 | Mike Cannady is an attorney with the law firm of Fleeson, Gooing, Coulson & Kitch, L.L.C. He received his Bachelor of Business Administration degree from Wichita State University, graduating magna cum laude, in 1985, his Juris Doctor, with Honors, from Washburn University, in 1988, and his Masters of Laws degree in Taxation from the University of Missouri-Kansas City, in 1995. Prior to joining Fleeson, Gooing, Coulson & Kitch, L.L.C., in 2004, Mike was with the firm of Grant, Cannady & Baker, P.A., in Butler County. He practices primarily in the areas of estate and business planning. |
Legal
2004-12-01 10:02:00
Does estate planning apply to me?
ANSWER: Actually, without doing any estate planning, any property which you own at your death will pass, under state law, to your children, in equal shares. This, however, does not mean that you do not need to do some estate planning. The estate planning process involves not only the preparation of documents which will provide for the proper distribution of your property upon your death, but also documents which are important during your life. I would suggest that your estate plan should include the following:Will/Living Trust. Although state law may provide for the distribution of your property to your children, I would suggest that your estate plan include either a will or living trust. Either of these documents could not only direct that your property go to your children, in equal shares, but could also contain contingencies for unexpected events. For example, there is always a possibility that one of your children could die before you do, and if that happens, you could direct that such predeceased child's share is to go to your other children, your grandchildren, or to some other relative, friend, or charity. Furthermore, if any person receiving a portion of your estate is incompetent or too young to properly manage his or her share, you can provide that such share be retained in trust for that person's benefit. The use of a will or living trust also allows you to appoint, in the case of a will, an executor to handle your estate upon your death, or, in the case of a living trust, a successor trustee to take over following your death. Also, if any of your children are still minors, you would name a guardian and conservator for such minor children. With a living trust, the trustee of the trust holds title to your property, and at the time of your death, the trustee has authority to pay your obligations and taxes, and is responsible for distributing the trust property to beneficiaries, without the involvement of the probate court. This probate avoidance can result in significant savings to your heirs. Typically, you will name yourself as the trustee of your own trust during your lifetime, and therefore you can maintain complete control of the trust property. You may spend trust assets, amend the trust's provisions, and revoke the trust at any time. Furthermore, no separate trust income tax return needs to be filed, and you will continue to report income from the trust on your individual tax return (Form 1040).In the case of a will, upon your death the will is admitted to probate, and the probate court supervises the administration of your estate. This is generally more costly than if your property is held in a trust. In some cases, however, having the probate court supervise the administration is preferable.The primary advantage to a living trust is probate avoidance, while the primary disadvantage is that it is more expensive to draft and fund a living trust than to draft a will. Whether a living trust or a will is better for you will depend upon a number of issues, and you should discuss these issues with an estate planning lawyer before making any decision. Financial Durable Power of Attorney. A financial durable power of attorney authorizes whomever you name to sign documents and otherwise act on your behalf. You can direct that this document become effective immediately, or only if you become incapacitated. In either event, it will remain in effect through any period of incapacity, and will terminate upon your death. If you do become incompetent sometime during your life, this type of a power of attorney will, in most cases, prevent your family from having to have a conservator appointed for you by a court. Power of Attorney for Health Care Decisions. A power of attorney for health care decisions is similar to a financial durable power of attorney in that it authorizes whomever you name to act on your behalf. The actions taken by the person you name in the power of attorney for health care decisions, however, will not be in relation to your finances, but will be in relation to your personal care. If you become incompetent sometime during your life, this type of a power of attorney will, in most cases, prevent your family from having to have a guardian appointed for you by a court. Living Will. A Living Will is a document wherein you direct that you do not wish to be put or kept on life support if two physicians have determined that you are terminally ill, and that the application of life-sustaining procedures would serve only to artificially prolong the dying process. The Living Will and the Power of Attorney for Health Care Decisions are sometimes referred to collectively by doctors and hospitals as Health Care Directives. In addition to the above documents, there could be a number of other documents which may be of use to you. For example, depending upon the size of your estate, you may need to do some estate tax planning. There is a federal estate tax and a Kansas estate tax, both of which can be minimized or avoided with proper planning. Also, if you own your own business, you may need a buy-sell agreement, or some other form of business succession planning. Regardless of how simple you believe your estate to be, there are a number of issues which you should discuss with an estate planning lawyer. Such a lawyer can look at your particular situation, and advise you on the proper way to proceed.
