THE CARSON REPORT

News for you and your family

Number 2 March, 2001

THE NEED FOR UP TO DATE ESTATE PLANNING

Do you have a will or other estate plan? Do you know what will happen if you have no estate plan or you have an outdated estate plan? What will happen if you become ill and unable to make decisions about your health care? We have set forth some basic information below, and as we do not do estate planning, we have given you the names and telephone numbers of attorneys that we can recommend for estate planning. We have also given you the name of an attorney who also practices in the areas of mental health and elder law. Your prompt attention to these issues is important.

WILLS

A “will” is a legal document that sets forth who gets your property when you die. In Missouri, for a will to be valid, you must be 18 years old, the will must be in writing and signed in front of two witnesses who know who you are and that the document you are signing is your will. It is best if neither of the witnesses is going to receive anything under the terms of the will. You can give your property to whomever you chose in your will, but certain grounds exist for challenging a will. These are complicated and should be discussed with an estate planning attorney.

A will allows you to name the person that you want to be in charge of carrying out the terms of your will, called the personal representative.

There are forms available for preparing a will in the store and on the internet, but you should be careful about using such forms. If you do something incorrectly, some or all of the wishes that you express in your will may not be effective.

Under very limited circumstances, an oral will may be enforced, but only with regard to personal property with a value of $500 or less. This method of estate planning should not be used. If you think that someone has made an oral will, you should consult with an attorney immediately, as there are time deadlines for enforcing this and all types of wills.

TRUSTS

A “trust” is a document that determines both how your property will be managed during your life and how it will be distributed after your death. A trust is a very complicated document, and you should discuss this with an estate planning attorney and have that person create it for you. You may have seen the term “revocable living trust.” This is a trust that can ordinarily be changed or ended by the person or persons who created it, called the “grantor” or “grantors.” Most revocable living trusts become permanent and not revocable after the death of the grantor or grantors. The terms of each trust are different. A trust should generally be done along with a will. Property that is part of a revocable trust does not have to go through the probate process for title to pass, and this saves some probate fees, as those fees are based on the amount of property passing through probate. A revocable living trust does not save on estate taxes, only probate fees. More sophisticated trusts can be done that will save estate taxes. You should talk to your estate planning attorney about whether such a trust is right for you.

You cannot name a guardian for your children in a revocable living trust. This can only be done in a will.

Although many advertisements unambiguously proclaim that revocable living trusts are best in all situations, you should talk to an estate planning attorney (and not one who so advertises or says). A revocable living trust will generally be more expensive than a will or other form of estate planning, and it will require more attention and upkeep as new assets are acquired. In the event of a divorce, a revocable living trust can complicate matters.

LIVING WILLS

A “living will” is a document that states your wishes with respect to medical treatment, food and water in case you become very ill or are gravely injured. A living will can be accomplished through a document called a “Durable Health Care Power of Attorney,” which should be accompanied by an “advance directive” that states your wishes with respect to the decisions that are made about your health care. An advance directive is important, because it will help your family and friends know that they are doing as you wish and it may help avoid an expensive court battle if your friends and/or family do not agree on what should be done.

Any person who is competent and over the age of 18 can make a living will by signing a document containing specific language that an attorney can provide. There must be two witnesses to the signing of the form and neither of the witnesses can be a person who may inherit from you or someone who might be financially responsible for your medical care. You may designate the measures that you do and do not wish to be taken in the event that you are in a situation where death will occur within a short period of time whether or not treatment is given. A living will only avoids treatment when death is imminent and treatment will not avoid or significantly delay death. You should discuss these issues and your wishes with your family and friends before it is an urgent matter. You should give a copy of the document to your physician and keep a copy with your other estate planning documents. A living will may be revoked at any time, either orally or, preferably, in writing.

DURABLE POWER OF ATTORNEY

A “durable power of attorney” is a document by which you appoint another person to make important decisions for you in the event that you are unable to do so. A durable power of attorney may give another person the power to make health care decisions for you, as discussed above, financial decisions for you, or just one or the other.

All powers of attorney signed by you cease to be effective upon your death. To be effective, a power of attorney must be signed when you are competent. It may be written to expire upon your incapacity or incompetence, to be a durable power of attorney that will continue to be effective if you become incapacitated or incompetent or to be a “springing power of attorney” that becomes effective only upon you becoming incapacitated or incompetent.

A power of attorney can be for a limited, specified period of time (for example, while you are out of the country on vacation) or for a limited purpose (for example, to manage my property at 123 Main Street). If you wish the power of attorney to allow someone else to have access to bank accounts and other assets in the hands of third parties, you or your estate planning attorney should confirm with that third party that the form that you intend to use will be sufficient. Sometimes banks and other financial institutions require a guaranteed or other special signature.

ALTERNATIVES TO WILLS AND TRUSTS

In some situations, it may be acceptable to avoid having a will or a trust by titling property in such a way that it is automatically transferred upon your death. A “beneficiary deed”, properly executed and filed with the Recorder of Deeds in the county where the real property is located, will result in the transfer of title to the property automatically. Bank accounts, motor vehicles and some other assets may be titled “pay on death” or “transfer on death” or “TOD” in order to pass title to the named beneficiary at your death. If these techniques are properly used, the probate process may be avoided. This should be discussed with an estate planning attorney before this option is used.

DEATH WITHOUT AN ESTATE PLAN

If you die without an estate plan (no will, no trust, no beneficiary deed, no pay on death or transfer on death titling of assets), the rules about who will inherit what are complicated. Basically, in the absence of a contract between you and your surviving spouse (a pre-nuptial or a post-nuptial agreement), Missouri law sets forth specific rules about who will receive what proportion of your estate. The rules are different depending on who survives you: a spouse, children, parents or siblings. For more information about these rules, talk to your estate planning attorney. It is preferable for most people to decide how to distribute their property upon death rather than to let those issues be decided mechanically by Missouri law.

It is important to realize that if you die without an estate plan, your spouse does not automatically get everything. Unless you have taken action to make certain that this will happen (if it is what you wish), it may or may not. Before you decide that you do not need estate planning, it is important to think about the uncertainty, stress and additional expense that your decision may cost your family.

CHALLENGES TO A WILL

If a will gives a spouse or child less than he or she would receive if there were no will and there is no valid pre-nuptial, post-nuptial or other agreement between the spouses, the surviving spouse may “elect to take against the will.” There are time frames within which this election must be made. Where children have been excluded, there may be a right for one or more of them to challenge the will, depending on the particular circumstances. Your estate planning attorney can discuss this with you in more detail.

Even if there is a pre-nuptial, post-nuptial or other agreement between spouses, that does not necessarily preclude a challenge to a will. That agreement may be challenged in the probate court.

In addition, a will may be challenged on the grounds that the person who made it was not mentally competent at the time that he or she signed it, was under pressure from someone at the time of signature or was mislead as to what was being signed or what the document provided.

SIMULTANEOUS DEATH

This can be complicated, and should be discussed with your estate planning attorney. If you leave your property to another person and that person dies “simultaneously” with you, that person is treated as if he or she did not survive you. If your estate plan does not specifically address the situation where you and a beneficiary die simultaneously, a beneficiary who does not survive you by 120 hours is deemed to have died first.

THE EFFECT OF DIVORCE ON A PRIOR WILL

If you are divorced and your former spouse is named in your will, that person is automatically disqualified from receiving anything under the will that was written prior to the divorce. It is not clear under Missouri law what happens under a revocable living trust written before a divorce that names a former spouse as a beneficiary.

PROBATE

The “Probate Court” is a division of the Circuit Court. The process of probate involves three things: the listing and valuing all of the property and debts that are part of the decedent’s estate, the payments of taxes and other debts and the distribution of the property according to the will or, if there is no will, according to state law. If there is a will, it is presented to the probate court. If there is no will, the death and the fact that there is no will are presented to the probate court and an estate is opened. Specific rules and specified time periods must be followed in seeking to open an estate in the probate court. Once an estate is opened, a personal representative that is named in the will is generally appointed. If there is no will, a personal representative is appointed by the court. Creditors of the deceased may seek to have the debts owed to them paid, any death taxes are paid and the remaining property of the deceased is distributed according to the will or, if there is no will, according to state law. Regardless of whether there is no will or trust, an estate must be opened in the probate court so the decedent’s probate property can be distributed and his or her debts paid. The fees that are paid to the personal representative are paid from the estate and are set by state law according to the size of the estate.

Not all property passes through probate and your estate planning attorney can discuss this with you in detail.

A surviving spouse and/or surviving minor children are generally entitled to a support allowance in an amount based upon the family’s standard of living prior to death, subject to limitations. This will be paid from the estate prior to the distribution of the property.

There are many time deadlines in probate that must be followed exactly, as there is generally no excuse for missing them (i.e. filing the will, challenging the will, publishing legal notices, filing inventories, filing creditor claims, and many others). A missed deadline may mean that the terms of a will may not be enforced or challenged.

Generally, an estate is opened or a will is filed in the county where the decedent last lived.

NAMING A GUARDIAN FOR CHILDREN

AS PART OF AN ESTATE PLAN

If you die and the children’s other parent is still living, that parent is presumed to be the appropriate “guardian” of the child. The guardianship of a parent over a child may be challenged if it is shown that the parent is unwilling, unfit or unable to provide the necessary care and protection for the child. In the event that both parents are deceased, any guardian may be designated in a will. A Guardian for a child cannot be named in a revocable living trust.

WHEN TO REVIEW YOUR ESTATE PLAN WITH AN ATTORNEY

Any changes in your family such as marriage, divorce, the birth or adoption of a child, a change in your assets (the value or what you have) or relocation to another state are reasons to review your estate plan.

The Carson Law Firm is dedicated to serving your family law needs: divorce, modification, child support, maintenance, adoptions, juvenile matters, appeals and simple traffic matters. For referrals to attorneys in other areas (worker’s compensation, personal injury, criminal, employment discrimination, tax, civil litigation and business representation), please contact us and we will help you. We highly recommend the following attorneys for estate planning:

Mr. Paul Seele

Mr. Seele also practices in the areas of income and estate tax planning, corporate and small business law.

Ms. Virginia Rice

Ms. Rice also provides advice in elder law situations, including nursing home planning, Medicare and Social Security assistance, and nursing home malpractice.

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The Carson Law Firm

Leigh Joy Carson

Tricia L. Feldmann, Law Clerk

Lisa A. Huhman, Legal Assistant

Suite 1003, 222 South Central

Clayton, Missouri 63105

(314) 721-2422

fax: (314) 721-1663

WWW. THECARSONLAWFIRM.COM

The Carson Law Firm: Family Law Attorneys -- Serving St. Louis Families for Over a Decade

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