Brenner: A Kansas Probate Loophole

The Kansas Court of Appeals decided the Estate of Brenner last Friday. Brenner comes to us from the fine town of Goodland, in western Kansas (Sherman County, near Colorado on I-70). Mrs Brenner died and her daughter asked the Court for letters of administration more than 6 months after her mother’s death (red flag). Mrs Brenner’s obituary tells the charming story of her life; unfortunately, after her death, conflict erupted.

Earlene F. Brenner died January 26, 2014. About 7 months later, on August 18, 2014, her daughter, Beverly Goodman, asked the court to open her mother’s estate and grant Ms Goodman letters of administration. The trial court (via Judge Scott Showalter) said “no,” refusing to open Brenner’s estate or grant Goodman letters. Brenner’s children disagreed if her estate had any probate assets – Brenner had some Texas real estate and bank accounts that passed outside probate.

Writing for the Court of Appeals (the daughter won, 2-1), Judge Kim Schroeder reversed the trial court, and granted letters of administration (K.S.A. 59-2232), as he found the “petition for administration [wa]s timely filed” (Slip, 10). The Court distinguished opening an estate for administration (no deadline) from filing a creditor claim (6 month deadline, K.S.A. 59-2239), and declared that “[a]n action to marshal assets does not invoke the non claim statute [59-2239]” (Slip, 9). The Court says “no harm [no foul]” – when Brenner’s estate is opened, if assets exist, the estate can administer them; if the estate’s empty, “the estate can be closed” (Slip, 10).

Judge Joseph Pierron was the lone dissenter, arguing that letters of administration fall under the 6 month deadline, like filing a will or creditor claims (Slip, 11), and observing that “the issuance of letters of administration is rarely a challenged issue” (Slip, 18). In addition to the daughter missing the 6 month deadline, Judge Pierron argued there were no probate assets, so no need to open a Kansas estate (Slip, 17).

Brenner‘s story may yet have another chapter. Goodman’s losing siblings in Brenner could ask the Court (1) to rehear or modify the case (Rule 7.05), (2) to hear the case en banc (Rule 7.02(a)(1), (b)), or (3) petition for review with the Kansas Supreme Court (Rule 8.03(e)(2)). And in 2016, the Kansas legislature could clarify the probate deadline, to check or balance the growing trend of courts freely reading the statutes of limitation (an arc going back to at least Tracy (2006)).

Bottom line: Kansas’ 6 month filing deadline only applies to wills and creditor claims, not letters of (intestate) administration. If someone dies without a will, their estate can be opened for administration after 6 months, and the estate opening window looks indefinite, a classic carte blanche loophole (“we can find no statutory bar to this action,” Slip, 10). Brenner adds an arrow to our quiver, expanding the attorney’s probate repertoire. And Brenner is yet another reason to encourage clients to do estate planning during their lives, as the Court’s decision arguably undermines probate’s finality (Slip, 11-12).

More food for thought for the bar: could Brenner affect the timing for filing (1) a small estate affidavit (K.S.A. 59-1507b) or (2) a determination of descent (K.S.A. 59-2250)? If letters of administration can be granted more than 6 months after death (even years later under Brenner‘s logic), that could delay the small estate affidavit or determination of descent, since those probate routes assume it’s too late for letters of administration (or that letters won’t be sought or granted) (Slip, 10, 17-18).

My law firmJohnson Law KC LLC, is experienced counseling clients on probate, estate planning, and trust administration. Call (913.707.9220) or email me (steve@johnsonlawkc.com) to schedule a free, convenient consultation.

(c) 2015, Stephen M. Johnson, Esq.

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Dynasty Trusts: A Great Estate Planning Tool

The WSJ has this useful perspective on dynasty trusts and inheriting in trust. Dynasty trusts enable families to take care of future generations and ensure their philanthropic and business legacy while protecting hard-earned wealth from creditors, divorcing spouses, and other potential money drains. My firm counsels Kansas and Missouri clients to use Missouri dynasty trusts to help achieve their estate planning goals.

My law firmJohnson Law KC LLC, has experience working with individuals and families to serve their business and estate planning. I enjoy working with a variety of clients – ranging from single young professionals with minimal assets to multimillionaire business owners with complex trusts. My firm has strong relationships with local and national trust companies to help administer all types and ranges of trusts. If my law firm can help you or your family with your estate planningelder lawasset protectionbusiness law needs, or digital estate planning, including advising on trustee removal or other fiduciary litigation, call me (913-707-9220) or email me (steve@johnsonlawkc.com) for a free, convenient appointment.

(c) 2014, Stephen M. Johnson, Esq.

 

 

Collins: Choosing Your Funeral Plan in a Medical DPOA

Thursday I attended a Kansas City Estate Planning Society meeting. The luncheon speaker presented fascinating and thought provoking perspectives on fiduciary litigation. She highlighted the recent Collins decision, which dealt with selecting funeral plans under a Missouri medical durable power of attorney. Look for more posts soon discussing other fiduciary litigation cases in Missouri (and Kansas).

Collins focused on the right of sepulcher, choosing your funeral plans under a medical durable power of attorney. The facts: Betty Jean Collins was diagnosed with cancer, and on June 12, 2012, executed a medical durable power of attorney (with springing powers). (Springing powers only go into effect when your doctor certifies you as disabled or incapacitated. Immediate powers, by contrast, are effective the moment you sign the document.) Importantly, Mrs. Collins did not consult an attorney – she filled out a blank medical durable power of attorney form herself. Four days later, Mrs. Collins was killed instantly in a tragic car accident. Believing Mrs. Collins wanted to be cremated after she passed away, Mrs. Collins’ grand niece, Tina Shoemaker, wanted to have Mrs. Collins’ body cremated and give the remains to Mrs. Collins’ daughters. Mrs. Collins’ medical durable power of attorney had appointed Shoemaker to make this decision. But Mrs. Collins’ daughters went to court in Benton County, Missouri and argued Shoemaker didn’t possess authority to make the decision because Mrs. Collins was never found incapacitated, so the powers hadn’t sprung into effect, but  lay dormant for all of time in the deceased’s document. Mrs. Collins died, but she wasn’t certified as disabled or incapacitated, so the Collins daughters argued her power of attorney document was a worthless scrap of paper. One month later, the Benton County Probate Court sided with Shoemaker and said she had authority to have Mrs. Collins’ body cremated and give the remains to Mrs. Collins’ daughters. But the daughters appealed to the Missouri appellate court in Kansas City. And about 1 year later, the Missouri Court of Appeals reversed the Probate Court and sent shockwaves through the Missouri probate and elder law bar. The Collins Court strictly interpreted Mrs. Collins’ document and noted that while she could have chosen immediate powers, she chose springing powers instead, so since she was never certified as disabled or incapacitated, Shoemaker never had authority to act for Mrs. Collins.

The Missouri Court of Appeals decided Collins on August 6, 2013 per Judge Ellis. In Missouri, the right of sepulcher is “the right to choose and control the burial, cremation, or other final disposition of a dead human body.” Missouri law gives the final decision to the deceased person’s next of kin. And Missouri law defines “next of kin” by degrees of consanguinity (blood relation), similar to intestacy law (dying without a Will). Collins sparked a flurry of debate among the bar. If you’re dead, are you incapacitated? “No,” the Court said. This past week, the Missouri bar released these sample durable power of attorney documents (here for the complete DPOA packet or here, the fillable DPOA), and all Missouri attorneys should ensure their clients’ documents comply with the new provisions. Because of the complexity of these legal issues, Missouri residents should consult with their estate planning attorney to ensure their medical durable powers of attorney reflect their wishes and intent about the right of sepulcher. And if you live in Missouri and do not have estate planning documents in place, do yourself and your family a favor and execute documents at your earliest convenience. Use your freedom to make your own decisions. Don’t leave your estate planning to politicians in Jefferson City.

If my law firm, Johnson Law KC LLC, can help you or your family with your estate planning needs, call (913-707-9220 or email me (steve@johnsonlawkc.com) for a complimentary and convenient consultation.
(c) 2014, Stephen M. Johnson, Esq.

Long Term Care Choices

Driving to a lunch appointment with a friend, I heard the wonderful Up to Date program Tuesday on KCUR (Kansas City’s NPR affiliate), an elder law attorney friend gave some great advice to families considering long term care and elder law issues. As our family members and loved ones age, we can support them by having open and honest conversations about long term care and elder law issues and helping ensure their legal affairs are in order to give care and dignity to the final years of life.

The long term care discussion reminded me of this WSJ article. Anecdotally and in my practice, I’ve seen a real mix of retirees selling their homes and downsizing. Some people want to downsize long before they have any serious physical ailments or health related issues. Others may insist on living in their homes until their 80s or 90s, including spending for in-home health care services as needed (an expensive option). Ultimately the question hinges on (1) how much a client wants to stay in their home as their health issues arise and youthful vigor deteriorates, (2) how much in-home care they can afford, and (3) the family’s comfort level with the decision (including proximity to the elderly relative). 

My firm’s estate planning documents (wills/trusts, living wills, and durable medical and financial powers of attorney) include elder law protections standard and can be custom tailored (for free) to reflect a client’s beliefs, convictions, and long term care wishes. Here’s a basic explanation of the core estate planning and elder law documents. If you or a loved one need to consider your estate plan or elder law issues, call me (913-707-9220) or email me (steve@johnsonlawkc.com) for a free, convenient consultation. Our passion and expertise is serving you and your family’s legal needs.

(c) 2014, Stephen M. Johnson, Esq.

Estate Planning in 2014

Some recent online highlights from the estate planning literature. Steve Akers of Bessemer Trust offers this helpful summary of the Fall 2013 ACTEC meeting. Here’s his take on Heckerling 2014. And Wealth Counsel recently sponsored a Heckerling Nuggets 2014 webcast – slides here. The ABA’s report of Heckerling 2014 is here – part 1 and part 2.

My firm has experience working with individuals and families throughout the business and estate planning processes. I’ve enjoyed working with clients ranging from single young professionals who want to plan for the future to business owners with complex trusts and tens of millions in assets. If my law firm can help you or your family with your estate planningelder lawasset protectionbusiness law needs, or digital estate planning, call me (913-707-9220) or email me (steve@johnsonlawkc.com) for a free, convenient appointment. I want to make business and estate planning simple and straightforward to serve your legal needs and help protect you and your business from lurking liabilities.

(c) 2014, Stephen M. Johnson, Esq.

Estate Planning Like a Billionaire

Bloomberg has this fascinating article exploring grantor retained annuity trusts (GRATs) and grantor retained income trusts (GRITs) and how they are used by very wealthy business owners to pass assets to the family without incurring estate or gift taxes. (Longtime readers may recall our discussion of Mitt Romney’s large scale estate planning for his family’s estimated $750 million fortune.) Many estate planning attorneys and accountants make a sport of devising creative methods to help clients save money and pass their wealth on to future generations. The ideas aren’t illegal or unethical, they simply utilize gaps in the IRS Code that Congress and/or the Treasury haven’t solved that yield big savings to clients when multiplied by millions of shares in a given company. Estate planners are careful when practicing on the cutting edge of tax law to gauge how much risk the client is willing to take on (e.g. whether the IRS will void a transaction and send the client a tax bill), how much money is at stake, and how reliable/tested a technique is. While the estate planning techniques discussed in the Bloomberg article have been blessed by various authorities (the IRS, the Tax Court, or others), many advanced trust or tax techniques are in a legal grey area – we know X is illegal and we know Y is OK, but what about something between X and Y?

In law school, the first day of estate planning class with Prof. Martin Dickinson, he told us a story about a family business in a small town where a father gave his wife and each of his 4 children a 20% stake in the family business (worth about $5,000 each at the time, the annual gift tax exemption) in 1953. 60 years later, that family business is called Wal Mart and each 20% stake is worth $20 billion. So $100 billion was transferred without estate or gift tax liability. Sam Walton relates the story in his autobiography Made in America and credits his fraternity brother and banker, R. Crosby Kemper Jr., of UMB Bank with helping him develop the business. Here’s Bloomberg’s visual of some of the tricks of the estate planning world.

Inheriting in trust is better than inheriting money in your individual name, as it protects your inheritance from lawsuits, creditors, and divorcing spouses, among other unpleasant life surprises. Inheriting in trust using a discretionary trust provides asset protection. Asset protection uses a separate entity (e.g. a trust or LLC) to hold an asset and protect it from your creditors, divorcing spouses, spendthrift kids, or others. Asset protection trusts are not allowed under Kansas law (see K.S.A. 33-101), but Kansas and Missouri residents can use a Missouri trust to protect assets for generations. Missouri (unlike Kansas) welcomes dynasty trusts – irrevocable trusts designed to pass wealth across families for generations – and allows them to last indefinitely. For clients who anticipate inheriting over $400,000, we recommend a Missouri inheritor’s trust. An inheritor’s trust allows you to protect the assets and keep them off your balance sheet for tax purposes (so you don’t have to worry about estate, gift, or generation-skipping taxes) while having the assets available for your use and enjoyment.

My firm has experience working with individuals and families to serve their business, estate planning, and nonprofit/charitable/philanthropic needs. I enjoy working with a variety of clients – ranging from single young professionals with minimal assets to multimillionaire business owners with complex trusts. My firm has strong relationships with local and national trust companies to help administer all types and ranges of trusts. If my law firm can help you or your family with your estate planningelder lawasset protectionbusiness law needs, or digital estate planning, including a Walton GRAT, a GRIT, or other sophisticated trust planning, call me (913-707-9220) or email me (steve@johnsonlawkc.com) for a free, convenient appointment.

IRS CIRCULAR 230 Disclosure: Unless expressly stated otherwise, any U.S. federal tax advice contained in this blog post or links is not intended or written by Johnson Law KC LLC to be used to avoid IRS or other tax penalties, and any tax advice cannot be used to avoid penalties that may be imposed by the IRS.

(c) 2013, Stephen M. Johnson, Esq.

Good Estate Planning – How to Prevent Disputes

The WSJ has this helpful article with tips on how to prevent estate disputes. Among their tips:

(1) talk with your family,

(2) write a memorandum,

(3) unequal treatment after death means family discord,

(4) hire a professional executor, and

(5) share your values.

In my practice, I’ve seen each of these techniques work well for individuals or families doing estate planning. I’ve also worked on numerous estate and/or trust litigation cases where major disputes arose because people didn’t communicate (and the only winners in estate or trust litigation are the lawyers who get paid by the hour to go to court). Kansas and Missouri law both include provisions for incorporating a written memorandum into your will or trust (a/k/a a separate personal property list) – see K.S.A. 59-623 and V.A.M.S. 474.333 – and I encourage all my clients to make a written memorandum at their convenience to supplement their will’s instructions to their executor and/or their trust’s directions to their trustee.

My firm has experience working with individuals and families throughout the business and estate planning processes. I’ve enjoyed working with clients ranging from single young professionals who want to plan for the future to business owners with complex trusts and tens of millions in assets. If my law firm can help you or your family with your estate planningelder lawasset protectionbusiness law needs, or digital estate planning, call me (913-707-9220) or email me (steve@johnsonlawkc.com) for a free, convenient appointment.

(c) 2013, Stephen M. Johnson, Esq.

Good (Celebrity) Estate Planning

Last week brought bad news for music fans that rock and roll legend Lou Reed had died. Fortunately for Reed and his family, he planned ahead and had his financial affairs and estate planning documents prepared. While he lived a thrilling and unconventional life, his estate plan was standard – leaving everything to his wife and family. As an acclaimed musician and artist, he was wisely counseled to think about who would handle the copyrights and licensing for his music. When clients have IP portfolios, experienced counsel is needed to ensure copyrights, trademarks, patents, and licensing are handled correctly after a client’s death. Reed’s good celebrity estate planning stands in marked contrast to this case and others of bad celebrity estate planning. Celebrities are like the rest of us – we all need proper planning and peace of mind, they just have more assets and more complexity than most of the rest of us.

If you or a loved one have intellectual property – copyrights, trademarks, or patents – you need an experienced attorney to serve your estate planning needs and ensure your IP portfolio is handled well into the future. My firm has experience with estate planning and counseling clients on their IP portfolios and succession planning with those. Call my firm (913-707-9220) or email me (steve@johnsonlawkc.com)for a convenient, free consultation. Even if you don’t have an IP portfolio, you probably have digital assets (emails, photos, videos, computer files, Facebook, LinkedIn, Twitter, Pinterest, a blog, etc). My firm produces reliable and cutting edge estate planning documents that include digital estate planning and elder law provisions, standard and at no extra cost. My firm is also experienced handling probate and trust administration – ensuring your Will proceeds smoothly through probate, or that your Trust works seamlessly to avoid probate and ensure your legacy for your family, business, and favorite charities. My law firm, Johnson Law KC LLC, can serve you or your family’s estate planningasset protectionelder law, or business needs. My firm looks forward to serving you and your family with reliable, friendly experience and counsel at an affordable cost.

(c) 2013, Stephen M. Johnson, Esq.

Settling Large Estates

The NY Times has this interesting article about an estate and trust litigation settlement that has been reached in the Huguette Clark case in New York. Ms. Clark, who died in 2011 at age 104, leaving behind a roughly $300-500 million estate, elected to be a recluse for much of her adult life. Her story is told sympathetically and even-handedly by the recent book Empty Mansions (2013). (The title comes from a series of news stories about her mansions in Santa Barbara, CA, New York, and Connecticut which were left untouched and sat vacant for decades) Settling the estate was a wise decision by the various parties involved: ”Both the family and the beneficiaries had reasons to settle. Rolling the dice at a trial can mean losing everything. Both sides had already spent a great deal on pretrial research and legal fees. And a trial would be an exhausting endeavor, expensive for everyone, last weeks or months.” Empty Mansions, 345

 

The legal dispute over Clark’s estate arose because she executed 2 wills a few weeks apart in 2005: 1 Will left most of her estate to her surviving relatives (distant cousins, nieces, nephews), and another Will created a foundation in the Santa Barbara mansion and left large gifts to her healthcare providers, attorney, accountant, and mostly excluded her family. The distant relatives weren’t as concerned about inheriting part of her fortune as they were about the apparent manipulation of her by doctors, nurses, accountants, attorneys, and others, who took advantage of her generosity for private lucre. (More about those issues in future posts.) Still by all accounts, Ms. Clark ”lived a surprisingly rich life of love and loss, of creatively and quiet charity, of art and imagination. Though the platitude – money can’t buy happiness – may be comforting to those who are less than well heeled, great wealth doesn’t ensure sadness either.” Empty Mansions, 353.

Huguette was a daughter and an heir of Sen. W.A. Clark, a copper baron of the Gilded Age whose wealth was of a similar magnitude to Rockefeller, Carnegie, Mellon, and other Gilded Age business owners. Unlike his Gilded Age contemporaries, Sen. Clark did not due smart estate or business succession planning: ”The W.A. Clark business empire was not built for longevity, collapsing soon after its founder handed it to his children. While his Gilded Age contemporaries typically operated through hierarchies of executives and managers, creating vast corporate entities, W.A. ran his companies as essentially sole proprietorships, which he ruled autocratically. Having attended to every detail of his companies personally W.A. failed in succession planning.” Empty Mansions, 142.

One of her distant relatives summed up the issues she faced as the steward of a large estate: ”I think having such wealth can lead some people to have a lack of self-worth because of not having developed a lucrative career of their own or even having investigated their own potential. Having an overabundance of wealth can make people insecure around others who have far less than they do, since the former might wonder if potential partners or even friends are ‘only’ after them for their money. Well-meaning people of excessive wealth can feel anxious about the lack of perfection of charities they support, and about the fact that even as willing patrons they are powerless to obliterate suffering – all the while knowing that any small amount of money that they might spend on themselves is still enough to change or even save some lives. Wealth can lead to guilt over the unfairness of people working endlessly for them who have never been included fully into the family. In sum, having immense wealth can lead one to feel isolated and to have a false sense of being special.” Empty Mansions, 328 – 329.

Look for more posts soon on the Huguette Clark saga and lessons we can all learn from her story. In the meantime, if you need an experienced attorney to serve your estate planning needs (anything from a simple will, living will, and power of attorney, to complex business and tax planning with dynasty trusts for multiple generations), call my firm (913-707-9220) or email me (steve@johnsonlawkc.com) for a convenient, free consultation. My firm is also experienced handling probate and trust administration – ensuring your Will proceeds smoothly through probate, or that your Trust works seamlessly to avoid probate and ensure your legacy for your family, business, and favorite charities. My law firm, Johnson Law KC LLC, can serve you or your family’s estate planningasset protectionelder law, or business needs, . My firm looks forward to serving you and your family with reliable, friendly experience and counsel at an affordable cost. One valuable lesson for us all from Huguette Clark’s life is don’t leave your legacy and your family’s inheritance at the mercy of a court settlement.

(c) 2013, Stephen M. Johnson, Esq.