Legacy Planning For Your Estate

The estate planning toolbox includes a number of available techniques, including the transfer-on-death (TOD), pay-on-death (POD), Last Will and Testament, Pour-Over Will, Living Trust, Revocable and Irrevocable Trusts, General Durable Powers of Attorney, HIPAA Releases, Living Wills, and Health Care Powers of Attorney, to name the most common. In the absence of a plan designed with your unique family and asset mix in mind, the State has selected certain provisions which will apply to you and will constitute your estate plan. You have the opportunity, however, to design a plan which is different than the “plan” which the State has mandated for you.

Both Missouri and Illinois are “Dynasty” States.  This means that it is possible to create trusts which protect assets from taxes, creditors and predators through multiple generations, and even for all time, if desired.


Last Will and Testament

Under our system of laws, we have the right to own property and, at our death, to pass that property on to those whom we select as our beneficiaries. However, this right is not absolute. We can only pass property to our loved ones by following certain formal requirements. These formal requirements are met by the execution of a proper Will, prepared and signed in accordance with State law. (Each state has its own law about Wills.) A Will does not avoid the necessity of probate. All Wills go through probate. If you die without a Will, the State has prepared one for you–-your property passes to those persons whom the law has designated to receive your property. This may or may not be what you want. Although anyone can legally write a Will, there are many pitfalls. If proper language is not used, the entire Will, or certain bequests in the Will, may be unenforceable.

Non-Probate Transfers, PODs and TODs

Probate can be avoided by transferring each type of property that you own via a “non-probate transfer.” Bank accounts can be titled “POD” (Pay on Death) to a specific person or persons. Real estate can be conveyed outside of probate by a Beneficiary Deed which takes effect only on your death. Stocks, bonds and vehicle titles can be made payable “TOD” (Transfer on Death) to whomever you choose. Every type of property has a method by which it can be passed outside of probate. A lawyer will need to advise you on how to pass specific types of property in this manner. All property transferred via non-probate transfers is simply “dumped” to the named beneficiaries at the moment of your death. Although non-probate transfers avoid probate, you are not able to establish the same types of personal protections for your beneficiaries which you are able to establish for them in a Living Trust.

Durable Powers of Attorney

A Power of Attorney is a document by which you appoint another person to act as your authorized agent (also known as your “attorney-in-fact”). You may not be aware that a Power of Attorney which you give to someone is revoked automatically if you become mentally incapacitated. Under Missouri and Illinois law, a properly prepared Power of Attorney can be made “durable.” This means that your attorney-in-fact may continue to act on your behalf whether or not you are mentally incapacitated. This will allow your agent to pay your bills, contract for nursing home services, and make basic health care decisions for you. This type of Power of Attorney is useful both before and after incapacity, but it must be executed prior to becoming mentally incapacitated. Powers of Attorney can be revoked at any time.

Health Care Powers of Attorney

You are legally entitled to appoint some person as your health care attorney-in-fact, which allows that person, in the event that you are comatose or otherwise unable to participate in your health care decisions, to make your health care decisions for you. In this document, you can ensure that the treatment you receive is the treatment that you desire, and no more. This document can reduce the likelihood of a doctor, hospital, or court requiring you to be “plugged in” interminably on life support systems, if you do not desire to be kept alive in that manner.

Living Trust Information

Living trust-based estate plans have many advantages. First, they avoid probate. This means that your assets can transfer quickly and efficiently at your death, without the delay, attorneys fees, and unnecessary expense of probate. In addition, living trusts ensure absolute privacy for your financial matters. Since trusts are not filed in the Probate Court, “inquiring minds” do not have an opportunity to see an inventory or valuation of your assets, or to find out how much you are leaving to your beneficiaries.

Living trusts are very flexible–they can be changed any time by the Trustmaker. They allow you to retain absolute control of the terms of the trust–you continue to buy, sell, spend, invest and make gifts of trust property just the way you do now. No gift is made when the Trustmaker transfers assets into the trust, and no separate tax returns are required to be filed by the trust during your lifetime.

Even people who have smaller estates can benefit by doing living trust planning. This is especially true for people who are either married or have children or have an estate in excess of five hundred thousand dollars. Re-marriage protection for a surviving spouse is typically a serious concern with most families. A trust which incorporates personal protections for the surviving spouse can keep him or her from being preyed upon financially by third parties or by a subsequent spouse. A trust with strong personal protections can insure that your money goes to your children and not to a new spouse or the family of a new spouse.

Similarly, personal protections in a trust can provide divorce-proofing strategies for children’s inheritance. Trusts can be readily designed to protect children and beneficiaries from other types of creditors and predators as well, including the IRS.

Personal protections incorporated within trusts are also an excellent tool to preserve assets from “impulse spending.” Research indicates that most inherited money is spent within 17 months of receipt. (Surprisingly, the figures are not radically different if the money is inherited by wealthier and more sophisticated beneficiaries.) It is generally undesirable to simply “dump” money on children at any age — it is more important to pass “value” to one’s family, not merely money. “Value” includes protecting the beneficiaries from our very human tendency to quickly dissipate “windfall” funds. This “value” can only be obtained through family-oriented trust planning.

A personally designed living trust is the only planning device which allows people to design their own disability plan. Anyone who is interested in receiving home health care (rather than being left in a nursing home) should design a disability plan inside a living trust. In addition, those who want to avoid having a guardian appointed for them, or who are concerned about making sure that their family members can access funds if the breadwinner should become disabled, need a well-designed living trust.

There are many legal changes which take place every year. Clients need a reliable and inexpensive system in place to update the plan as necessary to comply with these many changes.

Conscientious planners are now recommending to clients that they implement a formal estate planning update system. This planning method makes great sense in light of the many legal changes which occur every year. A formal updating program can be designed at a very small cost to ensure that the estate plan will not become obsolete and that the investment in the plan will not be wasted.

Medicaid Trusts

Virtually all assets which you own (other than a few exempt assets) are “countable resources” for purposes of determining Medicaid eligibility. Medicaid Trusts can be legally designed and created to hold assets free of nursing home spenddown requirements. Done properly, these trusts can provide a host of additional tax and family protection benefits. See “Elder Law” tab.

Irrevocable Trusts

An entire “alphabet soup” of irrevocable trusts (ILIT, IDIT, IDGT, GDOT, SNRT, SLAT, etc. etc.) has been developed to achieve goals such as removing assets from the taxable estate, providing superb asset protection and providing multiple tax and gift benefits. In addition, most Medicaid Trusts are irrevocable trusts (see “Elder Law” tab). The design and creation of irrevocable trusts requires specialized language, design skills and experience and should not be attempted by persons who lack the expertise necessary to accomplish these goals without creating catastrophic adverse results.

Retirement Plan Trusts (also known as IRA Inheritance Trusts)

The SECURE Act in 2020 and SECURE 2.0 in 2022, made significant changes for the beneficiaries of your retirement accounts: these Acts require most designated beneficiaries-with some exceptions for spouses, beneficiaries who are not more than ten years younger than the account owner, the account owner’s children who have not reached the “age of the majority,” disabled individuals, and chronically ill individuals – to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death.  The shorter ten-year time frame for taking distributions will result in the acceleration of income tax due, possibly causing your beneficiaries to be bumped into a higher income tax bracket and receive less than you anticipated.  A Retirement Plan Trust can be designed to hold the retirement account distributions to maintain asset protection on the funds for your beneficiaries and ensure that the beneficiaries get the full ten years to distribute the retirement plan.  This is referred to as an Accumulation Trust.

Charitable Trusts

Many persons feel a deep need to “give back” to a society which has helped them achieve success. Others simply want to assist the poor, the hungry, those in pain and those in need. Whatever the reason, savvy people want to give “tax-wisely.” We can help you design a charitable-giving vehicle to maximize tax benefits while accomplishing your altruistic goals. These vehicles can be designed to involve subsequent generations of family members in the ongoing charitable-giving process.


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