Kansas and Missouri Estate Planning

What's This I Hear About "Electronic" Wills?

Electronic estate planning does not mean you should do it alone.

In this digital age, some states are now permitting electronic wills.

What are electronic wills?

As the name suggests, these wills allow for you to sign and complete the document online.

This includes remote notarization and witnessing through secure video.

According to a recent News Chief article “Electronic wills are coming, but are they a good idea?,” electronic estate planning is not as simple as it means.

Be sure you know the specifics of the laws in your state.

For example, Florida requires notaries to pass training in order to have the authority to execute electronic wills.

The state must also approve custodians for safeguarding the electronic will until you die and the will is submitted to probate.

You cannot assume all states will honors these documents.

Why?

Only four states have implemented laws about storing and executing electronic wills.

And no, neither Kansas nor Missouri is one of the four.

What happens if you make an electronic will and a given state does not recognize it when presented for probate?

Your assets will be distributed according to the intestacy laws of the state.

What does this mean?

Traditional last wills created by an experienced estate planning attorney and signed in hard copy before witnesses and a notary in his or her office are enjoy a presumption of authority.

Traditional estate planning also protects you and your loved ones from criminals who may seek to steal your assets.

Although electronic wills may be an option in your state, they may not be the wisest choice.

Reference: News Chief (August 23, 2019) “Electronic wills are coming, but are they a good idea?”

Can My Family Inherit My Frequent Flyer Miles?

Not all assets can pass at death.

Whether for business or pleasure, you are a seasoned traveler.

You have racked up miles and miles of airline points.

You have and will use many of these.

What happens if you do not use all of those miles before you die?

What becomes of them?

According to a recent The Wall Street Journal article “A Thorny Inheritance Issue: Frequent-Flier Miles,” your frequent fliers miles will likely die with you.

Such is the policy of British Airways, Korean, Singapore, and Qantas.

Delta has a small exception for those who receive prior written permission from a vice president or above before they die.

Many airlines make their flier rewards non-transferable.

United and American are two that have this policy.

United and American may be making exceptions with fees in the case of death and specific documentation; however, it is not guaranteed the transfer will take place.

Southwest gives others 24 months to use miles after the owner dies, if those others have the correct login information.

For Emirates and All Nippon, you must request transfer within six months of the death of the owner.

Transfer fees may greatly diminish the reward for many who succeed to the transfers.

Two airlines have a preemptive workaround.

Jet Blue and British Airways allow families to link accounts to “pool” their miles and points.

This, too, must be done before the death of the owner.

The strain of working with airlines while still grieving a loved one should be avoided.

Although you cannot change airline policy and airlines do have the right to make their own policies, there are some steps you may be able to take.

What are they?

Give explicit instructions regarding transfer regarding airline miles in your last will.

This could prove helpful for those who review requests case-by-case.

Provide account information for the airlines.

This would include access to the password, credit care, and email associated with the account.

Accordingly, make sure someone has your account information, passwords, and access to the credit card and email that is associated with the account.

Do not pay to transfer miles.

What if the airline makes you pay?

Be sure it does not wipe out the account miles.

Finally, if the airline allows family sharing, sign up now.

Acting proactively can help your family navigate these situations and receive the benefit of your rewards if at all possible.

After all, you earned them.

Reference: The Wall Street Journal (June 19, 2019) “A Thorny Inheritance Issue: Frequent-Flier Miles.”

When Should I Update My Will?

Changes in life require changes to estate plans.

You have an estate plan.

Your affairs are in order according to your wishes.

You can now sit back satisfied until you die.

Think again.

According to a recent Thrive Global article titled “7 Reasons Why You Need to Review your Will Right Now,” your estate plan is not a fix-it-and-forget-it part of life.

How so?

Life brings many changes.

Some of these changes demand an updated estate plan.

What are they?

The addition of people to your life.

New people enter our lives all the time.

Loved ones get married.

Children and grandchildren are born.

As the love in your life grows to cover new people, be sure your estate plan covers them as well.

The death of people in your life.

The death of a spouse or other beneficiary or agent named in your estate plan requires updates.

You cannot leave assets to someone already deceased.

Similarly, someone who has passed away will not be able to make decisions for you if you are incapacitated.

Visit your estate planning attorney to fix this without delay.

Divorce in the family.

If you and your spouse get divorced, you will likely want to keep your ex from getting your assets.

[Big assumption on my part, I know.]

Similarly, if your child divorces his or her spouse, you will want to protect your assets from nasty divorce proceedings if at all possible.

[Another big assumption on my part.]

Children reaching adulthood.

The rules regarding how children and adults inherit is quite different.

The legal dependency of a child and the actual financial maturity of a young adult should be carefully considered and updates should be made accordingly.

After all, some folks have children who become economic adults and others have children who just keep having more birthdays.

Financial situation changes.

You could get a raise and suddenly have more money.

This could require a different structure for tax purposes.

If you suddenly lose money, you may need to reconsider how to protect your family in the case of sudden loss.

Be sure to review your life and disability insurance, too.

You change your mind.

Sometimes your ideas and goals change.

When this happens, you will want to make your legal documents reflect your new wishes.

Whether the reasons be personal like those listed above or external like revised tax and estate law, you will want to review your estate plan regularly with an experienced estate planning attorney.

Reference: Thrive Global (June 17, 2019) “7 Reasons Why You Need to Review your Will Right Now”

Is Congress on the Warpath Against "Stretch IRAs"?

New legislation may make inheriting an IRA less lucrative.

Unless you have been living under a rock, chances are you have heard of an IRA or individual retirement account.

This is a fundamental financial tool when it comes to saving for retirement.

IRAs have been useful in leaving an inheritance to family members, as well.

With strategic planning, you could make this inheritance last for years long after you are gone.

This may be changing.

According to a recent CNBC article “Congress may gut the 'stretch IRA' that wealthy people love,” the House Ways and Means Committee of Congress passed the Secure Act.

It sounds good, but what does the Secure Act actually accomplish?

On the upside, it requires employers who provide 401k plans to include long-term part-time employees.

Through the plan, small companies would receive a $500 tax credit for starting retirement plans with automatic enrollment.

Now for the downside.

The Secure Act also includes a rule requiring non-spouse beneficiaries to drain all money from the account within 10 years of the death of the original owner.

This provision makes inheriting an IRA less desirable for younger heirs.

Why?

It makes Stretch IRAs impractical.

With a Stretch IRA under current law, a designated beneficiary may take required minimum distributions (RMDs) from the account based on his or her own life expectancy.

With the new rule law, the inherited IRA will need to be drained much more quickly.

This can create a significant tax liability for your designated beneficiaries.

There are a few exceptions to the new rule for beneficiaries who are disabled, those fewer than ten years younger than the decedent, and minor children.

If this new law upsets your current strategy, do not fear.

Fortunately, there are other options when it comes to estate planning with an IRA.

One such option is through use of a charitable remainder trust.

Do not navigate legislative changes alone.

Work with an experienced estate planning attorney to help create a plan to meet your needs while satisfying the laws of the land.

Reference: CNBC (April 11, 2019) “Congress may gut the 'stretch IRA' that wealthy people love”

Should I Schedule a "Full Physical Exam" of My Estate Plan?

Reviewing your estate plan is vital to its health, just like a full physical exam is to your own health.

Many of the "responsible" things we do in life are enjoyable.

For example, very few people love going to the dentist.

Even fewer look forward to medical tests or annual physicals.

If you do, you are in the minority.

According to a recent The Kansas City Star article titled “Talk to estate attorney about impacts of Tax Cuts and Jobs Act,” regular checkups are important when it comes to your estate planning as well.

Why?

One of the primary reasons is changing tax laws.

And with the Tax Cuts and Jobs Act of 2017, it is time for a review.

The federal estate tax exemption doubled, limiting the potential for a taxable estate.

If you had a trust with a formula tied to the former federal tax exemption, it could severely impact your estate plan by triggering some unpleasant unintended consequences.

How so?

If you have an estate plan created in 2001 when the exemption was a paltry $675,000, it could have arranged for your children to receive the tax exempt amount and your spouse to receive anything beyond the exemption amount.

If you were to die today, you could unintentionally disinherit your spouse.

Why?

The federal estate tax exemption amount is $11.4 million ... per spouse.

Yikes!

Another issue is portability.

Portability was introduced in 2011.

Without portability, bypass (also known as "credit shelter") trusts were helpful tools.

It allowed income to be paid to a spouse upon your death and then have the principal pass your children after the death of your spouse

The reason?

Folks wanted to maximize the full tax exemption available for the estate of the first spouse.

Now, the "unused exemption" from the estate of the first spouse to die can be added to the estate of the surviving spouse though portability.

Although cost-basis was not addressed in the most recent tax law updates, it is important to consider it in your planning.

A bypass trust could keep your children from benefiting from a second “step-up” in basis.

Why?

Because the "basis"of assets is fixed in such a trust based on their value on the date of death of the first spouse to die.

Consequently, any appreciation in value of those very assets during the lifetime of the surviving spouse will not enjoy as new basis as of the death of that spouse.

This could have significant income tax consequences on your heirs.

If it has been a few years since you have reviewed your estate plan, schedule an appointment with your estate planning attorney.

He or she will be able to get your estate plan back into good health.

Reference: The Kansas City Star (February 7, 2019) “Talk to estate attorney about impacts of Tax Cuts and Jobs Act”

What Should I Know About Online Wills?

All wills are not created equal.

Most people do not think estate planning is important.

Seems like a bold statement, yes?

Unfortunately, it is backed up by numbers.

A recent Caring.com survey showed 50 percent of Americans did not have at least a last will and testament.

Can you just prepare a free online and call it good?

According to a recent U.S. News & World Report article approriately titled “Should You Make a Free Will Online?,” estate planning is often more complex than a free online resource leads you to believe.

Yes, you have several options.

You can do your own estate plan.

You can use a do-it-yourself program.

You can also work with an experienced estate planning attorney.

Not all are DIY estate plans are as simple as they seem.

There are pitfalls to drafting your own will.

The truth is probate, tax, and property laws all need to be addressed.

You need to understand how each of these applies to your unique circumstances both in your own state and at the federal level.

Successful do-it-yourself wills demand that you have a very basic estate with very little to pass on when you die.

Think young single male with no wife, no children, a truck, a dog, and his first real job.

An online service is essentially the same, but with software to help walk you through the process.

Not all software companies are state-specific when it comes to the applicable laws for your state.

This fact alone can make DIY estate planning incredibly dangerous.

While you think you have addressed everything in your estate plan, it could be ineffective when needed.

Working with an experienced estate planning attorney is your best option.

In fact, if you have complex investments, property in multiple states, or a blended family, you should not even consider taking on your estate plan by yourself.

Why?

Although paying an experienced estate planning attorney may seem wasteful when compared to free software, you will be saving money in the long term.

He or she brings understanding of relevant state and federal laws to your specific situation.

This alone helps ensure that your plan will meet your needs and the legal requirements to protect everyone you love and everything you have.

After all, that is what estate planning peace of mind is all about.

Reference: U.S. News & World Report (January 9, 2019) “Should You Make a Free Will Online?”

What Happens to My Estate Distribution for a Predeceased Heir?

Burying your child can be a sad reality.

You are the parent.

You brought new life into the world.

You rear your children.

You love them, nurture them, and teach them.

What if you have to bury them?

According to a recent article in The Carroll County Times titled “Legal Matters: If predeceased by an heir in a valid will, what happens with that inheritance?,” this is an unpleasant reality for many.

The death of a child is devastating.

It is not how things are “supposed” to happen.

As my maternal grandfather told me, "the old must die, but the young may die."

The pain will never fully leave.

You may be grieving the rest of your life.

Unfortunately, even after the death of a child, your life will go on.

As it does, you will need to face your new normal.

This includes mundane and even unpleasant tasks like updating your estate plan.

The death of one of your heirs requires such action to be taken.

What happens if you neglect this?

The state will decided, based on its own laws of intestate succession, the fate of the share designated for your deceased child.

In addition, life insurance companies and retirement plan administrators typically have provided for this by contract in lieu of beneficiary designations made by you.

The inheritance may be transferred to the descendants, the surviving siblings, or the estate of a predeceased child.

Not updating your will, trust, or beneficiary designations not change reality.

Honor the legacy of your child by taking care of yourself and those you love.

Reference: The Carroll County Times (December 21, 2018) “Legal Matters: If predeceased by an heir in a valid will, what happens with that inheritance?”

What States are Changing Their "State" Estate Tax Exemptions?

Some states will not be raising their estate tax exemption to the federal level.

President Trump raised the estate tax exemption threshold to $11.18 million per person.

This is a significant increase.

Does this mean you will no longer have to worry about paying estate taxes?

Not necessarily.

Some states have their own estate taxes with lower thresholds.

According to a recent Forbes article titled “States Rebel, Won't Conform To Trump Estate Tax Cuts,” this will be the case even for some states that previously tied their state exemption to the federal exemption.

Why?

They cannot afford such a large increase.

What are some of these states?

The District of Columbia.

The previous exemption for DC was only $2 million.

It did increase, but not to the federal level.

It has been changed to $5.6 million.

Hawaii.

Hawaii did not raise or lower the estate tax.

Instead, it will remain $5,490,000 for 2018.

Maryland.

For 2019 and beyond the exemption will be $5 million.

It also added portability.

What does this mean?

The surviving spouse can take advantage of "unused exemption" from his or her late spouse.

Maine.

The estate tax threshold is $5.6 million for 2018.

Inflation adjustments will start in 2019.

Connecticut.

The plan in 2017 was to phase the estate and gift tax exemptions to match the federal level before 2020.

This has been extended to 2023.

No matter where you live, you should work with an experienced estate planning attorney.

Why?

Estate planning involves more than merely minimizing taxes, but tax planning may require more focus depending on your state of residence.

Reference: Forbes (August 31, 2018) “States Rebel, Won't Conform To Trump Estate Tax Cuts”

Does Your Pastor have an Estate Plan?

More than half of Southern Baptist pastors do not have an estate plan.

Christians tend to look up to pastors.

People go to pastors for wisdom and advice.

Pastors are supposed to practice what they preach.

In the end, however, pastors are just as human as the rest of us when it comes to estate planning.

This news comes to us through a recent Baptist Press article titled “Young or old, many pastors lack a will, survey finds.”

Although 74 percent of pastors believe estate planning is important financial stewardship, fewer than 50 percent actually have an estate plan.

Of pastors ages 18 to 44 only 31 percent have a will and only 14 percent have health care directives or a power of attorney.

Of pastors ages 55 and older, only 54 percent have a will and only 25 percent have a heath care durable power of attorney.

Yikes!

Many of the survey respondents do not know the laws of estate planning in their states and how it will impact their families.

Although more than half understand that courts appoint guardians for minor children when there is no will, 48 percent think their families are left to distribute their estates as they see fit.

The truth?

The courts decide what happens in both instances.

This can be expensive, time-consuming, and difficult for the family left behind.

Regardless whether you are in the pulpit or in the pews, do not delay.

Work with an experienced estate planning attorney to make proper plans today.

Reference: Baptist Press (August 31, 2018) “Young or old, many pastors lack a will, survey finds”

Is it Safe to Store My Will Online?

Storing your estate plan online requires great care.

It seems as if everything is online these days.

What about your estate plan?

According to a recent CNBC article titled “Here's what you need to know before storing your will online,” several companies are offering services for storing assets online.

Accessibility is one of the greatest benefits of storing assets online.

As the account owner, you can do this anywhere there is internet connection.

However, storing your estate plan online should not be done without careful forethought.

What should you consider?

You should be organized.

It can be a helpful tool for including your online accounts in your estate plan.

Failing to include these may mean they are doomed to be destroyed.

You should also provide specific permissions for accessing digital assets.

Why?

Although the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) allows fiduciaries to access certain digital assets in 45 states and the District of Columbia, it does not include full access to your assets like your emails, social media accounts, and texts.

If you want these to be accessed and controlled by others, you will need to specifically relay this information in your will or as specified by governing statutes.

When you have created your estate plan, you should discuss your wishes with your executors.

Your executor should have the logins and passwords for your accounts.

If your account has security questions, you should also provide the appropriate answers.

Before you decide on a specific online storage provider, be sure you understand their security protocols.

Because estate planning contains sensitive information, the service should provide encryption and comply with all compliance protocols.

In addition to storing your estate plan and digital assets online, you should also have a physical document kept in a safe location.

The physical signed documents may be required by institutions for your health care directive or your power of attorney.

Similarly, many states require the physical, original copies of your other legal documents.

You should store these in a secure location with your other important documents, like your marriage license and your birth certificates.

Is a safe deposit box a good option?

Not typically.

Why?

It will be difficult for your agents to access these without the documents granting them specific authority.

They will not have the documents required to access the documents because they would be locked in the box.

Yikes!

Can you store your estate plan and digital assets online?

Certainly.

Nevertheless, you should be sure your estate plan is secure and comprehensive wherever stored.

Storing your plan online does not mean you can ignore or dispose of your signed, physical originals.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: CNBC (July 25, 2018) “Here's what you need to know before storing your will online”