Estate Planning, Wills, Trusts and Powers of Attorney

Estate Planning Overview

What is "Estate Planning?"

In its simplest terms, Estate Planning is the highly personal process of anticipating and arranging for the transfer of your assets. The primary goal of estate planning is to ensure the transfer of your property to the beneficiaries of your choice at the smallest possible financial and emotional cost. As discussed below, the ever popular Will (e.g, a Last Will and Testament) is just one way of completing this process. For some people, reducing taxes is an important component of estate planning. For others, the process of estate planning simply involves creating an orderly transition of assets to maintain family harmony. Estate Planning is the process of planning for your potential incapacity and your eventual death.

As a brief overview, the estate planning process involves three steps: (1) determining and evaluating your assets (the value and ownership of each asset), (2) deciding to whom you want those assets to go upon your death or incapacity (your estate planning goals), and (3) determining the most efficient way to transfer those assets to the desired people (through the estate plan we draft for you).

If you use our estate planning services, we will work with you to complete steps 1 and 2 above. Based on your answers to steps 1 and 2, we make recommendations for you regarding the best and most cost-effective way to accomplish step 3.

Many people consider estate planning to be a process only "wealthy" people need to worry about. This is not true. Everyone needs to consider estate planning issues. If you do not consider such issues, then your assets may not go where you want them to go upon your death or your incapacity.

If you have never considered these issues, the laws of your state (Kansas or Missouri) will determine where your assets go upon your death, which may or may not be where you would want your assets to go. [Kansas Rules] [Missouri Rules] If you considered these issues at some time in the past but have not re-evaluated these issues in the last several years, your estate plan may be out-of-date. We recommend that you annually review your existing estate plan to ensure it continues to meet all of your goals and objectives. We also recommend that you meet with an attorney to review your existing estate plan every 3 to 5 years to ensure it does not need to be updated to accomodate changes in the law.

The main document in most estate plans is a will or a trust. The will or the trust typically contains the instructions for the transfer of your property upon your death. A good estate plan will also include important supporting documents such as a General Durable Power of Attorney, a Durable Power of Attorney for Health Care Decisions, and an Advance Health Care Directive (a Living Will).

The key to a good estate plan is the coordination of your assets with the written documents. If your assets are not coordinated with your written documents, your estate plan may not work as intended. This is a common mistake we see with estate plans drafted by other attorneys who are not experienced in estate planning or who do not draft wills and trusts on a regular basis. For all of our estate plans, we provide you with a written and personalized "Asset Retitling Plan" for you to implement to ensure your assets are properly retitled in a manner consistent with the estate plan we draft for you.

Our approach to estate planning is simple. We educate you to the extent necessary without overly complicating the process so that you can make sound decisions for yourself and your family. I will explain the important concepts to you and make objective recommendations about your options. Most importantly, we will take the time necessary to make sure you understand the estate plan we develop for you and your family.

For many of our clients, the wills and trusts we draft are relatively simple and straight-forward. We also have the knowledge and experience to create complicated wills and trusts that are sometimes needed to accomplish all of our client's estate planning goals. Obviously, the more complicated the will or trust, the more expensive it will be for us to draft.

"What factors make a will or trust complicated?" This is a good question and it is a question we get from many of our clients. Some of the common issues that make an estate plan complicated are:

• second marriages, where one or both spouses have children from prior marriages or other beneficiaries
• the desire to control the assets after death of the client (e.g. creation of a trust to restrict a child's access to money)
• disinheriting children
• unequal distributions to children

Whether your estate plan is simple or complicated, our personalized service, knowledge and experience can help you accomplish your estate planning goals. Call us today to set up an appointment for your initial consultation.

Four Methods of Transferring Property at Death

In a nutshell, there are really only four (4) ways to transfer property upon your death. A good estate plan will use a combination of these transfer methods to accomplish your goals.

1. Joint Tenancy With Right Of Survivorship (JTWROS)
   At the moment of death, property held in joint tenancy automatically passes (by operation of law) to the surviving joint tenant(s). No probate. This is a great way for assets to be owned between spouses. However, we strongly discourage this method of ownership between persons who are not married (e.g., parents and children). This is especially true for financial assets (e.g. bank accounts, brokerage accounts). The reason we strongly discourage this method of ownership between persons who are not married is that one joint tenant has the legal right to withdraw the entire balance of the account without the permission (or knowledge) of the other joint tenant(s). Because any individual joint tenant has this legal authority, a creditor of any individual joint tenant also has this authority. We have seen some very serious situations where a child (who was a joint tenant on their parent's bank account) was very indebted to a creditor, and because the child had the legal right to withdraw all the money from the parent's bank account so did the creditor (after obtaining a judgment). The parent's entire life savings was taken by the creditor to pay the debt of the child. This particular person told us they just wanted a simple way for the child to write checks on the bank account and then inherit the money upon the parent's death. Fortunately, there is a much better way to accomplish the same goal: the use of a power of attorney and transfer on death designations.
   
   
2. Certain Contracts and Beneficiary Designations
   The proceeds of financial assets are paid according to the terms of your contract with the the financial institution. Life insurance and retirement plans are examples. No probate. "Pay on Death" (POD) and "Transfer on Death" (TOD) designations also fall into this category. The POD and TOD designations can be used on bank accounts, CDs, stocks, mutual funds, bonds, tangible personal property, cars and real estate. Pay on death and transfer on death designations can be used on many different assets.
   
   You may be thinking: "this is great information. I can transfer my entire estate to my children by using pay on death and transfer on death designations." You would be correct, but it is not the best choice because there are SIGNIFICANT DISADVANTAGES to using pay on death and transfer on death designations as your exclusive method of transferring assets at your death. Some of the significant disadvantages include: (1) the risk of your children predeceasing you, therefore disinheriting your grandchildren, and (2) the risk of the financial institution refusing to honor complicated pay on death and transfer on death designations (thereby changing your entire plan). When used properly, pay on death and transfer on death designations are extremely useful in the estate planning process. Used improperly, they can create chaos and vastly unequal distributions to your loved ones.
   
   A good estate plan provides for contingencies and events that you may not have considered (e.g., a child predeceasing you). The best method for dealing with contingencies in an estate plan is through a will or a trust. Because both a will and a trust are detailed documents, they can cost-effectively deal with the numerous contingencies that may occur.
   
   
3. Probate (click here for more Probate info)
   The probate process involves collecting your assets, liquidating liabilities, paying necessary taxes, and distributing the remaining property to your heirs. In a nutshell, your property is retitled and distributed through the probate process. Probate can occur in two ways:
   
   1. Intestacy (Intestate Succession) [Kansas Rules] [Missouri Rules]
      Your property will be distributed according to Kansas or Missouri law (e.g., Kansas law states if you are married and have children, then half of your assets go to your spouse, the other half go to your children in equal shares). Intestate succession occurs if you do not have a valid will or other method of transferring your property in effect at your death.
   
   
   2. Wills (Testate Succession)
      Your property will be distributed according to the terms of your Will. Essentially, a Will is a list of instructions to the Probate Court detailing how you want your property distributed. A Will allows you to nominate guardians for your children, determine where your property will go, plan for tax liability, and appoint trustees and executors, among other things. A Will guarantees your property will go through probate.
   
   
4. Revocable Trusts ("Living" Trusts)
   
   • Your property will be managed and distributed according to the terms of your trust. As trustee, you can manage the trust property. However, a trust only controls the property that is transferred into it.
   
   
   • The property in the trust does not go through probate. Instead, upon the death or incapacity of the trustee, a successor trustee takes over and continues to manage the property according to the terms of the trust. A revocable trust allows you to determine where your property will go, plan for tax liability, and appoint trustees, among other things.
   
   
   • If you choose the revocable trust option, I would strongly advise you to also have a "pourover" will. A pourover will is necessary to transfer to the trust any property inadvertently left out of the trust. A Will is also the best place to nominate guardians for any minor children.

Methods of Dealing with Incapacity and Health Care Issues during your Life (Life Planning)

In addition to transferring assets upon your death, a good estate plan will include documents that will allow the management of your assets during your life in the event you become incapacitated. A good estate plan will also include documents for addressing your health care needs. The following is a summary of the other critical documents we prepare for our clients as part of the estate planning process:

General Durable Power of Attorney (GDPOA)
This written instrument is used to appoint another person (your "agent" or "attorney-in-fact"), or a group of people, to legally act on your behalf if you become disabled or mentally incapacitated (in such a way that you cannot act for yourself). Such acts include the ability to deposit and withdraw from your bank accounts, to sign your checks, to pay your bills, to sign your tax returns, to open and enter safety deposit boxes, and maybe even to sell your property, among other acts. Mostly used for financial matters.

Durable Power of Attorney for Health Care (DPOA-HC)
This is similar to the General Durable Power of Attorney except it is limited specifically to health care decisions. Powers granted to the agent may include the ability to consent, refuse consent, or withdraw medical procedures; to make all necessary arrangements at hospitals and other nursing facilities for your well-being, and many other acts.

Living Will & Health Care Directive (LW & HCD)
The living will and health care directive is a sworn, written statement regarding your specific medical treatment instructions to your health care providers under a very limited set of circumstances. However, it is effective only if you lack the ability to communicate your instructions and are in a terminally ill condition (Living Will) or unlikely to regain an acceptable quality of life (Health Care Directive). This statement is limited to declaring whether or not you want "life-sustaining" procedures withdrawn or continued under specified circumstances. It allows you to express your instructions regarding surgery, dialysis, CPR, antibiotics, mechanical ventilators, tube feedings and anything else you care to add to the statement.

The DPOA-HC and the LW & HCD work together. The LW & HCD contains your explicit instructions under certain limited circumstances. If a situation arises to which your instructions are applicable, then your instructions will be followed. If a situation arises to which you have not declared your instructions (and you are unable to make and communicate your desired medical treatment due to a disability or incapacity), then your agent under your DPOA-HC can make such medical decisions for you.

An Introduction to Wills and Trusts

At almost every initial consultation we get asked "What is the difference between a will and a trust?"

Will

A Will is a written document (in proper legal form) specifying the disposition of your probate assets after your death. You must sign the Will in the presence of two qualified witnesses. A Will must be admitted to the Probate Court in order to be effective.

A will only governs disposition of property passing through probate. Probate property consists of property owned by a decedent at his or her death. It does not include property owned in joint tenancy with another person or property having a beneficiary designation (such as life insurance, Individual Retirement Accounts, retirement plans, "payable on death" designations on financial institutions accounts, and "transfer on death" designations for real estate, vehicles and securities). Joint tenancy property and property having beneficiary designations will pass to the surviving joint tenants and beneficiaries at death outside of the probate process. Thus, such property will not be governed by a will.

If you do not have a will (or a trust), your probate assets will pass to your "heirs at law" by a statutory process known as "intestate succession." For example, if you are married and have children, your spouse is heir to half of your assets, and your children are the heirs to the other half. In addition in the absence of a will, the court will decide who is to serve as administrator of your estate and who is to be guardian and/or conservator should you have any minor children.

Revocable "Living" Trust

A more comprehensive option for managing your assets during your life and disposing of your assets after your death is a Revocable "Living" Trust. A trust is an agreement between you (the grantor) and another individual or entity (the trustee) who holds legal title to the property and manages it for the benefit of one or more individuals or organizations named in the trust (the beneficiaries). During your life, you can serve as trustee of your own trust and be the beneficiary of it as well. This means that you create and manage the trust for your own benefit. The terms of the trust are set out in a written trust agreement. Upon your death or incapacity, the successor trustee that you choose will continue to manage the trust assets (for the benefit of those stated in the trust agreement).

A trust is a separate legal entity from you. Thus, in order to be effective, you must transfer assets to the trust (either during your life or at your death). Assets transferred to the trust are not subject to probate. You can save probate expenses and fees because the trust contains special instructions for distribution of your assets after your death without court proceedings.

As long as you are competent, you do not have to give up control of your property in a revocable living trust. You can retain as much control as you desire. You can change trustees, change the provisions of the trust, direct your trustee on investments and distributions and even terminate the revocable living trust if you are unhappy with the arrangement. Additional advantages to a revocable living trust include privacy and asset protection planning.

What is a Trust?

1. A trust is a separate legal entity whereby one individual (the Settlor/Grantor/Trustor) transfers property to a second individual or institution (the Trustee) to manage for the benefit of a third individual (the Beneficiary). A trust separates legal ownership (which is given to the Trustee) from the beneficial ownership (which is given to the Beneficiary).


2. There are five requirements of a trust:
   
   1. A Settlor/Grantor/Trustor who creates the trust.
   2. A Trustee who manages the trust.
   3. A Beneficiary who receives the income and principal from the trust.
   4. The Trust Terms (the trust document) which contain the instructions to the Trustee.
   5. The Assets/Corpus/Principal consisting of the property held by the trust.
   
   
3. There are two types of Trusts:
   
   1. Testamentary
   1. Created by your Will at your death.
   2. Requires the assets to go through probate.
   
   
   2. Living (Inter vivos)
   1. Created while you are living when you sign the trust document.
   2. Does not require assets to go through probate.
   3. The trust owns the property during your life.
   4. There are two types of Living Trusts:
      
      1. Revocable
         
         1. You can change or terminate the trust prior to your death.
         2. Avoids probate, but not income or estate taxes.
            
      2. Irrevocable
         
         1. You cannot change or terminate the trust (you lose control of the assets placed in this type of trust).
         2. Avoids probate, and sometimes minimizes income and estate taxes.
         3. Irrevocable Trusts are used for advanced estate planning and medicaid planning.

Common Uses of Trusts

1. A trust is an extremely flexible planning tool because a trust can be created for any legal purpose. Further, the terms of the trust are only limited by your imagination, common sense, and the law (it must be legal).
2. Revocable Living Trusts are primarily used to avoid probate and/or efficiently manage assets. You can serve in all three roles, the Grantor, the Trustee, and the Beneficiary, while you are alive and have capacity to manage the assets.
3. Testamentary Trust for Children. This trust is typically provided for in your Will and is created only if one and/or both of the parents die prematurely. The terms of the trust may provide for support and maintenance of your children until they reach age 18, then provide for college education. Further, the trust terms may limit access to the trust until the children are mature or may provide for partial distribution of the trust assets (e.g., 1/3 at age 24, 1/3 at age 27, and the final 1/3 at age 30).

If you have read this far, you are probably thinking "WOW! This is complicated!" Fortunately, it doesn't have to be. With our experience and knowledge we can simplify this process so that you can make the best decisions for you and your family.

If you have not created an estate plan for yourself, the State of Kansas has created one for you. It is called the "Intestate Succession Law" and that law, not you, will determine where your property goes upon your death. This law applies to all property that you own in your individual name at your death (e.g., this law does not apply to property owned jointly with right of survivorship with another person). All 50 states in the U.S. have intestate succession laws (although the particulars vary slightly from state to state).

The Kansas Intestate Succession Law (K.S.A. §59-501 et. seq.) distributes your property as follows:

1. If you have a surviving spouse and any surviving descendants (children, grandchildren, etc.), then one-half of your property goes to your spouse and one-half to your descendants (distributed to those descendants as described below in #3).*
2. If you have a surviving spouse but no surviving descendants, then all of your property goes to your spouse.
3. If you have surviving descendants (children, grandchildren, etc.) but no surviving spouse, then all of your property goes in equal shares to those surviving descendants (e.g., surviving children and descendants of previously deceased children who have surviving descendants, with such descendant taking the share their parent would have taken had he or she survived).
4. If you have a surviving parent or parents but no surviving spouse and no surviving descendants, then all of your property will go to your parents in equal shares.
5. If you have no surviving spouse, no surviving descendants and no surviving parents, one-half of your property will go to the heirs of your mother and one-half of your property will go to the heirs of your father, within six degrees of relationship.
6. If your property cannot be distributed by the foregoing rules, then all of your property will pass to the heirs of your last predeceased spouse. Finally, if there are no heirs of your last predeceased spouse, then all of your property goes to the State of Kansas.

If the Intestate Succession Law does not distribute your property in the same way you would upon your death, you should create an estate plan for yourself. You can create a simple estate plan or a complex estate plan depending on the goals you want to achieve and your circumstances.

The Law Office of Ray Kowalczewski, P.A. can help you achieve your goals through proper and thoughtful estate planning. We will listen to your specific concerns and recommend an estate plan that is right for you and your family. We make complicated concepts understandable. Call Ray today to set up a consultation.

*A surviving spouse and minor children may also have some rights, not detailed here, as provided by Kansas law.

If you have not created an estate plan for yourself, the State of Missouri has created one for you. It is called the "Intestate Succession Law" and that law, not you, will determine where your property goes upon your death. This law applies to all property that you own in your individual name at your death (e.g., this law does not apply to property owned jointly with right of survivorship with another person). All 50 states in the U.S. have intestate succession laws (although the particulars vary slightly from state to state).

The Missouri Intestate Succession Law (RSMo. §474.010) distributes your property as follows:

1. If you have a surviving spouse and any surviving descendants (children, grandchildren, etc.), then one-half of your property goes to your spouse and one-half to your descendants in equal parts. The surviving spouse is also entitled to the first $20,000 of property when all your descendants are also descendants of the surviving spouse (e.g., no step-children involved).*
2. If you have a surviving spouse but no surviving descendants, then all of your property goes to your spouse.
3. If you have surviving descendants (children, grandchildren, etc.) but no surviving spouse, then all of your property goes in equal parts to those surviving descendants.
4. If you have no surviving spouse and no surviving descendants, then your property will go to your father, mother, brothers and sisters, or their descendants, in equal parts.
5. If your spouse, descendants, father, mother, brothers and sisters, and their descendants, do not survive you, then your property will go to your grandfather, grandmother, uncles and aunts, or their descendants, in equal parts. If your grandfather and grandmother, uncles and aunts, or their descendants, do not survive you, then your property will go to your great-grandfathers, great-grandmothers, or their descendants, in equal parts, and so on, within nine degrees of relationship.
6. If your property cannot be distributed by the foregoing rules, then all of your property will pass to the heirs of your predeceased spouse(s). Finally, if there are no heirs of your predeceased spouse(s), then all of your property goes to the State of Missouri.

If the Intestate Succession Law does not distribute your property in the same way you would upon your death, you should create an estate plan for yourself. You can create a simple estate plan or complex estate plan depending on the goals you want to achieve and your circumstances.

Frequently Asked Questions

Can I do this myself?

There is no law that says you must have an attorney draft an estate plan for you. Everyone has the legal right to represent themselves. However, that doesn't necessarily mean it is the best move. If you have the time and ability to become educated on the estate planning process, you certainly can try to draft an effective estate plan for yourself. On the other hand, you can simply hire an attorney who already has the knowledge and experience in estate planning–freeing up your time for more interesting things. Unfortunately, the cost of a mistake can be very high. One unintended probate or assets going to the wrong people can create problems that are very expensive or impossible to fix. In addition, a flawed estate plan can create family disharmony that can never be fixed.

What about the do it yourself books?

As we have stated elsewhere on this website, we believe in planning. With proper planning many (but not all) problems can be avoided. We have seen the mistakes of many do-it-yourselfers end up costing a lot more money than if they would have simply hired an experienced estate planning attorney to draft the plan in the first place.

Why should we hire your law firm to create our estate plan?

We offer personalized service, knowledge and experience. In addition, our approach is one that we believe provides you with very cost effective legal representation. While we do charge an initial consultation fee, we charge this fee so that we can begin to give you honest legal advice from the beginning of our initial meeting. In some cases, your situation might be so simple, you don't even need a will or trust. In such cases, we will provide you with that information in the initial consultation. Sometimes, "free" initial consultations are not really free at all. Instead, they are sales pitches designed to get you to sign up for their estate plans. In contrast, our initial consultation is an education process whereby we provide you with extensive information so that you can make the decisions regarding your unique estate plan that are right for you.

A Word about Fees . . .

Our initial consultation fee is $225 for an one hour consultation. In this consultation, I will provide you with extensive and invaluable legal advice about the estate planning process (expanding on the information contained on this website). I will educate you about the options you have in managing your assets during your life and distributing your assets upon your death. We have found that our clients greatly appreciate this education-based approach to estate planning. The initial consultation usually takes one to two hours.

Due to the custom nature of the estate planning process, it is impossible for me to quote you an exact fee for planning your estate before I meet with you to discuss your individual goals and preferences. Upon the conclusion of our initial consultation, I will give you a fee proposal either verbally or in writing (for complicated estates). For most estate planning engagements, I will be able to quote a flat fee for preparing the documents. Re-titling your assets, if necessary, can be done either by you (with instructions from us) or can be undertaken by my Law Office on an hourly rate basis.

We can move as quickly or as slowly as you want through this process. My typical estate planning engagement takes thirty to sixty days to complete, depending on the client and the estate plan you determine is best for you. An estate plan based on a Will involves two meetings (the initial meeting and a meeting to sign the documents) and several phone calls in-between. An estate plan based on a Trust usually involves three meetings (the initial meeting, a question and answer meeting, and meeting to sign the documents) and numerous phone calls in-between. The question and answer meeting is also helpful for you to give me feedback on the first drafts of your documents.

I will begin drafting your documents upon receiving one-half of my quoted fee and sufficient information to draft meaningful documents. The remaining one-half of the fee will be due when you sign the documents. If you decide to have my Law Office prepare your estate planning documents, the initial consultation fee will be credited toward the flat fee for preparing your documents and deducted from this second payment. Any hourly rate work will be billed on a monthly basis and payment is due upon receipt. The hourly rate work will be undertaken by my Law Office only after written consent is obtained from you. After the initial consultation, I will ask you to sign a fee agreement to minimize any confusion about the legal fees. The fee agreement simply details the services to be provided and the fees we will charge for those services.

The Law Office of Ray Kowalczewski, P.A. can help you achieve your goals through proper and thoughtful estate planning. To learn how we can help you, schedule a consultation by calling 913-310-WILL (9455). During this appointment, we will listen to your specific concerns and recommend an estate plan that is right for you and your family. Our firm is open 8:30-5:00, Monday through Friday, with Saturday appointments available by request. MasterCard, Visa and Discover accepted. Call Ray today to set up a consultation.

Click here to download The Estate Planning questionnaire.

The Law Office of Ray Kowalczewski, P.A.
8826 Sante Fe Drive, Suite 218
Overland Park, KS 66215
Telephone: 913-310-WILL (9455)
Fax: 913-888-4037
Serving Johnson County area including: Leawood, Lenexa, Merriam, Mission, Olathe, Overland Park, Prairie Village, Shawnee.

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