Reproduced with permission from the Publications section of the Kansas Department on Aging web site, http://www.agingkansas.org/kdoa.

Your estate consists of everything you own: your home, personal property, car, land, stocks and bonds, life insurance and any other property in which you have an ownership interest. Estate planning is a plan for how you will acquire property, use it, conserve it and, perhaps most importantly, how it will be transferred upon your death.

There is no way to determine your wishes regarding distribution of your property after your death unless you take appropriate steps prior to your death. Estate planning can be beneficial no matter what the size of the estate.

What is probate?

Probate is a legal procedure for settling the decedent`s estate. It is a process by which the court validates the will if there is one, grants authority to the executor or appoints an administrator if there is no will, assures payment of taxes, oversees distribution of the property, and provides for legal transfer of ownership of the property.

What property is exempt from probate?

All property is subject to probate proceedings, whether or not there is a will, except for property owned in joint tenancy with another, any property placed in a trust, property subject to a transfer on death deed (real estate or vehicles may be titled in transfer on death titles), payable on death accounts or life insurance proceeds designated for a named beneficiary. The property in these categories automatically passes to the joint tenant, designated beneficiary or trust beneficiary, although it may be subject to inheritance and estate taxes.

How long does probate take?

A regular probate proceeding takes a minimum of six months to complete. Creditors have four months from the date they receive notice to file their claims against the estate. There are some simplified, less time-consuming proceedings that may be used in certain cases.

Does probate cost the estate money?

The expense of the probate proceeding depends upon the complexity and value of the estate. In Kansas, fees average from 1 percent to 5 percent of the estate. Fees for the attorney and executor or administrator are also charged to the estate.

Wills

What Constitutes a Valid Will?

In Kansas, a valid will must comply with these requirements:

Who will make sure my Will is carried out?

A will should name an executor who will administer and settle the estate. The job includes paying all debts and taxes out of the estate assets, as well as distributing the estate according to your wishes. It is always best to name an alternate executor to serve in the event that your first choice cannot serve.

What rules govern distribution of property?

Generally, Kansas law allows you to distribute property as you desire. One major restriction is that a spouse has an absolute right to at least half of the estate. If the will is written to give a spouse less than half, then that spouse must have agreed to the smaller share of the estate in the manner provided by law for the will to be valid as written.

How can I change or revoke my will?

A will that meets all of the requirements of Kansas law is good until it is changed or revoked by the maker. This may be done by writing a new will or by writing an amendment (a codicil) to your current will. The document must be signed with all the formalities of the original will. You may revoke your will by burning, tearing, destroying or marking through it with the intent of revoking it. Marriage, divorce and birth or adoption of a child also have an effect on your will. You should review your will every few years to make sure it still reflects your wishes.

What if I die without a will?

If you die without a valid will, which is called dying intestate, all of your property, other than what is held jointly, will be distributed among the surviving relatives according to Kansas laws. Your estate will be divided into various portions depending on whether a spouse, child(ren), parent(s) or other categories of relatives survive.

Will my heirs have to pay taxes on property I leave them?

An estate tax is imposed by the federal government on the value of all property owned at death over an amount set by the federal government. Various deductions are subtracted from your gross estate in order to determine the amount of your estate that is subject to federal estate tax.

The state of Kansas imposes an estate tax only on estates subject to federal estate tax. The amount of such tax is equal to the amount of the maximum credit allowed by section 2011 of the internal revenue code against the tax imposed by that section.

Trusts

A trust is a legal arrangement made during your life where property is held by one person for the benefit of another. The person creating the trust is called the grantor. The person who manages the trust property is called trustee, and the person who receives benefits from the trust is called the beneficiary. The terms of the trust are written out in a legal document known as a trust instrument. It looks a lot like a will and contains your written instructions for what you want to happen to the trust property if you become disabled or die.

What is a living trust?

A living trust takes effect during the grantor`s lifetime. The grantor usually serves as the trustee. Because title to the property is transferred from the grantor to the trust, the property does not pass through probate. However, the establishment of a living trust does not deprive the grantor of control of his or her property. Upon the grantor`s death, the property automatically passes to the beneficiary.

What are the advantages of the living trust?

The primary advantage of the living trust is that the trust is not subject to probate on the death of the grantor. The living trust also offers protection if the grantor becomes disabled. Because the property is titled in the trust, someone else, called the successor trustee, can step in and take over without delay. Some people are attracted to the living trust because it is private. Unlike a will, your trust is not required to be filed with the probate court on your death. Therefore, the assets of your estate plan remain private.

What are the disadvantages of a living trust?

Living trusts are often set up to avoid probate and for tax purposes. If the grantor needs Medicaid due to nursing home costs, many trust documents will prevent the grantor from receiving Medicaid. Changes in federal law severely restrict the use of trusts for Medicaid beneficiaries. Transfers of funds from a trust are now subject to a 60-month "look-back" period. Also, assets of a Medicaid beneficiary put into a trust for the benefit of an individual or the spouse are considered available regardless of trust purposes or discretion. Both the cost and complexity of living trusts may make them undesirable.

Is a living trust for everyone?

Many people find that the expenses of setting up a living trust, including attorneys` fees and asset transfer charges, are much less than the expense of probate. However, there are people whose estate can be handled through one of the simplified small estates proceedings and who can find disability protection through a durable power of attorney. This decision as to whether a trust is for you can best be made in consultation with your attorney.

What is a payable at death account?

This type of account may be established at various financial institutions. It provides for the balance of your account to be transferred to a named beneficiary upon your death. It is like a joint account in that the funds will not be subject to probate. It is preferable to a joint account as a probate avoidance tool because the beneficiary cannot withdraw funds from the account until your death, nor can the beneficiary change the beneficiary designation. You may withdraw funds from the account and change the designation of the beneficiary at any time. Payable at death accounts will come under the provisions of estate recovery by Medicaid services.

What is a Transfer on Death Deed? Is it only for Real Estate?

In 1997 the Kansas legislature made it possible to transfer title to real estate or vehicles, upon the death of the owner, by a process similar to payable-on-death bank accounts. The owner of real estate or a vehicle may record a Deed to real estate which specifies a beneficiary of the title upon the death of the owner. The Deed should have a notation that the transfer is only for purposes of designating a beneficiary upon death, so that there is no tax due at the time of filing. It should be filed with the Recorder of Deeds in the county where the real estate is located. There is a small fee for recording the Deed.

Similarly, the owner of a motor vehicle may record a title transfer with the Division of Motor Vehicles designating a beneficiary upon the death of the title-holder. The transfer can be recorded by taking the title to the County Treasurer in the owner`s county of residence and paying a fee.

Designating a beneficiary on death allows the property to pass to the ownership of the beneficiary without any involvement of Probate Court, but the ownership doesn`t take effect until the present owner dies. That means that the present owner can change his or her mind and change the beneficiary without anyone else consenting. It also means that the present owner can sell or trade the property or give it away to someone else before death without needing any other person`s permission.

Is joint tenancy a good way to avoid probate?

Joint tenancy does avoid probate, because title to the property automatically passes to the surviving joint tenants upon your death. Adding a joint tenant to property makes that joint tenant an owner of the property; therefore, you should carefully consider the effects before using joint tenancy as an estate planning tool.

Property held in joint tenancy with anyone other than your spouse will not be considered as an available resource if you apply for Medicaid. If you decide to put someone other than your spouse on a joint tenancy Deed and then apply for Medicaid, SRS will look back 36 months to see if you have given away any valuable property. Adding a joint tenant (other than a spouse) less than 36 months before you apply for Medicaid will make you ineligible for a "penalty period" based on the value of the proportion of the ownership held by the joint tenant.

Should I transfer property before my death?

You may decide to sell or give away your property for various reasons for extra income or to help your family avoid paying inheritance or estate taxes. But you should consider the effects of such transfers:

Planning for the time you can`t make health decisions for yourself

A Durable Power of Attorney for Health Care Decisions is a written document that allows you, the principal, to designate another person to make health care decisions when you are unable to do so. This designated person is called the agent. The document must contain language expressing that the agent`s granted power is effective even if you become incapacitated. Other powers may be granted into the document, such as the power to make financial decisions.

To make the document valid, it must be dated and signed in the presence of a notary public or in the presence of two witnesses who are at least 18 years old. If two witnesses are used to validate the document, then these witnesses cannot be your agent. Your agent cannot be your treating health care provider, any employee of your health care provider or any employee, owner, officer or director of a hospital, psychiatric hospital or treatment facility, hospice, nursing home or similar facility. However, if your treating health care provider or an owner, officer or employee of one of these institutions is related to you by blood, marriage or adoption, they are allowed to serve as your agent. This just means that your doctor, nursing home director or anyone else who has a professional or financial interest in your care should not be making these decisions on your behalf unless they are also your spouse, son or daughter or close relative, persons who would be expected to have your own wishes paramount in their decision-making.

What authority does the agent in a Durable Power of Attorney for Health Care Decisions have?

The agent has broad authority; in fact, it has broader powers than those granted in a guardianship. The agent in a Durable Power of Attorney for Health Care Decisions has the power to do the following:

Does the law limit an agent`s authority?

The law only has one limitation of an agent`s authority. An agent cannot be granted the authority to revoke a previously existing "Living Will," which is a declaration made under the Natural Death Act.

If you want, you may include other limitations. The statute recognizes that an agent may have broad powers, but it does not require you to grant all of these powers in thedocument. Because the principal has the power to determine what authority the agent has, it is important that the document is reviewed carefully and changes are made to tailor it to your desires.

When do the agent`s powers become effective?

Unless the document specifically states otherwise, the agent`s powers become effective when the principal becomes incapacitated, which the attending physician determines, unless the power of attorney document states another test for determining when the power becomes effective.

Can the agent act contrary to the wishes of the principal?

The agent is obligated to act consistently with any desires that you have expressed.

Can I revoke the power if I change my mind?

Yes. Any durable power of attorney can be revoked at any time by the principal or by a court-appointed guardian. However, an agent, without knowledge of the revocation, can act in good faith under the power.

Does the agent also have the authority to make organ donations upon my death?

Yes. Unless otherwise stated in the document, an agent can make decisions regarding organ donation, autopsy and the disposition of the body.

Who may be named the agent?

In general, you may choose anyone to be your agent, but there are some exceptions. You may not designate a health care provider or the employee of a treating health care provider, unless that person is related to you by blood, by marriage or by adoption. In some cases, you may not designate a person who is a member of your community and is bound by religious vows.

Is there a special document form that must be used?

The statute contains a simple form that can be used, but you can also have an attorney draft a document that meets your special needs. If you have questions, you should contact an attorney or the Senior Citizen Law Project in your area.

Living Wills

Kansas law allows you to make a written declaration instructing your physician to withhold or withdraw life-prolonging measures in the event of a terminal condition. This document is often called a "Living Will." The Kansas Statute lists certain provisions that must be in the document.

What is the procedure for signing a "Living Will"?

You can sign a declaration at any time so long as you are competent and at least 18 years old, but it will not become effective until your attending physician diagnoses a terminal condition.

The doctor must either comply with your wishes or transfer you to another physician.

When making a "Living Will," you must have it witnessed by two adults who are not related to you, not entitled to any part of your estate by will or otherwise, and not financially responsible for your medical care. Also, two medical doctors, one of whom must be your attending physician, must provide written diagnoses of a terminal condition.

Can I revoke my "Living Will"?

You can revoke it by destroying it or defacing it, by signing a document revoking that Living Will, or by saying that you intend to revoke it in front of witnesses who sign and date a written confirmation of the revocation.