Overland Park Attorney

Who Pays the Bills If I’m Not Around?

Who pays the bills in your house? If your house is like most, there is probably one person who handles most of the financial matters. Would you or your spouse be prepared to assume the role of managing the household finances if something happened to the other spouse? Too often, clients have gone through the process of ensuring their estate plan is in order, just to realize that, when one passes away, the other does not have the information they need to pick up where the other left off. After the wills, power of attorneys, and medical directives are created and the other crucial estate planning components are addressed, take some time to consider your unique family situation and the details that would make the transition more difficult to navigate following a death.

A recent issue of The Ledger contained a very practical checklist for organizing household finances in “Estate planning details you may be forgetting.”It included these important points:

1. Organize financial documents and personal information. Leaving behind organized records with everything from account information to contact numbers will help your spouse or children when they need access to this information. Make certain your spouse knows where you keep things such as wills, trust documents, insurance information, social security cards, birth certificates, medical records, and tax information. Write the names and contact information of emergency contacts and include your doctors, attorney, and insurance agent.

2. Create a list of assets and liabilities. Assets should include bank accounts, brokerage accounts, safety deposit boxes, and property. Liabilities should include things like credit card debts, mortgages, and car payments. List the location, names on the accounts, account numbers, and any website login information including usernames, passwords, and security questions for each one.

3. Identify all sources of income and expenses. This will help your spouse understand what in-flows to expect, as well the bills to be paid. Note whether you pay a bill by paper or online, and if online, list the usernames, passwords, and security information to access the websites.

4. Document any other miscellaneous information that your spouse might need. While this might not be financial planning, it is still very important. This includes things like where you keep the spare keys to your house, or any keys to the shed or safes. As you go through your daily routine, consider things that are obvious to you, but may not be as obvious to your spouse or children. This should include a list of passwords for online accounts, passwords for computers and other electronic devices, locations of flash drives or CDs with old family pictures—even a basic household maintenance checklist.

Detailed planning will result in the peace of mind for your spouse and family in the event of your death or incapacitation.

Sit down with an experienced estate planning attorney to get some help with planning for these and other life events.

If you want to learn more about Estate Planing in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website.

Reference: The Ledger (September 17, 2015) “Estate planning details you may be forgetting”

 

Andreas Lubitz's Estate Declares Bankruptcy

No one has claimed to be the heir to the estate of the German co-pilot who is alleged to have intentionally crashed a plane into the Alps. Now, the estate has filed for bankruptcy.

If you have watched the news the past few months, then you undoubtedly know the story of Andreas Lubitz. The German co-pilot is alleged to have suffered from severe mental illness. On March 24, while the fellow pilot of a passenger plan was using the restroom, Lubitz is believed to have intentionally crashed the plane into the Alps, killing 150 people.

His estate will undoubtedly be ordered to pay millions of dollars in compensation to the families of the people who died in the crash. These would be considered debts of his estate. Under German law anyone who claimed the assets of the estate would also be liable to pay any debts of the estate. Thus, understandably no one has made a claim for Lubitz's estate. The executor of the estate, under the belief that the assets of the estate will be less than the debts, has as a consequence filed for bankruptcy. The Associated Press reported this story in "Germanwings co-pilot Lubitz's estate is declared bankrupt."

While this case is unusual both for its circumstances and the media attention it has received, it highlights a somewhat common occurrence. It is not all that unusual for an estate to have more debts than assets, especially when the deceased faces civil lawsuits. Unfortunately, what that normally means is that estate creditors do not receive full compensation as it is not the responsibility of anyone else to pay the deceased's debts.

If you want to learn more about Estate Planing in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website.

 Reference: Associated Press (July 10, 2015) "German wings co-pilot Lubitz's estate is declared bankrupt."

 

 

Paying the Debts of an Estate

When someone passes away, his or her debts become a part of the estate and must be paid. This is one of the jobs of the executor or personal representative. If you are administering an estate, you need to know how to pay the estate's creditors.

Most Americans have debts of some kind and most debts do not disappear when the debtor passes away. Instead, the debts are paid out of the assets of the estate before the assets are distributed to the heirs.

NJ.com recently published a helpful article about this subject titled "What you need to know about estate creditors."

While the article is written specifically about New Jersey law, there are some generally applicable notables that are helpful reminders for all estate administrators.

The first thing to understand is that not all debts presented to the estate need to be paid. Only valid debts should be paid.

Debts can be invalid for a variety of reasons, such as the creditor cannot prove that the debt is owed or perhaps the statute of limitations has run on the claim. Another important thing to understand is that creditors should be paid in a specific order depending upon the type of debt.

While the specific order might change from state to state, it is important to note the debts to the government for taxes should always be paid before private debts! Finally, if there is not enough money in the estate to pay all of the debt, administrators need to be very careful and properly pay each creditor the appropriate amount from what is available.

Of course, the best thing for estate administrators to do when it comes to creditors, let alone estate administration, is to hire an experienced estate planning attorney to assist.

If you want to learn more about Estate Planing in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website.

Reference: NJ.com (March 1, 2015) "What you need to know about estate creditors."

 

 

Blowing an Inheritance

Happy New YEAR!!!

 

People often fear that leaving large sums of money to their relatives will result in those relatives blowing the money on things they do not need. A recent case in the United Kingdom demonstrates that this is not an unfounded fear.

 

Euan MacAndrew, a 24-year-old, was left an inheritance by his grandfather that amounted to approximately one-hundred thousand pounds. MacAndrew then proceeded to do what was probably the last thing his grandfather would have wanted him to do with that inheritance.

MacAndrew wasted it all on cars, clothes and drugs.

Eventually, MacAndrew was arrested for selling cocaine. He might have turned to dealing drugs to continue the lifestyle that he began after receiving the inheritance and wasting it all. The full story was recently reported in The Mirrorin an article titled"Lad, 24, blew 100K inheritance on cars, clothes and drugs before being busted for dealing cocaine."

 This is something that unfortunately happens all too often.

 People who do not have a lot of wealth of their own often waste it when they come into it. When they have not earned the wealth for themselves, they do not always understand the true value of it and how difficult wealth can be to maintain.

 The good news is that this is something that can be prevented.

 You do not have to give an inheritance to a relative as a lump sum of cash. You can use trusts or other legal instruments to distribute money over time or on an as needed basis.

 If you think your relatives might waste their inheritances, talk to an experienced estate planning attorney about how you can best prevent that from happening in your family.

For more information about Estate Planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website.

 Reference: The Mirror (December 19, 2014) "Lad, 24, blew 100K inheritance on cars, clothes and drugs before being busted for dealing cocaine"

 

 

 

Protect Your Assets!

If you have assets, then you need protection. Protection from creditors, civil suits, the IRS, even possible future claims of a spouse. Obviously, not all assets can be or are meant to be protected from creditors. Creditors typically make a secured loan on the basis that one or more assets would be collateral for the loan. Asset protection does not imply hiding an asset; even the most secreted assets have ways of being unearthed by creditors as we do live in asset traceable/discoverable society.

So there is no hiding of assets, but there is—if you are wise—comprehensive estate planning that leverages several kinds of tools to protect your assets. Estate planning should entail asset protection, as well as long-term planning strategies that can realize the objectives of both estate planning and asset protection simultaneously. You want to make sure that you have the protections in place while you are alive to safeguard your assets from creditors and also grow your estate so that your loved ones are cared for after you pass.

A recent Fort Meyers Florida Weekly article, titled "Take measures to protect your assets into the future," reminds us that while federal law applies to protection of some assets, such as IRAs and retirement plans, state law also plays a part in choosing the ideal products and strategies for the protection of your assets. For instance, the article reminds us that not every state treats homesteads or life insurance in exactly the same manner.

The more assets you have, the more extensive your estate plan should be. However, even a regular middle class person can be subject to litigation or the seizure of personal assets to satisfy corporate debt. So if you are a millionaire or even if you are not, you should seek the assistance of your estate planning attorney. He or she can examine all of your current and potential assets and liabilities, and create a plan that makes the most sense for you and your circumstances.

Do not wait to meet with your estate planning attorney until the creditor calls or you are served with a civil complaint. At that point you cannot simply move assets from a creditor's reach prior to a judgment. That will be viewed as fraudulent conveyance—remember, it is against the law to hide assets.

There are several exceptions to what a creditor can get at, and it takes a skilled attorney who specializes in this area to create effective vehicles to protect your assets within the confines of state and federal law. Talk to your estate planning attorney sooner rather than later. Make a point of setting up an appointment right away.

For more information about Estate Planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website. 

Reference: Fort Meyers Florida Weekly (July 23, 2014) "Take measures to protect your assets into the future"

 

 

A New Supreme Court Decision Impacts Estate Planning

A ruling by the U.S. Supreme Court holding that assets contained in an inherited individual retirement account (IRA) don’t qualify as retirement funds for the purposes of bankruptcy exemption has turned the estate planning community on its head. The Supreme Court’s ruling is “sending seismic shock waves through the estate planning community,” said Gail Buckner, a retirement and financial planning specialist and instructor with Franklin Templeton Investment.

The ruling will make it easier for creditors and bankruptcy attorneys to lay claim on inherited retirement assets, experts say.

In Clark v. Rameker, the Supreme Court unanimously affirmed a lower court ruling in favor of bankruptcy trustee William J. Rameker. The Rameker decision impacts a sizeable segment of the nation's wealth. Quite clearly, inherited retirement assets are no longer as "bulletproof" from creditors as they were before the decision.

A recent InsuranceNewsNet article, titled "Court Decision Has Implications For Estate Planning," explained that the Supreme Court was asked if federal bankruptcy law exempted an inherited IRA from a debtor’s estate in bankruptcy. Justice Sonia Sotomayor wrote in her decision that an inherited IRA account did not qualify as a retirement fund, so it would not be exempt. Inherited IRAs do not fall under the definition of a retirement fund, the Justices held, because the heir to the fund, other than a spouse, is not permitted to put money into the account. The accountholder (or heir) must also withdraw all of the funds from the account or set up annual distributions. It does not matter how close this inherited IRA accountholder is to retirement, and he or she must pay taxes on those distributions. Permitting an inherited IRA to be exempt from creditor claims would ultimately undermine the purpose of the Bankruptcy Code, Sotomayor explained.

What does this mean for your IRA? How will you handle it in your estate planning strategy?

Speak with your estate planning attorney, get a thorough explanation, and put a sound plan in place.

For more information about Estate Planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), please visit my Estate Planning website. 

Reference:  InsuranceNewsNet (July 24, 2014) "Court Decision Has Implications For Estate Planning"