Kansas and Missouri Estate Planning

What Lessons can We Learn from a Recent "POD" Case in Kentucky?

Payable on Death accounts are dangerous if not used properly.

There are a number of estate planning tools at your disposal.

Each has its benefits.

They can also be detrimental, if not used correctly.

According to a recent Justia report on a case titled “Coe v. Schick,” the Payable on Death account was facilitated some unfortunate unintended consequences for the estate.

So, what is a Pay on Death account?

Basically, it is an arrangement between a bank and a customer.

Instead of the account going through probate, it can be automatically transferred to the Pay on Death beneficiaries as new owners.

What happened in this case?

The decedent purchased a bank account and a Certificate of Deposit (CD) in the name of his trust.

He named his granddaughter as the Pay on Death beneficiary.

His pour-over will and his trust left his assets to his children Bill and Bonnie.

A bank was named the trustee of the estate after the death of the decedent.

This bank moved this CD and checking account to a new trust account.

Jennie, the granddaughter, disputed this in probate.

Her claim?

The bank account and CD transferred automatically to her independent of the pour-over will or trust.

The court determined the Payable on Death account was not valid.

Why?

A trust cannot die.

The court also found the account to be a joint account.

The result?

Jennie did not have a claim to the CD or bank account.

This oversight cost more than 8 years in litigation and upwards of $75,000 in legal fees.

Working with an experienced estate planning attorney in your estate will help you to avoid mistakes like these.

So, how do you find an "experienced" estate planning attorney?

First, ask around. Friends, family and other professional advisors are trustworthy sources.

Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").

Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.

How?

Two helpful online resources are just a mouse click away to assist with your due diligence:  Avvo.com and Lawyers.com.

Check any Avvo ratings, client ratings/testimonials and attorney endorsements on Avvo.com and any "peer ratings" by judges/other attorneys and any client ratings/testimonials on Lawyers.com.

In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.

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: Justia (June 29, 2018) “Coe v. Schick”

What Misconceptions do Most People have about Estate Planning?

Age and money are the basis of the two greatest estate planning lies.

Great question.

Unfortunately, there are many falsehoods floating around regarding estate planning.

All of them are detrimental.

According to an article in the Pauls Valley Daily Democrat titled “More on estate planning myths,” two misunderstandings are particularly common.

What are they?

Only older people need a will.

Wrong.

Do you have children?

Naming a guardian in your will allows you, not a judge, to select who will rear them in the event both you and your spouse die.

You know better than anyone who would love and care for your children according to your wishes.

Do not make the court decide by default.

I have too few assets for a will.

Also, false.

Even if you do not have much money, you probably have items of sentimental value.

Giving these to specific people can be done and explained in a will.

Do you only need a will to transfer assets?

No.

An estate planning attorney can help you plan the use of Transfer on Death deeds, Payable on Death transfers or other probate-avoiding transfer method as part of your estate planning.

Every situation is different.

The best way to find out what you need?

Work with an experienced estate planning attorney.

This will even reduce the potential for conflict after your passing.

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: Pauls Valley Daily Democrat (March 1, 2017) “More on estate planning myths”

Six "Specialty" Trusts (You May Never Have Considered) / Overland Park, KS

A typical estate plan is designed to achieve a variety of goals unique to the one making the plan. Some of those goals may be rather commonplace, but others may be highly specialized. Fortunately, there is a unique trust available whatever the need.

A recent lighthearted Forbes article titled “Six Trusts For The Person Who Has Everything Else” pulled back the curtain for a look into the world of unique trusts for unique circumstances, whether you are in Overland Park or elsewhere. [Spoiler alert: There are really four trusts, one special bank account, and one misguided attempt to emulate the trust format.]

Here is an overview of how the article described these six trusts:

Totten Trusts: These are specialized bank accounts rather than actual trusts, often known more appropriately described as “payable on death” accounts.  The account allows the depositor to name a beneficiary for the account, and such beneficiary receives the account upon the passing of the depositor entirely outside of probate or, if you are careful, outside the knowledge of your other heirs. The article notes that Totten Trusts are especially well-suited secret heirs, paramours, lopsided giving or other hushed motives, unless the wronged someone has access to bank statements or tax returns.

Purpose Trusts: These trusts are not designed for people but for a “purpose.” In this sense it is actually a class of trusts and amongst the most common purposes is the health, happiness, and continued well-being of a prized and/or pampered pet. Think Leona Helmsley. Then again, the maintenance of a collection is also a strong purpose behind setting up a purpose trust.

Funeral Trusts: Like the name itself, these trusts are solely designed to ensure the payment of funeral expenses because you believe either your heirs should not be so burdened or you do not trust them to be responsible about it. Basically, you want to make your passing a non-issue. You can always pre-pay for a burial plot or other accoutrement, but the trust gives discretion to a trustee while still footing the bill.

Blind Trusts: This is a trust that leaves you, the trust settlor, blind regarding what your own trust owns, how the investments are doing, or any other information that may compromise you. Namely, you would be compromised if you could accidentally get tagged for insider trader (an executive holding stock in their own company) or the fact that healthy investments can be politically disadvantageous (note the use of the Blind Trust by many a politician, not least of which being the former presidential nominee Mitt Romney).

Rabbi Trusts: No, these trusts have nothing to do with Judaism. On the other hand, they do have everything to do with timing of compensation – salary, bonuses, or other compensation from an employer – to stash that money away while limiting the income tax hit in any given year.

And, finally,

Secret Trusts: In the estate planning world, secrets can be manageable if often ill-advised (secrets   breed distrust, and distrust breeds long and painful lawsuits for heirs). In reality, the secret trust is not even a trust at all, even if you do keep it secret. Essentially, this is the attempt to emulate a trust by getting an executor to agree, outside of the will, to disperse estate funds in any particular way. That is a tricky spot to be for an executor, a nasty secret for an excluded heir to discover, and an easy way to see everything go downhill after that.

That is a quick list and explanation of unique trusts, and one non-trust as a lesson in what not to do. Read the original article for more in-depth coverage of the topic. So, have you made appropriate estate planning arrangements with a trust or two designed with our goals in mind?

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) and to download free tools to help you organize your estate, visit my estate planning website.

Reference: Forbes (January 2, 2014) “Six Trusts For The Person Who Has Everything Else”