are concerned about beneficiaries getting more due to someone else’s death.

On the other hand, per capita can be a better choice if we’re worried about a distribution to grandchildren going to an unpopular daughter or son-in-law.  That can happen when the distribution is made to the grandchild but taken improperly or used unnecessarily by their mother or father.  That’s something to consider if you find yourself with an in-law that you don’t like.

In the end, careful consideration of all circumstances and preferences has to be examined and peace of mind is ultimately the goal with any estate plan.

 

WHAT IS ESTATE PLANNING?

WHAT IS ESTATE PLANNING?

WHAT IS ESTATE PLANNING?

               As an experienced estate planning lawyer St. Charles, I spend much of my time explaining to clients what estate planning is and how it works.  Estate planning is the use of legal documents to not only distribute your assets when you pass away, but to name people to make decisions for you if you become disabled and/or incapacitated.

Overview of Estate Planning Documents

Common estate planning documents include a living trust, last will and testament, medical power of attorney, healthcare directive and financial power of attorney.

A living trust can help you avoid probate and provide rules about when your beneficiaries receive their inheritance.  An example would be creating a provision where your beneficiary only receives their inheritance when they reach a certain age.  That age is up to you and depends on your specific situation.

As one of the top estate planning lawyer St. Charles, you can count on me to also review the purpose of having a last will and testament, which is another document which can distribute property when you pass away.  If you have a living trust, the will usually leaves the property to the trust, not directly to a beneficiary.

Power of attorney documents allow you to name a spouse to make financial and healthcare decisions for you if you become incapacitated.  An example would be naming your adult children to do banking for you if you had dementia.  A medical power of attorney could name the same adult child to work with doctors if the dementia advanced to a point where you were considered mentally incapacitated by a doctor.

Choosing the Right Estate Planning Lawyer

You should feel comfort with the skill level and personality of any lawyer you meet with.  Many attorneys practice in too many areas of law, which reduces their effectiveness in all areas of law that they practice.  Therefore, you should focus on choosing a lawyer that practices almost exclusively in this area.

Making estate planning decisions is intensely personal due to everyone having different family dynamics, levels of wealth and health and concerns about the ability of children to make smart decisions if they inherit your nest egg.  There are many different components to determining how your estate plan is created and it’s important that we discuss all of the aspects that help you identify these components.

An initial meeting to discuss your situation will include who should be in charge of distributing your inheritance, who your beneficiaries are and specifics about their personality and what assets you have.  Our focus is always on identifying client concerns and worries, client goals and educating clients on how the documents we are drafting resolve their concerns and accomplish their goals.  If you’re in need of an estate planning lawyer St. Charles, contact Legacy Law Center today.

 

Missouri Healthcare Power Of Attorney

Missouri Healthcare Power Of Attorney

MISSOURI HEALTHCARE POWER OF ATTORNEY: A must-have estate planning document

This article focuses on the importance of having a Missouri healthcare power of attorney and what it does. A Missouri healthcare power of attorney is a document in which you name a power of attorney, called an “agent”, to make healthcare decisions for you if you become incapacitated and cannot make them yourself.

In Missouri, the document allows you to state whether you want one or two doctors to determine if you are incapacitated. The state standard is two doctors, but you can opt out and decide one.

Once you are incapacitated, your agent can not only meet with your doctors and review your medical records, but decide:

* what type of treatment
* which doctor / which hospital
* whether to put you into skill nursing or other long term care facilities such as assisted living
* whether to put you into hospice, either at home or at a facility
* whether to withhold artificially nutrition and hydration (tube feeding), if you specifically grant that power to your agent

So, in a nutshell, your Missouri healthcare power of attorney literally puts you life into the hands of another person. That should usually be your spouse or an adult child (or children together if you think they can make decisions together). But it’s important to point out that you can choose whoever you want to make these decisions and generally that should be a person nearby who’s judgment you trust and who you are sure will act if necessary.

In the document you can also decide whether you want to donate organs and provide specifics about your wishes as to when you pass away if you want to be buried or cremated and information about the type of funeral services you want. It also contains a HIPAA Waiver which will ensure that your agent can review your medical records as needed and discuss your care with your doctor(s).

You should also have the second part of a Missouri healthcare power of attorney, which is a Missouri healthcare directive (sometimes referred to as a Missouri living will), which at our office is a second part of the healthcare power of attorney document. The point of the healthcare directive is to provide detailed instructions to your agent if you are terminally ill or persistently unconscious (a coma, for example). You want to prevent your agent from having to guess how far to take medical treatment if you are not able to decide and that’s the point of this document. It’s invaluable to provide these instructions to your agent so they don’t have to guess, which puts both of you potentially in a tough spot.

A Missouri healthcare power of attorney document can be drafted by an experienced Missouri estate planning or elder law attorney.

AVOIDING PROBATE: IT’S NOT JUST ABOUT MONEY…

AVOIDING PROBATE: IT’S NOT JUST ABOUT MONEY…

As an estate planning attorney, a central goal that I preach is for my clients to avoid probate. Most of my clients associate probate with something akin to the plague and people like bankers, insurance agents, financial advisors, TV hosts and society at large have done a good job educating clients on the simple premise that they should avoid probate at all costs.

But why? Most people would guess the expense. That is certainly a legitimate reason. In Missouri, a probate administration can lead to costs to the court, big expenses being paid to your personal representative (also known as the executor) and, if you want the easy version of probate in Missouri, independent administration, the services of a knowledgeable and experienced probate attorney.

In a recent probate, an approximately $450,000 estate ended up costing about $1,000 in costs to the court for filing fees, inventory fees and various other expenses and approximately $31,000 in fees split equally between the personal representative and attorney .

That’s a lot of money and completely avoidable with estate planning. But to me the underrated reasons to avoid probate are:

1. Time

In Missouri, an estate cannot be closed for at least six months. Best case, therefore, you are looking at a 180 day process. In most cases, you can add at least a couple of months, if not more.  In some cases, the estate won’t be closed for at least a year, sometimes longer. So, not only have you lost a loved one, but now as a beneficiary or heir of an estate you have to wait a long time to get your inheritance!

2. Complexity

I work on probates every day and while I do a great job for my clients I have to say….I don’t like doing them.  St. Charles County has a terrific probate division but many of my probates are in St. Louis County and they are a nightmare to deal with.  Every county has a different set of procedural details that must constantly be adhered to, which is tough because those details seem to change by the month. Probates are comparable to getting your teeth pulled. The smallest details can delay them for days and even weeks.

3. Family Issues

Imagine with your family who would be more than a little bit anxious / conspiratorial about an inheritance owed to them. If someone makes out a will and then dies, unlike on TV, there is generally not a reading of the will. That is largely a Hollywood created fiction. In larger estates with a variety of distant relation family members or different beneficiaries (like people that don’t know each other), it might make sense to have a will reading. So people think that something is being hidden from them when the personal representative and the attorney for the estate don’t just cut them a check. Probates cause family tensions and in families where there is already tension, it can only aggravate things.

Conclusion

Here’s the silver lining: It is easier than ever to avoid probate with a living trust or even without a living trust under some circumstances. All you need to do first is sit down and meet with an estate planning lawyer to find out how. Heck, our office offers a free initial consultation. By the end of that meeting, you’ll know what you need and how much it costs…and how much avoiding probate will save you.

Oscar Nominated Film Highlights Guardianship Issue…

Oscar Nominated Film Highlights Guardianship Issue…

OSCAR NOMINATED FILM HIGHLIGHTS ISSUES FOR GUARDIANS AND TRUSTEES

            The movie “Manchester By the Sea” recently garnered an Oscar award for Casey Affleck, who won “Best Actor”.  In the movie, he plays a man dealing with the loss of his older brother who soon discovers he is the backup guardian and trustee for his nephew.  The guardianship in the issue mainly plays in the background but it highlights what I consider to be a common issue for people who’ve lost a loved one and are suddenly thrust into the role of taking care of legal affairs for the deceased.

The struggles of Affleck in the movie are familiar ones for people who’ve been in that position.  His character is shocked to be in charge, never actually expecting to serve as guardian and trustee.  He struggles immediately to straddle the line between the unfamiliar role of assertive father to his nephew while also trying to find middle ground between the needs of the nephew and his own life.  In particular, Affleck struggles with the prospect of relocating his life back to a place that he left for good reason, all in service of his brother’s wishes.

He struggles with the emotional details of arranging the funeral of his departed brother, including having to delay the burial because it’s the middle of winter.  He has to delay his own grieving process to assist the nephew with his.

It’s actually these struggles that make the movie so moving and well done.

I rarely find myself impressed with how Hollywood portrays legal issues on screen.  From the imaginary fiction that the death of every person require a dramatic reading of their will at a cramped law office to the ridiculously dingy and dim lighting of New York city courts in “Law and Order”, Hollywood mostly fails to find a middle ground between reality and fantasy in its portrayal of legal matters.

This movie is different in that respect.  It captures the essence of the pain of dealing with death, from the obvious standpoint of emotion but also with the pesky details that have to be covered when it happens.

In my own practice, the reality of how my clients choose people to be in charge of their estate plan often takes quite a bit of time with clients.  Part of that reality is a suggestion from me that my clients actually talk to the people that they name as guardians, powers of attorney, trustees and executors.  Seems like common sense but it’s surprising that often people don’t discuss these matters.

Is that a role the chosen person will actually fill if necessary?  Do they have a life now that would allow for time to be effective if they were suddenly the legal guardians of your children?  Are they being chosen just because they’re a relative and nearby?  Are they too old already to serve if the time to serve was a decade away?  Do your children have a close relationship with the person you chose or is it just you that is close to that person?

I will give away one secret about the movie:  Casey is a better actor than his brother.