One of the most frequently asked questions that I receive is “How much will it cost to get my affairs in order?” or “How much does a Trust cost?” What our clients like is that we have clear, up front pricing. During our initial consultation we’ll discuss what it is that you want to accomplish and the simplest way to do so. Typically, our clients know to the penny what the amount will be before we get started.
Why is up front pricing better than hourly billing?
When attorneys bill hourly, they have an incentive to work slow. And because clients know that each phone call or email will be logged and billed for, clients are hesitant to ask questions. With up front pricing, we encourage you to contact us throughout the process- after all, it is your estate plan that we are putting together, we want to work with you to make sure that it does just what you want it to do. Communication is key to making sure that happens.
The Cost of Not Planning
Consider Alex who never got an estate plan because she was concerned about how much it would cost. When Alex died, her children had to take time off of work to travel from St. Louis to Cape Girardeau, hire an attorney in Cape Girardeau, and pay the attorney an out-of-pocket retainer to represent them. At the end of each month, Alex’s children received an invoice for the work that the probate attorney performed the prior month. Needless to say, it quickly became expensive. And the expense went on for month after month. Finally, after 10 months, the children were able to get the probate case closed. Yet, for 10 months, Alex’s children had to waste their time and money in probate court. The point of this example is clear- Alex was penny wise and pound foolish. By not planning while she was alive, it ended up costing her children much more money, not to mention the time, aggravation, and hassle of her children having to deal with court proceedings over 10 months in a county an hour and a half away.
How Do I Get Started on a Will or Trust?
My practice is focused on Estate Planning (Wills & Trusts) and Elder Law (Asset Protection). This is what we deal with day in and day out. The first step is scheduling an initial consultation where we will discuss what it is that you want to accomplish and then the simplest way to make that happen. Call 573-334-5125 and speak with Heather or Theresa to get a consultation scheduled today.
We often get clients who say, “I’d like to set up a Trust.” Yet, what type of trust you want to set up will depend on your situation.
One big advantage of most Trusts is they can help your heirs avoid probate court and, in many instances, can help keep your affairs private. Many trusts are not part of the probate court system and never become a matter of public record.
5 Common Types of Trusts in Missouri are:
Testamentary Trusts. Testamentary Trusts have no power or effect until the Will of the deceased is probated. Although a testamentary trust will not avoid the need for probate and will become a public document as part of your Will, it can be useful in accomplishing many estate planning goals. The most common use we see of these are where individuals want an inexpensive estate plan with provisions for minor children.
Revocable Trusts. Revocable Trusts are often referred to as “Living Trusts” because they are created while you are alive. Revocable Trusts are the most popular type of Trust. With a revocable trust, the person establishing the trust (this person is known as the grantor, trustor, or trustmaker) maintains complete control over the trust and may amend, revoke or terminate the trust at any time. Revocable trusts are generally used for asset management, probate avoidance, and some tax planning.
Protection Trusts. Sometimes called a Medicaid Asset Protection or MAP Trust. Protection Trusts are crafted for a specific purpose, to protect the property inside (often a home, real estate, or farm land) from creditors and/or nursing homes. Because of its ability to protect real estate and other assets, Protection Trusts are becoming more and more popular, especially for individuals who do not have long-term care insurance.
Supplemental Needs Trusts. Supplemental Needs Trusts are often called Special Needs Trust. They enable the donor to provide for the continuing care of a disabled spouse, child, relative or friend while allowing the beneficiary to also receive public benefits.
Pet Trusts. More and more, clients are telling me they want a plan that ensure their pets will be well taken care of following their death. The Uniform Trust Code contains specific provisions allowing trusts to care for your pets after your death.
Recently a client of mine said, “Mark, we know that we should have done a Will or Trust a long time ago but we haven’t because we just don’t know who I want our property to go to. We don’t have any children, we’re not especially close to any of our nieces or nephews, and we keep putting this off because we’re just not sure what to do.”
My response was along the lines of, “You’re not the first client who has had this issue. I’ve seen clients do about everything you can think of – give it to children, give it to relatives, give it to charities, and even give it to a trust to care for their pet animals. You just tell me what you want to happen, and we can almost always find a way to get it done.”
After a week of thinking about it, the client called to say, “we’ve decided to give 20% to our relatives and to divide the rest of it among different charities that we like.” I said, “no problem. You give us the names of the charities and we’ll take care of the rest.”
We’ve helped clients with a variety of charities
Over the years, we’ve helped people design gifts to a number of charities – some local, some not. One website that we have found especially helpful in finding out more about charities is CharityNavigator.com. Their website aids clients in understanding the Financial Health and Transparency/Accountability of different charities.
Here’s a list of some of the charities for which we have helped our clients design gifts.
Jude Children’s Research Hospital
Humane Society of Southeast Missouri
Safe House for Women
Animal Legal Defense Fund
American Red Cross
Doctors Without Borders USA
Save the Children Federation
Environmental Defense Fund
Greenpeace Fund, Inc.
Southeast Missouri University Foundation
A variety of churches and religious organizations (from Baptist to Catholic and Mormon to Unitarian)
There are some important considerations with giving gifts including how to ensure your gift goes to what you want and maximizing the tax benefits of your giving. We’re happy to help – especially when it comes to charitable gifts.
Over-controlling daughter-in-law? Lazy son-in-law? These are just two reasons why parents may want to keep a daughter-in-law or son-in-law out of their estate.
Other common reasons include: (i) the fact that the in-law spends too much money; (ii) the in-law has their own kids; (iii) the in-law will inherit from their own parents and grandparents; (iv) some parents want to keep everything in the “bloodlines” because they inherited from parents and grandparents; others just don’t like their in-laws; and (v) others fear that their children will get divorced in the future and lose their inheritance.
These concerns are real. And parents have several options to address these concerns in an estate planning program. Part of the reason we strongly recommend clients seek out an attorney focused on estate planning and elder law is because they will have the knowledge to help you tailor a plan to your needs and concerns.
One option is simply leave the inheritance to the child – outright. Some parents reason that an inheritance is the separate property of the child so that should take care of it. However, inheritances that children receive are often, either intentionally or unintentionally, commingled to the extent that it loses its separate property status.
A second option parents have is to leave their child’s inheritance to a trust for the benefit of the child. If the parents name the child as the trustee, the child’s spouse could exert influence over the child and force the child to take excessive distributions from the trust. But some parents tell me, “Let’s leave it to a trust for our child and name our child as the trustee. If our child screws it up, so be it. We did what we could do to try to protect him without taking away his access to his inheritance.”
A third option is to leave your child’s inheritance to a trust, but name a 3rd party as the trustee of the trust – in essence restricting your child’s access to his or her inheritance. By restricting your child’s access to the trust, you are restricting your child’s spouse from influencing your child to access the trust. You may even wish to name your child’s children as the principal beneficiaries of the trust so that when your child later passes away, remaining trust assets would stay in the bloodlines benefiting your grandchildren. Your child’s withdrawal or distribution rights become key components to this program.
There are many factors that play into how you leave an inheritance to your children. An expert can help you choose the best option for you and your family.
Missouri Estate Planning Attorney
This afternoon I was able to visit with a client when he came in to pick up his estate planning portfolio. He remarked that “we sure did have to get a lot of things cleaned up. Thank goodness we found out about that. We would have hated to leave that mess for our daughter.” What he meant by that is that in the processing of transferring property to his trust, we discovered several issues with land he owned in Kentucky. Now I am a Missouri attorney and focus on Missouri law so when clients need a real estate deed drawn up to transfer land in a different state to their revocable living trust, we often work with attorneys in the state where the land is located to get the real estate transferred.
In this instance, the land was a vacation house located near Kentucky Lake. While working to transfer the lake house to the client’s trust, several issues with the current deed were discovered. It took a couple hundred dollars and about 3 weeks to get these issues cleared up. Yet, had my clients not taken care of these issues and left it for the daughter to deal with, it would have likely cost her thousands of dollars and taken months! There is an important lesson here – if not addressed by you, issues typically become more expensive and difficult to fix, not easier.
So often my clients tell me that they have procrastinated doing estate planning for years. Perhaps in part because of that procrastination, when they finally choose to get their affairs in order, they almost always report feeling relief! If the time is right for you or a loved one to get your affairs in order, we’re here to help. Each day we help educate individuals what their options are and help them implement solutions that make things easier on their spouse and children.
In just a few weeks, we will elect a new president. Recent polls have Hillary in the lead. Regardless of whether you agree with Bill and Hillary’s politics, we can learn a few things from them about smart estate planning strategies. A recent Time.com article reveals that Bill and Hillary have set up a variety of trusts.
First, the Clintons have a “qualified personal residence trust” for their home in Chappaqua, New York. The purpose of the “qualified personal residence trust” is lock-in a low value for a piece of real estate before it appreciates. In most cases, the result is that while the value of property transferred to the trust is subject to estate tax, any appreciation on the property is not. With the estate tax at 40%, the resulting savings can be huge.
Second, the Clintons set up Irrevocable Life Insurance Trusts (ILIT). It is reported that Bill and Hillary have 5 different life insurance policies, 3 of which are in ILITs. The benefit of the Irrevocable Life Insurance Trusts is that you can minimize or completely avoid tax. By using ILITS, Bill and Hillary will likely allow the death benefits of their large life insurance policies to pass to their daughter, Chelsea, outside of their estate, which means it will not count towards their estate tax exemption ($5.45 million per person in 2016).
If Bill and Hillary Clinton take advantage of the tax laws, so should you! ILITs are a common estate planning tool we use for high net worth individuals including small business owners and farmers. It’s only fair that you have the opportunity to use the same estate planning tools that the Clintons are using.
We are happy to work with your financial advisor. In fact, comprehensive estate planning often requires that we work with your financial advisor, accountant, and insurance professional. One local financial advisor breaks down wealth management into 13 parts. We are actively involved or responsible for 8 of the 13 parts (as shown by the *). The 13 parts are:
Qualified retirement plans / IRA plans
Corporate executive stock options
Business succession planning *
Durable power of attorney *
Gifting to children and descendants *
Charitable gifting during life *
Titling of assets *
Executor/successor trustee issues *
Distribution plan to spouse/beneficiaries at death *
Charitable inclinations at death *
Financial planning and estate planning go hand-in-hand. You need both.
While we do not give investment advice, we often encourage clients to contact a trusted financial advisor. For example, many clients have money invested in CDs at their bank (Certificate of Deposits) earning very little. Many financial advisors can find a safe investment that doesn’t earn a lot, but earns 2 to 3 times what the client’s CD at the bank earns.
That’s part of our difference. As estate planning professionals we handle powers of attorney, wills, and trust issues. Then we work with your existing financial advisor, accountant, or insurance professional to help you are get the most from those relationships as well.
At its heart, a revocable living trust is an agreement. Revocable means that the agreement is able to be revoked or amended during the Grantor’s life. Living means that the agreement is made while the individual is alive, as opposed to a testamentary trust which is made through a deceased individual’s Will.
The trust agreement has at least 3 parties:
The Grantor (aka Settlor, aka Trustor, aka Trust Maker): The Grantor is the person who creates the trust agreement. The Grantor is also typically the person who places assets (money, property, real estate) in the trust. In practice: When a husband and wife come in and ask for a trust, both husband and wife are typically Grantors.
The Trustee: The trustee is the person who actually holds the trust property and manages it. In designing the trust agreement, the Grantor decides who the initial and successor trustees will be. The most important qualification for a trustee is… someone that you trust! In practice: In the trust described above, typically both husband and wife are initial Trustees. Then they would name a child, children, or other trusted individual as successor trustees.
The Beneficiary: The beneficiary is the person, persons, or organizations that will receive the income and principal from the trust. In practice: In the trust described above, typically the surviving spouse is the first beneficiary, with the children named as beneficiaries upon the death of the surviving spouse. Distribution to the children can be tied to the child’s age, educational pursuits, or other criteria.
Creating the trust can be divided into 2 parts:
Part One consists of designing the trust agreement so it meets the Grantor’s goals. Some common goals include: avoiding probate, offering remarriage protection, offering creditor protection (spendthrift protection) to beneficiaries, providing for a child or grandchild’s education, making distributions at certain ages (rather than having a child receive a large lump sum at age 18, it is common to customize distributions to that children receive money periodically as they mature. For example: 1/3 at age 21, 1/3 at age 25, and 1/3 at age 30).
Part Two consists of ensuring that your property is transferred to your trust, a process we call funding the trust. Often you will want to transfer your real estate, vehicles, bank accounts, personal property, etc.. to your trust. Ensuring your trust is fully funded is the best way to ensure your loved ones can avoid the time and expenses of probate court.
The Missouri Bar advises clients that, “You should never sign a revocable living trust document without the advice of a Missouri attorney who practices in this field of law.” When choosing an attorney, ask them how much of their time they spend practicing estate planning. There are only a few of us in the Cape Girardeau area that practice primarily in estate planning.