32 Years of Service

Although we've seen the manner in which our profession operates:progress from typewriters and carbon copies to computers and email, Evans & Mullinix, P.A. prides itself in the fact that the essence of our professional services - sound advice and value - will never change. We strive to provide quality legal services to individuals and small businesses. This year, we are celebrating our 32-year anniversary. A small firm that started out with two lawyers desiring to serve to the legal needs of Kansas City, Kansas has grown to 12 lawyers providing legal expertise to the entire Kansas City metropolitan area. We are proud of the regional reputation we have earned during the years of service to our clients. Our estate planning practice group specializes in advising and assisting clients with the drafting of wills and trusts, as well as the preparation of power of attorney documents for financial and medical decisions. The primary goal of any estate plan is to pass the maximum amount of your estate on to your heirs, all in the manner and the timing of your choosing, with minimal tax consequences. That is exactly what we have been doing for over 30 years.

Whether you have an existing estate plan or none at all, there have most likely been recent changes in your life that require a review of your estate plan, including your will, your trust, or the beneficiary designations you have made for insurance policies, bank accounts and retirement accounts. Moreover, because of recent changes in estate tax law, an updated estate plan, or even a more comprehensive estate plan including a trust, could potentially save you and your heirs thousands of dollars. In addition to saving money, a review of your estate plan could also provide the additional benefit of avoiding the long and expensive probate process.

Since estate planning should always be tailored to your current family and financial situation, the present is always the best time to plan for the future. If the unfortunate situation arises where a loved one has passed without a detailed estate plan, whether they merely had a simple will or no will at all, Evans & Mullinix can assist you with administering their estate through probate as well. Depending on the nature of the assets and how they are titled, there may be methods to avoid a complete administration of the probate estate. Still, it is essential that the administration of a probate estate strictly comply with all of the statutory formalities of the probate laws so that others may not have a basis to later challenge the transfer of these assets.

Evans & Mullinix has over eighty years of estate planning experience among the attorneys who comprise our estate planning practice group. Tim Evans, John Larson, JoAnn Butuad, Colin Gotham, Stephanie Tucker and Tim Muir all practice in the area of estate planning and probate. For the last 32 years, we have advised and assisted thousands of clients in making sure that their wealth is passed onto to their family according to their wishes. We hope that you will trust Evans & Mullinix to assist you to do the same.

Updating Your Estate Plan

Estate Plans should be reviewed periodically to allow for changes in your family, and in federal or state law. Families frequently experience changes due to the death of a spouse, birth of a child, children attaining the age of majority, receiving an inheritance or other circumstances. Any of these changes may require an estate plan be reviewed and amended. The Terry Schiavo case from Florida points out the necessity of having an Advance Directive to provide for wishes in the event that an injury or disease causes a person to be in a persistent vegetative state. Congress passed the Health Insurance Portability and Care act several years ago. As a result, we encourage clients to include language in their Health Care Power of Attorney and their Financial Power of Attorney to enable the agent to deal with health care providers. Kansas passed legislation that allows a person to execute a Transfer of Death Deed with respect to real property. In many cases, a Transfer on Death Deed should be included in your estate plan. This deed does not transfer ownership until the death of the owner (or co-owner) to designated beneficiaries. The deed will avoid probate.

Living Trusts are still a great tool to provide for the handling of your affairs during your disability and to provide for disposition of your assets at death. The Trust should be reviewed to determine whether there are needed changes or amendments to the beneficiaries, the Trustees and whether all assets are registered in the Trust name or beneficiary designated to the Trust. The beneficiary designations on 401(k)s, IRA's, and retirement plans should be reviewed. The IRS has allowed benefi ciaries to treat IRA's as their own and stretch out the distribution over the beneficiary's lifetime. Several large insurance companies have de-mutualized and issued stock to the owner of a policy in the owner's name alone. While this is a bounty to the owner, the registration of the share units in the owner's name alone may cause additional legal concerns at death.

Increasingly, clients are concerned about the costs of long-term care and wish to consider legal alternatives to protect assets. There are questions about what assets and income can be retained by the at-home spouse, in the event the other spouse is confined to an extended care facility. What is the look-back period for transfers? Does the Medicaid lien extend to the residence? Congress recently revised the medicaid law. We suggest you review your estate plan, make a list of questions and meet with your legal advisor.

Federal Estate Tax- The Basics

Clients frequently have concerns about the impact of federal estate taxes, also known as "death taxes". The estate tax is a transfer tax imposed on estates of deceased US citizens and residents. The estate tax generally applies only to larger estates. First there is an unlimited Marital Deduction. In the case of a married person, to the extent that assets pass to the surviving spouse at death, the amount of the assets that will pass tax-free is unlimited. There is No Tax. The exemption for assets passing to beneficiaries other than a spouse in 2005 was equivalent to $1.5 million. For the years 2006, 2007 and 2008, the exemption equivalent is $2.0 million. Congress is attempting to pass new legislation to expand the exemption equivalent. The tax rate for the portion in excess of $2.0 Million (or the applicable exemption equivalent) is 46%. In computing the estate tax, the gross estate needs to be determined. This includes all personal and real property, including cash, bank accounts, bonds, investments, retirement plans such as IRA's and 401(k)'s. It also includes life insurance. Whether these assets are held in joint tenancy (i.e. mother-child) or pass through probate, the value needs to be included. The IRS allows a deduction for funeral expenses, the amount of outstanding debt, such as a home mortgage, real estate taxes due or credit card balances. Bequests to charity are also deductible.

The person in charge of the deceased's affairs has the responsibility to determine whether the estate exceeds the level of exemption. If the estate tax is applicable, the responsible person should file the return. Normally, the attorney or accountant will file the return.
Kansas has a comparable death tax - the Kansas Estate Tax. The exemption amount is $950,000 for decedents dying in 2005 and thereafter the exemption amount is $1.0 Million. The rate of the tax is less than the federal government. When beneficiaries inherit assets from a decedent, the beneficiaries receive a step-up basis for tax purposes. For instance, if parents paid $50,000 for a residence years earlier, but the value at death is $100,000 the date of death value becomes the basis for computation of capital gains should the benefi ciaries sell the residence. In case of a married couple whose estate assets exceeds $2.0 million, we often discuss splitting the estate assets into two shares. The husband and wife will each own their assets separately, most often through separate Living Trusts. In this manner, the couple will be able to double the exemption from $2.0 Million to $4.0 Million through separate Trusts (using the exemption rates for 2006, 2007, and 2008)

Kansas Enacts New Power of Attorney Act

In order to clarify the powers of an agent under a financial Power of Attorney, the State of Kansas enacted new legislation. The Kansas Power of Attorney Act sets out the Powers of an agent, optional additional powers that may be delegated, powers that an agent may not delegate, and reliance upon the Power of Attorney by a third party. Most powers of attorney are executed by clients for purposes of designating an agent who would handle the fi nancial affairs of the client during disability. These are -Durable Powers of Attorney-. Language must beinserted in the Power of Attorney document that states that the authority of the agent does not terminate upon disability and in fact, remains in effect during disability. A person candesignate one or more persons to act either jointly or severally (meaning independently of the other agent). In the absence of language that states that two or more agents
may act "severally", the agents must act jointly. If the document states that it is a "general" power of attorney and that the agent has authority to act with respect to all lawful subjects and purposes with no specific limitations, then the agent has the authority to do each and everyaction or power which an adult can perform. A Principal (person creating the Power of Attorney) may grant the additional powers if they are specifi cally set out in the document. The following are some examples that can be included:

• Execute, amend or revoke a Trust.
• Make gifts.
• Disclaim gifts.
• Create or change a survivorship interest in the principal's property, including bank account.
• Designate or change a designation of beneficiaries to receive benefits upon death (i.e. life insurance beneficiary designation).
• Sell the homestead (residence).

Certain duties cannot be delegated. Examples are making or revoking a Will, making or executing a living will, requiring the principal to take an action against his or her will. Our firm now includes language in a Power of Attorney that the agent under the power of Attorney can act as the authorized representative for purposes of the Health Information Care Insurance Portability Act (HIPPA). This provision authorizes medical insurance providers to be able to deal with the agent. The agent under the power of attorney shall clearly indicate the Attorney-in-Fact capacity and keep all bank accounts separate. The principal may require the agent to give an accounting of the agent's acts. Designating a person as an agent under a Power of Attorney
is a serious act and clients should carefully consider the person to whom they give authority. We suggest that you periodically review your Power of Attorney with your attorney.

The New Trust Code

Both Kansas and Missouri have adopted their own versions of the Uniform Trust Code, which codifies the duties of a Trustee. The Uniform Trust Code of each state provides for the terms under which a Trust must be administered. In a typical case in which clients create their own living trust and manage their own affairs during their lifetime, the Uniform Trust Code can largely be ignored. The client is most often the Grantor of the Trust (person who creates the Trust), the Trustee (administrator of the Trust) and the beneficiary. Upon death or incapacity, at the time a successor Trustee succeeds to the powers of the original Trustee, the application of the Uniform Trust Code should be followed. Whether the successor Trustee is an individual or a corporate trustee, such as a Bank Trust Department, The Uniform Trust Code applies. Kansas law requires a Trustee to keep the qualified beneficiaries of the Trust reasonably informed about the administration of the Trust and of the material facts necessary for them to protect their interest. A Trustee shall promptly respond to a beneficiary's request for information related to the administration of the Trust. Within 60 days after the date the Trustee accepts the duties of Trust, the Trustee shall notify the qualifi ed beneficiaries of the acceptance of duties, and of the Trustee's name, address and telephone number. The Trustee shall send to the qualified benefi ciaries, at least annually, and at the termination of the Trust, a report of the Trust property, liabilities, receipts, and disbursements, including the source and amount of the Trustee's compensation. Also, Trustee should include an inventory of the Trust assets with the current market value. The Uniform Trust Code provides that the Trustee shall administer the Trust solely in the interest of the benefi ciaries. Self-dealing by the Trustee of Trust assets is voidable. We recommend that a person who is about to become a Trustee or is serving as a Trustee of another persons Trust, consult with an attorney about the duties and responsibilities of a Trustee.

Gift Tax Exclusion

The annual gift tax exclusion increased from $11,000 to $12,000 per recipient commencing January 1, 2006. The donors of such gifts, then, can exclude any gifts made to recipients in the amount of $12,000 or less, in any year. In the case of a husband and wife, both could make gifts, thereby increasing the gift exclusion. The value of the gift is measured by the value of the property or asset transferred, as of the date of transfer. The recipient does not have to include the amount in an income tax return. The Gift Tax does not apply to charitable gifts, such as to churches or to schools. A gift must be complete and irrevocable. There must be intent to make the gift, to transfer the gift, and for acceptance by the recipient. The donor should not retain any interest in the property transferred.