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Power of Attorney

In our last blog, we talked about the importance of a health care directive in the context of the COVID-19 world that we are living in. Additionally, we want to talk about another part of your estate plan, the financial power of attorney. We talk about these two documents together because they are useful while you are still living, opposed to your will and/or trust which are useful after you pass away.

To be sure, COVID has made planning more prevalent for a lot of people, but that doesn’t mean that when the virus is gone, we should forget about it. COVID is top of mind for many of us, but tragedy can strike at any moment. You could be in a car accident or have a heart attack or get struck by lightning and be stuck in the hospital for months. Frankly, the cause is irrelevant. What matters is that you have planned beforehand, so that your loved ones can take care of your matters while you aren’t able to take care of them.

The financial power of attorney allows someone, called the “attorney-in-fact”, to speak and act on your behalf. Imagine you are in a car accident that leaves you with severe injuries and lands you in the intensive care unit. Unfortunately, the companies that you do business with won’t cease their operations. If you owe them money, they are still going to ask for it. Your mortgage won’t go away. Your electric bill will keep coming. For that matter, Netflix will continue to take money out of your account. What the power of attorney allows is for someone else to be able to keep paying the bill if you want or shut off the account if it is not needed.

Something that may be a bit more important than Netflix or your cable is that your attorney-in-fact can work with your insurance companies on the claim on your car. Or they can work with your disability insurance company to make sure that money continues to get paid to you. The goal is for the attorney-in-fact to keep your life moving so that when you get out of the hospital, you can go back to life and not have to dig out of past due bills or spend time where to start financially.

The reality is that tragedy does strike people. Some of us will get hit harder than others. Some of us will need to leave a roadmap for our loved ones on how you want your affairs handled if you are incapacitated. We always recommend that you plan to make sure that your wishes are considered. We don’t want people guessing what we might want or doing what they think is best for us. Their intentions are good, but what you want is what matters. Financially, a power of attorney is how you explain what it is that you want.

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Do I Need A Health Care Directive?

The last couple of months have been a wake up call for people in being prepared for the unexpected. COVID-19 has changed life as we know it. Regardless of your personal opinion of whether the public reaction to the virus was right, wrong or somewhere in between, it is undeniable that we have all been significantly affected by the virus. Sports events were cancelled, restaurants were closed, no one was able to get hair cuts and, of all things, many people weren’t able buy toilet paper. Varying levels of panic set in for people.

One thing that we have been very consistent in repeating over and over is the need to plan to make sure you and your loved ones are taken care of. One of the things that EVERYONE should be considering is their health care directive. Look, not all of us are going to die from COVID. Not all of us are going to be in the hospital if we get COVID. Many of us won’t even know we have COVID if we contract it. Unfortunately, some people will have to worry about those fears. The question that we should all ask ourselves is “why risk it?”

Maybe you haven’t been directly touched by someone that contracted COVID and maybe you won’t be. The sad reality to life, though, is that everyone is mortal. At some point we all are going to get sick, be in an accident, or have some other health issue. Many of us are going to need someone to make decisions for us because we aren’t able to speak for ourselves. COVID is just another real life example of what needs to be done if we get sick and need our loved ones to help us.

Kiecker Law Video Series Ep. 6 – Health Care Directives and Power of Attorney

The question becomes what do we do to help ourselves and our family. One of the best places to start is developing and writing a health care directive. A health care directive is simply a written directive putting someone (called your “agent”) in charge of your health care decisions if you are not able to do it yourself. The document gives your agent a guideline of what you want done for you medically. For example, if you are in the ICU in an induced coma, your agent will be able to tell the doctors how they should treat you based upon the guide that you wrote out for you. In essence, you are making the decision for your health care through this document and your agent even though you can’t speak for yourself.

You may ask why this is important. Well, unfortunately, our family members don’t always agree on what should happen. They may disagree, drag out the process, and cause you to suffer. They certainly don’t do it because they hate you or want to make you suffer, but because everyone thinks they know what’s best. That’s human nature. Everyone wants to do the right thing, but everyone has a different idea on what the “right thing” is.

We aren’t trying to scare people. That’s not how Kiecker Law works. Unfortunately, health issues are naturally scary. COVID is just a reminder of how fleeting life can be. A health care directive is a very valuable part of an estate plan. It works along with your will, trust, power of attorney and financial plan. That’s why our consistent recommendation is to plan. Don’t just plan for what you expect to happen. Also plan for what you don’t expect to happen.

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What Happens to My Kids If I Die?

In the past we’ve quoted a survey from Caring.com. Each year they do a survey gauging how many people complete their will. Frankly, the results are staggering to us. This month we’re going to be focusing on younger families, and more specifically what happens to kids when their parents die. Looking at the 2020 survey that Caring.com did, only 27.2% of people they surveyed between the age of 24-54 have a will (and it’s even less in the 18-23-year-old group). This is the chosen age group as this is the group that is typically going to have minor kids. We can assume those statistics are likely the same whether you have kids or don’t. That means almost 75% of people are going to leave it up to the courts to decide what happens to kids. The question we have is, is that really what you want, or do you want to decide what’s best for your kids?

Later this month, we will tackle what happens if you don’t have a will, but first let’s talk about what your will can and should do for you in deciding your children’s future if you’re no longer here to care for them. The first thing you will want to do is determine who the guardian will be for your kids. That’s probably self-explanatory, but that just means, who are your kids going to live with and who is going to care for their physical well-being. This is probably a question that you want to consider for more than just a couple of seconds. Many times, people will want to name their parents (i.e. the grandparents) as the guardians. At first blush, that may seem to be a good choice, but you will also want to consider whether your parents WANT to have a 2,5,8, or 10-year-old living in their house full-time? Or for that matter are your parents ABLE to care for a child full-time? Grandparents love to have their grandkids for an evening or even a couple of days, but could they handle having kids on a full-time basis?

Another thing to keep in mind is the style of parenting that you have versus what a potential guardian has. You want to make sure that your kids will be raised in a way that you are comfortable with. If you are strict with your kids, you likely want someone that is also going to have rules. Lastly, and maybe most importantly, remember this decision is about your kids. It’s not about the feelings of your parents, siblings or in-laws. It’s about your kids and what’s best for them. Many times, people feel an obligation to “keep things equal”. It’s not about keeping things equal. Your kids and how well they are taken care of is the only thing that matters.

The other part to consider is the financial side of things. You may be comfortable with the person that you name as guardian handling all the money, but you may not. If, for example, you name your sister as the guardian because she is such a good caregiver for her own kids, but you wonder if the money you leave for your kids will be spent wisely, you can name another person as a trustee. There could be a lot of money that is left to your kids in the form of proceeds from your house, life insurance or retirement accounts. You want that money used to care for your kids, not for frivolous expenditures that benefit your sister or her kids. If you want to have a fail safe in there so there isn’t even that temptation, you can name a trustee.

So, what does a trustee do? Essentially, your will sets up a trust for your minor children in which they get all the money that is left to them at a certain age (maybe 18, 21, 25 or any other random age you decide makes sense). In the meantime, your kids will need money for the every day things that they encounter such clothes, sports, food, school trips, or any other number of everyday necessities. The trustee would work along with the guardian to make sure that your kids’ money is being spent wisely. In other words, your sister that is the guardian would need to check in with the trustee before they can spend the money. It’s the best of both worlds. Someone that is going to be a good caretaker for your kids, and you can be sure that you have someone that is good with money to make sure your kids are financially cared for. 

Parents do everything they can to care for their kids physically and financially.  There is no reason that should stop just because the parents have passed away. A will is the legal structure of a plan that goes beyond your life.

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kiecker law what happens if I don't have a will

What Happens If I Don’t Have A Will?

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Posted by Kiecker Law on Wednesday, April 22, 2020

What Happens If I Don’t Have A Will?

Over the past month or so, we’ve talked about what a will is, what a will does to protect your stuff, and what your will does to take care of your kids. In February, we even talked about going through the probate process. Now, we’re going to take it one step further. We’re going to talk about what results when you don’t have a will and you need to go through the probate process. 

The first thing that happens when you don’t have a will is that you end up in a lengthy probate process. This probate process will be expensive, and it will be painful for your family. A large sum of money will be eaten up by attorney and court fees and not be given to the heirs that you want. Once you get past the fees taken out of your estate, the courts will use the Table of Consanguinity (pictured) to determine who gets what in terms of your stuff. You won’t get to decide who gets it and it could be that someone inherits your hard earned money that you don’t want to. It’s all based upon a table that was developed in the 13th century.

That charity or your church that you wanted to receive a large donation…that doesn’t matter. They won’t get it. That nephew you wanted to support because he helped you out…he won’t necessarily get it because he isn’t named specifically. The court will decide who gets what.

For those of you with minor children, the more important question is what happens to those children. This is where the chaos begins. At least with your stuff, there is a standardized process to follow. When it comes to who takes care of your kids, there is nothing. The courts and other governmental agencies decide what happens with your kids. They will take a look at your family’s situation decide what they think is best. Of course, they will take your family’s opinion into account, but when all is said and done, the court decides the future of your kids.

Unfortunately, what often times happens is that differing sides of the family have different ideas on what should happen. The husband’s parents may think the kids should come live with them and the wife’s sister may think that she should care for the kids or some other scenario like this. This often leads to large arguments between families and certainly leads to negative effects on the kids. Yes, everyone loves the kids, but the kids are the ones that are caught in the middle. Depending on how old your kids are, they are going to be caught in the middle of it at least until they are 18-years-old. 

In these situations, no one tries to put the kids in the middle, it just ends up happening as everyone thinks they know best. It’s not intentional by any means, but it’s what happens all too often. This worst-case scenario is why we suggest that everyone makes sure they complete their estate planning. It’s not fun, and not necessarily an easy process, but it’s worth it when your family needs it.

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Kiecker Law Last Will and Testement

What Happens To My Stuff?

One of the two main functions of your will is to determine who gets your stuff. Now, when we say stuff that means everything from your house to your car to your business to your investments and all the way down to the $2 knick knacks you have sitting on that shelf on the wall. Some of these things will have a high value and some of them are worth mere pennies. Some of them have tons of sentimental value and some of them don’t. Your will decides how to split them up. As an aside, many of these larger items in terms of monetary value can be taken care of with the appropriate deeds and beneficiaries, but anything that is not covered by a deed or beneficiary will be taken care of in your will.

Within your will you can decide how your stuff gets split. Some people may say that they just want their possessions to be split evenly between their kids. Alternatively, you may want to treat your kids differently. Maybe one of them helped you much more than the others and you want to financially reward them. Your will is the place to do that. If you want your church or a charity to share in your wealth, you would name them in your will. 

What Happens if I Die Without a Will?

Now, you may say that you just don’t care how your stuff gets split up. Honestly, your kids or heirs may not care either. Unfortunately, that’s not generally what happens. What seems to happen more often than any of us would like to admit is it starts family fights. When there is a fight, it generally doesn’t end well. You see, a fight needs to be settled by someone (ie a judge in a courtroom) and you also need to have someone fight along with you (an attorney). Both of cost time and money. All that wealth that you worked so hard to build up ends up in the hands of people other than those that you want. Those arguments may be avoided by properly writing your will within your estate plan. Yes, hiring an attorney to write your will costs money, but we can assure you that the cost for a will is less than the cost to fight over it!

So What Happens to My Stuff When I Die?

So, what goes into writing your will so that the right people get your stuff? Frankly, writing it is the easy part. Deciding the best course of action through thoughtful decision-making is the hard part. If you’re giving your wealth to your adult children, you likely know their personalities better than anyone else. It’s your responsibility to decide whether they are able to handle receiving a large sum of money or if it will be spent in ways that you don’t approve of. You can decide that they get their payout at a certain age or if they get it right away. 

When you decide to write your will, this is the area that you will spend the most time on. It’s important to not only write your will, but to also do it correctly. The worst thing that you can do is not put thought into it and cause more problems that you solved. We can’t stress enough that working with an attorney (even if it’s not us) is essential. When you do, you have a resource that can draw on the knowledge of what other people have done and what tends to work the best.

Contact Kiecker Law

Contact Kiecker Law to get started on your estate succession plan today.

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will

What Does a Will Really Do?

What is a will and what does it do? It sounds like such a simple question. It should be, but the details often get lost in emotional discussions such as estate planning. As a law firm, we sometimes forget that what is an everyday discussion for us and that we take for granted is not a normal thing for others to talk about. Whether you haven’t every talked about your will or you have done all of your estate planning, reviewing what a will is and what it does is a good idea.

What is a Will?

To put it plainly, a will is a legal document that answers two main questions:

  1. What happens to your stuff?
  2. What happens to your kids when you aren’t there to protect them?

Like mentioned above, we sometimes take these conversations for granted, but it can be a difficult conversation.  Not only do you have to ask yourself difficult questions that you may not know the answer to, but you have to admit your own mortality. Needless to say, that’s not fun. In fact, it can be downright scary. We don’t mean to give any more excuses to put off your estate planning any longer, but we find that there is no use sugar coating it to make our clients artificially feel better. In fact, you probably should feel a bit uncomfortable in making decisions that are so consequential to the people you most love. They are difficult, but important conversations and the worst thing that we and you can do is pretend that they aren’t. It’s OK to be scared. It’s OK to even be a little intimidated. That’s where your trusted advisors come in.

How to Write a Legal Will

The right attorney will guide you through that process. Like we mentioned before, we have these conversations on a daily basis. As a client, you can and should take advantage of that. Every person’s situation is different, but there are very few types of situations that your attorney hasn’t seen. You have the ability to use that knowledge and experience to your advantage. That is why you want to be comfortable with the attorney you choose to work with. We would love to say that Kiecker Law is the best firm for everyone (and, in our minds, we are), but even if we aren’t we want you to have comfort in knowing that your wishes are going to be honored.

Writing a Last Will and Testement

So, in a very brief way, we answered the question. What is a will and what does it do? Yes, it’s a legal document and decides where your stuff goes and what happens with your kids. We just talked a little bit of the process of what it takes to write a will, but in the next couple of months we will talk more specifically about the questions a will answers. We’ll talk about how we decide who gets your stuff and some things you might want to take into consideration. We’ll talk about what happens to your kids (if they are minors) and some things you want to keep in mind while making that decision. And we’ll talk about what happens if you don’t write a will. Throughout it all, we’ll give you a few thoughts on how we do things and some things that you might keep in mind regardless of what attorney you work with.

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What Is Probate? Part 2: Good Probate

In our last blog we talked about “THE BAD PROBATE”. This time we want to shift gears and look at “THE GOOD PROBATE”. Again, we’re not here to pull the wool over your eyes. There is no such thing as a fun probate process. There are just really painful ones and less painful ones. In fact, if done correctly, your estate won’t even need to go through probate. The correct planning and documents will transfer ownership of your possessions without any court proceedings at all.

The less painful methods have all your instructions laid out about what you want done in your estate plan. It lets your loved ones know who should get what. It lets them get more of what you have built up. And it helps them avoid court rooms. So, you may ask, what does your estate plan include and how does it accomplish these things?

Wills, Trusts, and Deeds

We talk about a will and a trust. Your will guides your executor (the person you want to handle it) to know who should get what. Don’t get us wrong, the government does have a plan set up for you, but you must go to court to get everything approved and that costs money. If you have a will, your plans are already known so a judge doesn’t have to decide whether it is fair or not. It doesn’t matter whether it’s fair, what you want to happen is the only thing that matters. You get to decide who gets what and when they get it (specifically if you have children).

In certain scenarios, you may want to have a trust. Some scenarios that could drive you needing this are the size of your estate, whether you have a special needs child or if you want to gift a sum of money to a charity in a specific fashion among other things. If privacy is important to you, a trust may keep what’s happening within your estate private so only your family (and a few select court officials) know what is happening with your affairs.

Probate and Estate Planning

As we always say, a good estate plan also includes a financial power of attorney and a health care directive. In terms of worrying about a probate, neither of these documents will have an effect, but we feel it would not be responsible for us to leave them out when discussing estate plans. They are useful tools that should be considered.

Additionally, you’ll want to make sure that you’re using the proper deeds for your real estate. A fantastic tool that you can use within real estate is a Transfer on Death Deed, or a TODD. What this type of deed will do is automatically transfer your house or any other land to the correct person or people when you pass away. Again, you don’t need to worry about going to a probate court for them to decide that what happens. It’s already known by using this document. It’s very helpful and it’s certainly less expensive than going through the probate process.

Should I Consult a Probate Lawyer?

Something that isn’t often spoken about is making sure the beneficiaries on your retirement accounts and life insurance are properly listed. Often times, people just put a name down. In all actuality, they should be working in conjunction with their will and/or trust. The language to use is specific to you and can also save a lot of headache.

Essentially, there are a lot of tools out there to help you pass along your possessions without having to deplete the value for your loved ones. We strongly encourage everyone to go through the process of planning and reviewing their planning if you have already completed it. A little bit of pain for you now will prevent a lot of pain for your loved ones later.

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probate law

What Is Probate? Part 1: Bad Probate

What is Probate? Probate is simply a legal process that any estate with an asset worth more than $75,000 must go through. Inevitably, you’re going to hear from Forbes and Motley Fool and The Wall Street Journal and your preferred regional newspaper about how horrible it can be. And, we’re not going to lie to you, many times it is horrible.

We don’t believe in pulling the wool over your eyes. We want you to make the most informed decision that you possibly can. That’s why we’re going to explain to you what can happen if you don’t do appropriate estate planning. And then we’re going to explain what you need to do to avoid making probate a difficult, expensive and painful process.

How Much Does Probate Cost?

Let’s start out by explaining the why. There is no hard and fast answer to how much probate costs. We’ve seen estimates from as low as 2% to as high as 10% of your estate.

That may not seem like a lot on it’s face but remember that includes all your assets that don’t have beneficiaries listed on them. So, that excludes things like your IRAs, 401(k)s and life insurance. What it includes though is your house, any land you own, any stocks that you own, your cars, and any of your personal property.

Probate Court

Again, that may not seem like a lot, but it WILL start adding up. Take for example this scenario…. the median cost of a house in the state of Minnesota is roughly $250,000. Depending on where you live that could be substantially higher or lower, of course, but we’ll use that as a starting point. Add in your two vehicles at $15,000 each and the value of your personal property (jewelry, lawn equipment, clothes, etc.) at roughly $50,000. Assuming you don’t have any bank accounts or investment accounts of any value, your estate is suddenly worth $330,000.

Between court fees, attorney fees, executor fees and various other expenses, your estate could be reduced by between $6,500 and $23,000. Now, depending on where you’re at in your life, that could have some pretty sobering effects. If you have minor kids, that means they will get that much less to support them. If you’re plan is to donate your money to charity or church, they will get that much less to do their good deeds. Whatever it is you want, the person or people that you want to benefit, will get much less benefit. Add to that, there’s always the potential of infighting about who should get what and it doesn’t lead to a pretty picture. You can calculate the size of your estate on your own and use this chart to approximate the cost of your own situation.

Probate Cost Chart

Value of EstateLow RangeMid RangeHigh Range
$50,000$1,000$2,500$3,500
$75,000$1,500$3,750$5,250
$100,000$2,000$5,000$7,000
$150,000$3,000$7,500$10,500
$200,000$4,000$10,000$14,000
$300,000$6,000$15,000$21,000
$400,000$8,000$20,000$28,000
$500,000$10,000$25,000$35,000
$750,000$15,000$37,500$52,500
$1,000,000$20,000$50,000$70,000
$1,500,000$30,000$75,000$105,000
$2,000,000$40,000$100,000$140,000
$3,000,000$60,000$150,000$210,000
$4,000,000$80,000$200,000$280,000
$5,000,000$100,000$250,000$350,000
$6,000,000$120,000$300,000$420,000
$7,000,000$140,000$350,000$490,000
$8,000,000$160,000$400,000$560,000
$9,000,000$180,000$450,000$630,000
$10,000,000$200,000$500,000$700,000
$15,000,000$300,000$750,000$1,050,000
$20,000,000$400,000$1,000,000$1,400,000

That may not be fair, but that’s the reality. This is what we call “THE BAD PROBATE”.

So, now that we have also sufficiently worried and scared you, what can you do? Like we said, it doesn’t have to be that way. Proper planning and continual planning will help to avoid some of those headaches. So, what does that mean?

Avoiding Probate

Proper planning is different for every person and family. To start out with, you need to get all your estate planning documents in order. This is going to include a will and maybe a trust. A good estate plan will also include a financial power of attorney and health care directive. They won’t do anything in terms of the probate but should be included. Depending on your situation and your goals, you may also need to have a trust. Additionally, you’ll need to make sure that all the beneficiaries on your life insurance and retirement accounts.

Additionally, you should review your plan every 3-5 years to make sure it still meets your wishes and evaluate your current situation. You may or may not need to change anything, but, at the very least, you should review it.

Again, probate can be a scary process for those you leave behind. It doesn’t have to be though. Leaving instructions for what you want done should make you sleep easier at night. You can know that your wishes will be known and followed, and you can also know that you’ve made things easier on those you care most about.

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