Law News and Tips

When Mom Dies . . .

Fred Vilbig - Tuesday, April 18, 2017

 

                                                              WHEN MOM DIES …

When mom dies – or for that matter, whenever any close family member or friend dies and you are responsible for taking care of things – you can be overwhelmed. First, you have to deal with the loss. Even when they have been sick for some time, and you knew it was coming, it’s still hard.People are immeasurably valuable, and the death of anyone is a great loss.

But after dealing with the personal and the emotional loss, unfortunately, there’s business to be done. We live in a world full of opportunists. With all of our connectivity, people on the other side of the world may try to steal a decedent’s identity for financial gain. Local people may have other purposes.In order to avoid a lot of problems when someone dies, you need to do certain things.

Government Benefits

If the decedent was receiving some kind of government benefits, the proper government agency needs to be notified.With older people, that is typically Social Security.If the decedent was receiving some kind of military benefit, then the appropriate defense agency needs to be contacted.If they were a former civil servant, then the Office of Personnel Management needs to be contacted.Also, don’t forget to notify the Department of Revenue and cancel their driver’s license.

Financial Accounts

On the financial side of things, you need to search and find all of the decedent’s records regarding credit cards, bank accounts, mortgages, investment or brokerage accounts, and pension benefits.You need to let all of the appropriate people know that the decedent has died.You need to cancel the decedent’s credit cards.If the financial accounts were owned solely by the decedent, then once you tell the financial institution of the decedent’s death, then the accounts are going to be frozen until they receive a copy of a court order appointing a personal representative.

Property Insurance

Several miscellaneous things need to be tended to as well.Although it can be problematic, you really should notify the insurance company insuring the decedent’s home.The problem with this is that most insurance companies don’t like to insure vacant property.They are usually willing to insure the property for a reasonable time for administration, but that is a limited time.They will want you to sell it or lease it as soon as possible, and if neither of those happen, then they may cancel the insurance.

Miscellaneous

You should also notify the credit reporting agencies so they can close those accounts.You should put the decedent’s name on the “Deceased Do Not Call List.”You should also notify social media companies such as Facebook, Twitter, LinkedIn, Instagram, and whatever else the decedent might have been on.

As annoying as all of this might be, tending to all of these details can save a lot of future headaches, time, and even financial loss. There are some bad people prowling around out there, and we all need to protect ourselves and our loved ones.

Contact Fred now about your situation. The first consultation is free. Or call him now at (314) 241-3963

Medicaid Income-Only Trusts

Fred Vilbig - Wednesday, March 15, 2017

MEDICAID PLANNING

Fred L. Vilbig © 2017

 

     When I first started practicing law in the early 80’s, it was relatively easy to use trusts to get people to qualify for Medicaid.Congress caught on, though.  They played around with the rules so that it usually looked as if short of giving all of your money away 5 years before you might go into a nursing home, you wouldn’t qualify for Medicaid.  That meant that you would have to be destitute for 5 years even though you may not end up needing to go into a nursing home.

     We have been working on a case in the St. Louis County Probate Court where to settle the case, we have to set aside some money for the benefit of the claimant.  Since the claim is being disputed, we don’t want to just give the other guy the money, and we certainly don’t want a nursing home to get it.  So that started me thinking.

     I had heard about irrevocable, income-only Medicaid trusts, but no one had really been able to explain the law behind them to my satisfaction.  As a part of this case, I had reason to research the issues on my own.  And I found out that, in fact, they do work.

     When qualifying for Medicaid, you’re not supposed to have income in excess of a certain amount.  It varies from state to state, but in Missouri right now, it’s $834 per month for an individual and $1,129 for a couple.  If you have less income than that, you are treated as “categorically needy.”  These are the people you would ordinarily consider as needy.

     But there’s another category of Medicaid beneficiaries. These are people who receive more than the threshold amount, but not enough to pay the Medicaid rate for nursing care. Their income falls a little short.  These are the “medically needy.”  They have to “spend down” their own income, and Medicaid makes up the balance.

     On the asset side, a Medicaid applicant can have no more than a certain amount of “non-exempt” “available resources” before being disqualified.Certain assets are excluded from this calculation such as the applicant’s residence (but there will be a lien put against it for any Medicaid benefits received), one automobile, household goods, and some other miscellaneous items.  Currently in Missouri, that maximum amount of available resources is $1,000 for an individual and $2,000 for a couple.  People will give away assets to get down to that level, but then you have to live in poverty for 5 years, and like I said above, you might not even need nursing care.I’m not sure that risk is worth taking.

     The dilemma is how do you make your “available resources” unavailable without reducing yourself to poverty.  The answer is that you put all or some portion of your assets into an income-only trust and irrevocably give the principal to your children on your death.  You get to keep the income off of the assets, but you give up any rights to the principal.  So long as you don’t file a Medicaid application within 5 years of when you fund the trust, the trust principal is no longer an available resource.

     If you consider doing this, it is important to note that this restriction is very strict.  Under the law, if there is any way for an applicant to get at the principal at any time, that trust principal will be treated as an available resource.

     The reason this works is because there is a single provision in the Medicaid law that allows you to exclude from “available resources” any assets that are not available to the applicant under any circumstances.  Some applicants with trusts tried to retain the right to get distributions under very limited circumstances, but the courts have ruled that the underlying trust assets would then be treated as “available resources.”

     As you can imagine, Medicaid has fought these.  They have litigated these extensively on the East Coast, but unless they were set up wrong, the government has lost all of these cases.

     It should be noted, though, that to my knowledge, no Missouri courts have yet ruled on this issue.  In our case, we are trying to force Missouri HealthNet (the Missouri Medicaid agency) into the case to force the issue.  However, in other cases like ours, they have avoided getting entangled in the lawsuits on procedural grounds.  We’ll still try.

     So although no assurances can be given, it looks as if a client can set up an irrevocable trust, retain the right to income only, give the principal away (but only on death), and be able to limit his or her exposure to nursing home costs.  In analyzing whether to use this strategy, clients need to carefully look at their available resources to see if they can live only on the income the trust will generate.  In addition, long-term care insurance should still be considered in deciding how to plan for this eventuality, but the irrevocable, income-only Medicaid trust might fit into a client’s plan.

Contact Fred now about your situation. The first consultation is free. Or call him now at (314) 241-3963

The Not So Durable POA

Fred Vilbig - Wednesday, February 15, 2017

     One of my partners recently came into my office with a story.  He has a client who has lost her mental capacity.  She signed a durable power of attorney (a “POA”) several years ago naming her daughter as her attorney-in-fact (her “agent”) to take care of things when she was no longer able to do so.  The daughter had taken the POA to her mother’s bank to do some banking for her mother.  The bank refused to honor it.  They said they had a policy that they would not accept POAs over 2 years old. Absurd!

     One of my clients recently had a run-in with an insurance company over a POA.  The POA said that the named agent could do anything they needed to do with annuity contracts, “including but not limited to” several listed options.  The client needed to change the beneficiaries on the contract in order to avoid probate.  The insurance company refused.  They said that since changing the annuity beneficiaries was not one of the specifically listed activities, it was not permitted.  Again, absurd!

     Until fairly recently, POAs were not very helpful.  They were only valid as long as the person giving the power (the “principal”) was competent.  They were primarily used in business transactions when travel and communication was difficult.  However, there was always a lot of uncertainty about whether the principal was still competent when the agent was acting under the POA.

     Beginning in about the 1980s, states started adopting what are called “durable” power-of-attorney statutes.  What these statutes did was they made POAs valid even after the principal lost his or her mental capacity. What this means is that an agent can continue handling the principal's business even after the principal becomes incompetent.

     This is a huge advantage for estate planning.  If no one can handle your business affairs for you when you are incompetent, then your family will need to petition the court to have a guardian and conservator appointed to handle those necessary things.  Even if you have a trust, there are assets that are not transferred into a trust that need attention.  And the law gives the agents the power to do those things.  That's why the bank and the insurance company were in the wrong.

Contact Fred now about your situation. The first consultation is free. Or call him now at (314) 241-3963

Wills

Fred Vilbig - Thursday, January 19, 2017

WILLS
     
      I recently met with a young couple regarding their estate planning. All things considered (including life insurance), they had a fairly good-sized estate. The problem as with many young families was the cash flow. It was already called for - every last cent - and there was nothing left for extras. Although they knew that they needed to protect their kids in the event of their deaths, they felt that a trust was a luxury. We talked about wills.
     Although I’ve talked about wills in prior posts, I want to return to the topic. I think there are a number of families (particularly young couples with children) who know they need to do some planning, but a trust is just too much. They are comfortable with a simpler, less expensive plan, notwithstanding the benefits of a trust. Why buy a Rolls-Royce when a Honda will cover your needs. So I want to talk about two important things parents can do with a will.
      When young children are involved, one of the main questions is, “Who will get the kids?” If you leave it up to the probate court, it may be a family member (but maybe not the one you want). Or they could end up in foster care. With a will, you get to say who you want to be the guardians of your children.
      Then there’s the question of who will manage the money. The minor children can’t live in the house alone, so it will have to be sold. And most families have some life insurance. Minor children can’t open a bank account, and do you really want an 18-year-old to get control of a few hundred thousand dollars? If you don’t plan, the money may go into a conservatorship to be managed by the public administrator. He can only invest in secure investments like CDs and money market funds. These investments don’t even keep up with inflation.
     With a will, you can provide that the cash will go into a trust to be managed by someone you trust. They can make reasonable investments and use the money for the benefit of your children. It’s a better plan.
      So even if cash is short, it makes sense to do some simple planning. Otherwise, problems loom in the future.

 

Evictions

Fred Vilbig - Thursday, January 19, 2017

EVICTIONS

      Lawyers read court cases… At least most do. When we were in law school, we better read them. You don’t want a law professor calling on you in class when you’re unprepared. They can be pretty mean. I think that’s a job requirement.

      Then when you get out of law school, you keep reading cases for several years. It’s kind of like being an intern studying medicine. Most attorneys don’t feel really comfortable practicing law in till they been doing it for maybe five or six years. After a while, though, lawyers get a handle on the law and start skimming relevant cases instead of reading them completely.

      I have to admit that cases can be pretty boring. A lot of times there talking about rules. There are lots of rules. There are rules for jurisdiction, rules for venue, rules for what arguments can and must be made in a particular cause of action. Those rules can be really boring.

      But under every case there is a story. A lot of times the story is buried under a lot of rules talk, but there is a story down there somewhere. Sometimes the story is sad; sometimes the story is funny; and sometimes it is just perplexing.

      One case recently caught my eye because of the story, but also because of the rule. As you may recall from some earlier columns, we’ve had a number of situations where mom and dad have both died, and a child (usually a son) who was living at home refuses to leave.

      The case in question, Kocina v. Johannes, was the opposite. Kocina owned an apartment complex. She hired Johannes’ son to maintain the complex in exchange for a furnished apartment and utilities. Tracy Johannes moved in with her son. At some point, the sun notified Kocina that he was quitting. Kocina offered to renting the apartment. He said no, and left… With his mother staying in the apartment. Kocina provided Jahangir, with notice to vacate the apartment. When she didn’t, Kocina sued for wrongful detainer.

      There are two ways to evict a tenant. The first is referred to as “rent and possession”. If you don’t pay the rent, there is an expedited procedure to get you out. At trial, the only question is “Did you pay all the rent due?” If not, the judge will ask if you can pay it then and there. If you can, the case is dismissed. If you owe rent and can’t pay it that day, you’re out.

      The other way to evict a tenant is through a wrongful detainer action. This is much more involved where the landlord has to prove that you breached some provision of the lease, other than rent – too loud; failure to keep the apartment clean; too many or any pets at all. Those kinds of things.

      When a landlord has a tenant, to evict the tenant for wrongful detainer, the landlord has to give the tenant one month’s written notice. The month in question is tied to the rental period. If the rental period starts on the 15th of each month, then the landlord has to give notice before the 15th of one month and can’t evict the tenant until the 15th of the next month. If the landlord doesn’t give the tenant notice until the 16th, then he or she has to wait two months to evict.

      In the case of Tracy Johannes, she argued that the landlord didn’t give her the full 30 day notice. It turns out that in her case, it didn’t matter. The court ruled that since Tracy Johannes was not the tenant (that was her son), the landlord didn’t have to give 30 days’ notice. Tracy Johannes was not a tenant; she was just a wrongful possessor. Written notice was required, but once notice was given, a wrongful detainer action can be commenced.

      This is helpful in probate or trust matters where a brother or sister is refusing to leave the deceased parents’ home. So long as written notice is given, there’s no need to wait 30 days to commence an eviction. This is particularly helpful when the holdover is during a high utility use time of year. It is important in administering an estate for a trust to keep costs down.

Contact Fred now about your situation. The first consultation is free. Or call him now at (314) 241-3963

Overtime … Or Not

Fred Vilbig - Monday, November 28, 2016

As many of you may know, the Labor Department on May 18, 2016, issued new regulations revising the overtime rule under the Fair Labor Standards Act. Basically, the rule fairly drastically modified the definition of “white-collar” workers substantially increasing the number of “non-exempt” workers.

The rule has three parts to it. The first part is that the employee must be paid on a salary (not hourly) basis. The third part of the rule is that the employee’s duties must be professional, administrative, executive, or outside-sales in nature. The second part of the rule is tied into compensation. If the employee makes less than a set amount (currently $23,660 annually), then he or she doesn’t fall into the white-collar exemption.

What did the Obama administration did was they more than doubled the salary component. What that would mean is that an additional 4.2 million (by the Labor Department’s estimate) workers would now be hourly employees entitled to overtime pay. Conversely, they would only be paid for the hours that they actually worked. Depending on your perspective, this could be good news or bad news. The other two parts of the rule remained unchanged. The Department just raised the salary threshold.

As you can imagine, a number of employers were not happy with this change. What may be surprising is that 21 states were also upset. They all sued in federal District Court in Sherman, Texas.

All of the plaintiffs in the case asked the court to stop the implementation of the revised rule. This is an injunction. In addition, they asked that the injunction be nationwide. On November 22, the judge agreed and issued a nationwide injunction stopping the implementation of this change in the rule.

In his 20 page opinion, the judge basically said that by so radically increasing the compensation part of the test (which isn’t even mentioned in the statute), the Labor Department effectively overrode the other two components of the test, which are in fact referred to in the statute. He felt that by doing so, the Department exceeded the authority given to it by Congress.

The government can appeal this decision. It would initially have to be appealed to the Fifth Circuit Court of Appeals which has not historically been favorably disposed to the government. So the case would probably end up in the US Supreme Court.

Although appeals can sometimes be expedited, it is almost a certainty that President-Elect Trump will have been sworn in before we see that happen. Many observers believe that he will not pursue this case, or he may simply abandon it. Although I don’t think it is on his first 100-days agenda, withdrawing the entire regulatory revision is a possibility as well.

For now though, the old rule stays in place. If an employee makes less than $23,660 annually, he or she is a non-exempt employee, no matter what. If he or she makes more than that, is paid on a salary basis, and performs professional, administrative, executive, or outside-sales duties, then the employee is probably an exempt employee.

We’ll have to keep an eye on this case as time goes on.

 

Medicaid Qualification

Fred Vilbig - Thursday, September 29, 2016

Many baby boomers are finding themselves stuck between their children’s generation and that of their parents. We were recently caught in that dilemma with my in-laws. It turned out that the amount of their Social Security checks roughly equaled the premiums on their Medicare insurance. That didn’t strike me as such a good deal.

I think a lot of people are getting stuck in this conundrum. It’s a difficult place to be, and the rules governing Medicare and Medicaid are impossibly confusing. The US Supreme Court once referred to the Medicaid rules as “Byzantine construction… almost unintelligible to the uninitiated.”

Those are pretty harsh words from the Supreme Court. In my career I have done a lot of tax law. I can say that the Medicaid rules make tax law look fairly simple. However, without getting into the deep thicket of Medicaid details, I think we can break Medicaid down into two general categories.

When most people think of Medicaid, we think of the program implemented to assist financially distressed individuals to pay for their medical needs. It covers a limited number of treatments. In order to qualify, the applicant has to be financially needy in one of two ways.

The first classification of qualified applicants is those individuals who are “categorically needy.” People are “categorically needy” when they have less than $1,000 of “countable assets.” In addition, they cannot have monthly income equal to or greater than $834. Individuals who fall into this category are the people we would typically think of as Medicaid qualified.

There is, however, a second class of Medicaid beneficiaries. These individuals are referred to as “medically needy.” In Missouri (and the laws vary somewhat from state to state), “medically needy” applicants must have less than the $1,000 of countable assets. However, with regard to income, “medically needy” individuals simply must not have enough income to cover their qualified medical expenses. For instance, if the cost for a person in a nursing home is $6000 per month and they only earned $3,000 per month, Medicaid can make up the difference. That person would fall into the “medically needy” category.

In both of the classifications, there is a limitation on what are “countable assets.” Countable assets are any assets an applicant owns (or owned during the five years immediately preceding the application for Medicaid benefits where the assets were not exchanged for something of value – that is, gifts), but it excludes certain assets. For instance, a person’s house is not included in “countable assets” for qualification purposes, but the State will put a lien against the house for any Medicaid benefits paid. When the house is sold after the recipient’s death, then the State will collect any Medicaid amounts it paid out of the sales proceeds. So the exclusion of the house from countable assets is only temporary.

People for years have been trying to get around the Medicaid rules to have the government pay for their nursing home costs. When I started practicing law 35 years ago, it was pretty simple. Congress caught on, though. First, they made it illegal for grandma to transfer assets to qualify for Medicaid. If she broke the law, surely they’d put her in one of those nice prisons with good medical care. That seemed like a good option to some clients.

Congress caught on, though. So they made it a crime for family or advisors to help mom or dad plan to qualify for Medicaid. As you can imagine, this was disturbing to a lot of influential people. The concern was that it would paralyze legitimate planning for fear of violating the law. So once again, Congress caught on.

Beginning in 2006, when an individual applies for Medicaid, he or she has to add back the value of any assets transferred for less than fair market value during the immediately preceding five-year period (the “look back.”). If an asset was transferred for less than fair market value during the look back period, then the government calculates a penalty by dividing the value of the gift by a Medicaid factor. This calculation determines the number of months that the applicant will be disqualified. The disqualification basically runs from the date when the value of the applicant’s countable assets drops below the maximum permitted amount. It turns out that the disqualification can run for longer than five years. Timing an application is critical!

If a client is trying to plan for nursing home costs, there are a number of things they can do. These include long-term care insurance, annuities, and irrevocable trusts. However, this article has already gotten too long. Maybe I’ll talk about those in a future article.

LLCs and Probate

Fred Vilbig - Thursday, September 29, 2016

We recently ran into an estate where the decedent (a successful business man) had created an LLC, transferred an asset into it, and ran the business through the LLC for several years. He had done his estate planning and had a trust, but it turns out that he never actually transferred the business into the trust. The reason was that he never completed the process of organizing the LLC.

A Little LLC Law

There are two steps you have to take in order to set up a limited liability company in Missouri. The first step is filing articles of organization. This is kind of a public notice sort of thing. You declare that you (the “organizer”) are setting up the LLC. You say what its name is. You state the purpose of the LLC, which can be very general. You say whether it will be managed by the members (kind of like partners) or a manager (kind of like a president). You say how long it is going to exist (LLCs can actually exist for only a limited time, although most are perpetual). And you name an agent who is the person to contact on behalf of the LLC.

That is only the first step. These articles say nothing about who owns the LLC or how it will operate (besides just saying whether it will be managed by a member or a manager).

The second step is the operating agreement, which is kind of like corporate bylaws. Missouri law says that the member(s) of an LLC “shall” adopt an operating agreement. The law does not provide a specific form and generally leaves the contents of the operating agreement up to the LLC members, but especially with a “manager-managed” LLC, certain things need to be covered.

For instance, here are some of the things that are generally covered in an operating agreement:

  • the members should be named;
  • the members’ profit interests should be stated;
  • the agreement should state how the managers are elected or appointed;
  • the agreement should state how the members (if more than one) will vote on company business; and
  • the agreement should state whether the LLC is taxed as a partnership or as a corporation, if that is important to the members.

 

One other topic that is generally covered by an operating agreement (which is very important for our purposes) is to say what happens to the ownership of the LLC upon the death of a member.

The Incomplete LLC

In the case of our case, the decedent had filed the Articles of Organization for the LLC. He named the LLC; he designated himself as the agent; he gave it a general purpose; and he said it would be managed by “managers.” Although unrelated to the operating agreement question, it clearly looked as if the business property was owned by the LLC based on a title certificate that the accountant has sent to us.

There was a loan from on the business asset, so I thought the bank might have had an operating agreement. It wasn’t in the material that they sent over. The accountant didn’t have an operating agreement, either. That led me to believe that no operating agreement was ever created for the business. This is not unusual when people set up their own LLCs, although it does create some complications.

Probate

What this means is that we had a little bit of an unusual situation on our hands. The LLC was sort of in limbo, and there was a bank loan still outstanding on it. This could cause some concern on the part of the bank, and they could have decided to call the loan. Since the business asset generated a nice stream of income for the surviving spouse, I thought they would want to keep it.

In that case, they were going to need to probate the LLC membership interest. The problem we had was that we didn’t have any documents evidencing what that interest was. It looked as if part of what we were going to need to do was to write an operating agreement. We then were going to have to talk to the Probate Court about how they wanted us to handle this. An operating agreement would have made things a lot easier and probably avoided probate.

 

Who to “Trust”?

Fred Vilbig - Tuesday, August 30, 2016

Most clients, of course, want to remain in control of their assets for as long as they are able. That is why they are their own trustees.

But one of the stumbling blocks clients run into in planning their estates is who to put in charge at their death or incapacitation. This applies to almost any fiduciary, but here we will talk about it in the context of a successor trustee. Typically clients want to name family. Younger clients tend to name siblings. Parents tend to name their children.

In many cases, this can be a difficult decision. Who will be best at handling the fiduciary responsibilities of being a successor trustee (or a personal representative)? Who has the skills and knowledge? Who has the time? Who has the personality and the necessary people skills to do what you want?

Sometimes clients (parents in particular) are worried about hurting the feelings of a child or further alienating them from their other siblings. If you want things to go smoothly, I really think that these kinds of issues should never come to bear on this decision. If you insist on putting a child in charge who has been alienated from their siblings, I think you’re asking for disaster.

Sometimes clients don’t want to leave anyone out of the loop, so they name some or all of their children as co-trustees. I almost universally discourage that. The administrative hassles are immense. Trying to get everyone to agree, even on simple matters, becomes a gargantuan task. Even if there are just two co-trustees, the possibility of deadlock is real.

Most of the time with parents they want to name their most successful child as the trustee. The problem with this is that Aaron, the neurosurgeon, who lives out of town and really doesn’t have the time, knowledge, or patience (not patients) to deal with these things, and it’s not something he or she has ever done before. It’s always good to learn a new skill set, right?

A lot of clients want to get whoever they are naming to agree in advance. That’s a nice thought, although it is completely useless in my opinion. Although someone may or may not be interested in serving now, 10 or 20 years from now will almost certainly be an entirely different story. What I tell clients is that they can tell the people they’ve named been named as the successor trustee of their trust after the fact, but insist that they are free to decline to serve. If it doesn’t work when the time comes and the need arises, they should not feel obligated in any way, if the burden would be too difficult. It’s just that you trust them and believe that they can do a good job. I also tell them to blame the attorney for writing them in. It’s always good to blame the attorney.

Then there’s the question of what to do when there is no one who fits the bill. Or, what do you do if someone would kind of be a good fit, but not a real good fit? That’s where a corporate trustee comes in.

In every case, even if we have 15 named trustees, I want at least the back-up trustee to be a corporate trustee, like a trust company. There is a chance that none of the 15 (and the chances much greater with only two named successor trustees) will be willing or able to serve or they my pre-decease you. If you only name individuals, and none of them will serve, then we will have to go to court to have a judge appoint a trustee. It could be the public administrator, and then the trust assets would be administered as a conservatorship, as we discussed earlier.

Corporate successor trustees (or even immediate corporate co-trustees) could be more appropriate under various circumstances. It may be that there are no family members who have the time or inclination to serve as trustee, and it would be too burdensome. It may be that the client doesn’t trust any of his or her relatives. Potential family trustees may lack the knowledge or experience to serve as a trustee in a particular circumstance. And finally, tense family dynamics could make it impossible for a family member to serve as the sole trustee (or even maybe as a co-trustee).

There are several reasons to consider a corporate trustee. First, they are professionals at what they do. This shouldn’t be minimized. Corporate trustees are held to a higher standard and are regulated both internally and externally. Another reason is that although individual trust officers may come and go, the corporate trustee itself doesn’t die or become incompetent requiring a pretty involved transition, such as would be the case with individual trustees. Corporate trustees are also typically more objective since they are not entangled in family issues. They are a third party with an unbiased opinion. Finally, corporate trustees are experienced in all kinds of tax planning, record keeping, business, investment, and real estate dealings which are not typically the case with individual trustees.

The issue that most clients raise with me is that corporate trustees will charge a fee. Depending on the institution and the size of the trust (the bigger the trust, the smaller the fee), I have seen fees range from .60% (or even less for really big trusts) up to maybe 2%. When considering a corporate trustee, be sure to ask about minimum fees – some are prohibitive, though most are not. Also, be sure to ask about which services are included in the fee and find out about any extraordinary fees such as termination fees. It is always a good idea to get the corporate trustee fee schedules – all of them. Finally, you probably want your family to be able to work with someone locally. If so, try to meet with them before you name them if you can.

With regard to trustee fees, it should be noted that individuals can be entitled to take trustee fees. After all, there is a lot of work involved. However, if professional investment advisors are being engaged (and they certainly should be), they will be charging a fee. If that is the case, then the individual trustee fee should be reduced by the amount of the professional investment advisor’s fee so that the actual fee charge is comparable to a corporate trustee fee. However, individual trustees should be able to charge an appropriate fee.

As I mentioned above, naming a trustee can be a difficult and challenging decision. As with many estate planning questions, there is not a single answer that works because families are so different. Nonetheless, it is an important decision that must be made in planning an estate.

But Where’s the Money?

Fred Vilbig - Thursday, August 18, 2016

I recently wrote a column in the West Newsmagazine about a new Missouri law designed to protect the elderly and disabled from financial predators. As I mentioned in the column, that law (which isn’t effective until 2017) is really designed to protect people during their lifetimes. It isn’t designed to recover assets.

The problem is that many times, families don’t discover that they’ve been hoodwinked until after mom and dad are gone, and so is the money. So the question is, what do you do then?

We’ve run into a number of cases recently where after the parents’ funeral, the kids find out that all the money is gone. Sometimes the house is even in someone else’s name. And that may not even be a relative, but some complete stranger.

The available remedies depend on when the assets are taken. If the assets are taken during the parents lifetime – deeds are changed, new names have been added to bank accounts or investment accounts, those kinds of things – then clients need to file what is called a “discovery of assets,” petition. In that kind of a lawsuit, the family can investigate what assets and accounts had belonged to mom and/or dad, who has them now, and why. The process of discovery involves questionnaires called interrogatories; subpoenas for documents and information; and deposition where you interview witnesses.

In some situations the re-titling may have been legitimate. For instance, maybe your mom or dad were perfectly competent and wanted to regard someone for everything they had done for them during their life.

However, in other situations, there may have been undue influence on the part of the perpetrator or a lack of capacity on the part of mom and/or dad in regard to the transfer or re-titling. In these situations your main witness is dead, and so gathering evidence is often circumstantial. These are not necessarily easy cases to prove, but depending upon the amount involved, the family may have no alternative. Since they can be difficult cases, clients need to be pretty certain of the facts before they commence litigation. What I mean by that is that you need to have a solid idea of the assets that are missing.

It may be that the assets were not transferred during the life of the parent(s), but only upon death, either by will or trust. If that is the case, then the clients have to bring a will contest or trust contest to have those documents set aside. These kinds of lawsuits, like a discovery of assets, action, or also difficult. You have to prove that the parent did not have testamentary capacity or that the perpetrator exercise undue influence. Since the perpetrator will certainly assert capacity and deny influencing the parent, it can come down to a “he said/she said” sort of argument.

As I said, these cases can be difficult, but they are not impossible to win. They just take a lot of time. Although clients typically want a quick result, they need to be patient as the case is built from the facts presented.