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H. Hurst Coffman, S. Lucky DeFries, R. Austin Nothern

H. Hurst Coffman, S. Lucky DeFries and R. Austin Nothern from the Topeka law firm of Coffman, DeFries & Nothern, P.A. have been recognized in The Best Lawyers in America 2017. Coffman was honored for “Trusts & Estates Law”; DeFries for both “Litigation & Controversy-Tax” and “Tax Law”; Nothern for both “Tax Law” and “Trusts & Estates Law”. In addition, DeFries was named Tax Lawyer of the Year for Topeka.

What Is a Power of Attorney?

What Is a Power of Attorney?

A power of attorney can provide peace of mind, but it is important for people to understand what it is and how it works.

A power of attorney can play an important role in helping Kansas residents with their estate planning. This document can be drafted for any number of reasons and provides people with protection in the event of an unexpected accident or health condition. It can also be specifically adapted to suit each person's own personal estate planning needs.

Coffman, DeFries & Nothern, P.A.

What It Can Do

A power of attorney is essentially a legal document that allows people to specify a personal representative to act on their behalf if they become incapacitated. According to CNN Money, the document is used in the management of a person's financial affairs. The person who is named on the document has the power to engage in actions that include the following:

Managing investments – buying or selling stock and other shares

  • Management of financial assets – selling the person's home, car or other property, or purchasing assets in the name of the person.
  • Paying bills – writing checks from the person's account or managing electronic transfers of payment to debtors.
  • Spending money – purchasing the person's medications, food, clothing and other items.

A power of attorney can also authorize the listed person the power to make medical and legal decisions for the other person. For example, if a person is in a debilitating accident and left in a vegetable state, the document can authorize a family member to remove the person from life support.

When It Goes Into Effect

When it comes to deciding when the power of attorney becomes active, people have two options. The first is a durable power of attorney, which goes into effect as soon as it is signed. These are often used by people if they know that they no longer have the capacity to manage their affairs themselves, or people who are traveling out of the country or will be hospitalized for a period of time.

The other type is a springing power of attorney. This will only take effect when a specific circumstance arises, such as if people develop dementia or suffer brain damage.

Choosing an Agent

When choosing someone to act as an agent through a power of attorney, people should make sure that the person can be trusted to carry out their wishes and act with their best interests in mind. The American Bar Association recommends that in the event the primary agent is unable to assume the responsibility, people should have a successor in place. They can also act as coagents, especially if people wish to name family members as their agent.

There are many components to making an effective estate plan. Thus, people of all ages in Topeka may benefit from consulting with an attorney to discuss their needs and look at the choices that will best work for them.

Estate Planning For Retirement

Estate Planning For Retirement

On behalf of Jeff Wietharn at Coffman, DeFries and Nothern, P.A.

For most people, the idea of retirement sounds attractive. After working the majority of their lives, they want to stop working and enjoy the "good life." The problem that occurs is that when someone is in his or her 20s or 30s, the idea of worrying about what life will be like at age 67 or later is a very abstract concept.

People have busy lives, working, going to school, raising a family and there are bills to pay, softball games, swim meets, dance recitals to attend and thousands of other details that can easily crowd out the concerns of dealing with retirement and other issues.

How an Estate Plan Can Help

Many people probably think that an estate plan is something that involves a will and maybe a trust, although they are not certain what a trust is, and this planning is something they only really need to do after they have become "older." Of course, "older" is relative and has a tendency to always be at least ten years older than their current age.

A comprehensive estate plan will likely include a will, and it may include a trust or multiple trusts, depending on the need, but in assembling an estate plan, the most powerful element gained is clarity.

To retire, you will need to have sufficient income to replace the income you made while working. You may be able to live on less income, due to lower expenses. You may have paid off your home and no longer have a mortgage. Your cars should need replacement less often, and child-related expenses should have diminished, as your children should now have reached adulthood and saving for college or covering extracurricular expenses is now a thing of the past.

By forcing yourself to realistically evaluate your likely budget needs allows you the ability to determine how much income you will need. You can then proceed to estimate how much you need to save and whether you will have to obtain some additional source of income, such as part-time work.

What About Taxes?

Maybe you have been a scrupulous saver. You have followed all the best advice and started paying the maximum into your 401(k) when you were in your 20s. This is ideal, but as you age, you may find that maximizing your saving in a 401(k) may no longer be the best advice because all withdrawals from a 401(k) are taxable. If you have considerable savings in those types of accounts, you may find that you will have substantial tax liability during that period.

By learning of this while creating an estate plan, you can alter your savings and investment strategies to prevent inadvertent and excessive tax liabilities once withdrawals become necessary from 401(k) accounts.

Advance Health Care Directives

No one likes to consider the prospect of their own incapacity, whether through illness or accident, but one of the most important aspects of an estate plan is the addition of a complete set of advance healthcare directives. You will likely want a "living will," which directive instructs your doctors as to your preferences for medical care and treatment when you cannot speak for yourself.

In addition to this document, you should also draw up a durable power of attorney. This instrument, which grants your spouse or other family members the legal authority to act on your behalf as your agent. In Kansas, you should draft one for health care decisions and a second one to handle your financial affairs if you are incapacitated.

Once you have established an estate plan, it is important to keep it up to date, as you and your family age and change. Nothing in life is guaranteed, but your likelihood of living the good life in your retirement will be greatly improved with a well-constructed and adequately funded estate plan in place.

Keywords: A well-drafted estate plan can help identify your goals for a successful retirement

An Explanation of Probate and Nonprobate Assets

An Explanation of Probate and Nonprobate Assets

On behalf of Jeff Wietharn at Coffman, DeFries and Nothern, P.A.

Many people mistakenly assume that their wills control the distribution of all their assets after they die. Although it controls a large portion of the assets, it has no effect on many significant assets. As a result, it is important for everyone to have a basic grasp of the general rules regarding asset distribution in order to have an effective estate plan.

Which Assets Does a Will Control?

The will is the primary determiner of how assets are distributed after death for assets subject to probate. Probate is the process where a court examines the decedent's will to verify that it is valid and oversees the distribution of assets subject to the terms of the will. In cases where the decedent did not have a will, the primary purpose of the probate process is to ensure that the assets are distributed according to the intestacy laws of Kansas (or the law of the state in which the property is located and titled). These laws are the "default" rules of distribution for those without wills.

Assets that are subject to probate generally include property titled in the name of the decedent only. Aside from personal belongings, these assets include solely owned real property, bank accounts, stocks and investments and motor vehicles. At the conclusion of probate, these assets are distributed according to the terms of the will or according to the applicable intestacy laws.

Which Assets Does a Will Not Control?

As mentioned earlier, not all assets must clear the probate process before they may be distributed. These are called non-probate assets. Generally, non-probate assets include property with a beneficiary designation or that is jointly owned. Common nonprobate assets are:

  • Life insurance
  • Assets within a trust
  • Real property with a right of survivorship designation or transfer-on-death deed
  • Retirement accounts, pensions and annuities
  • Bank accounts with a payable-on-death designation
  • Virtually any other property with a beneficiary designation

The rule of distribution concerning non-probate assets is simple: they always are distributed according to the beneficiary designation. Since the will has no effect on the distribution of these assets, it is important to periodically examine your non-probate assets to ensure that the listed beneficiaries reflect your wishes. Otherwise, upon your death, your non-probate assets may mistakenly go to an ex-spouse or someone who is no longer alive.

As your life throws changes your way, it is vital to update your estate plan after every birth, death, marriage, divorce and other significant life event. An experienced estate planning attorney can advise you further on the issues raised by each change and that the necessary adjustments are made to your estate plan.

Upcoming Changes to Tax Law May Make Trusts More Lucrative

Upcoming Changes to Tax Law May Make Trusts More Lucrative

On behalf of Jeff Wietharn at Coffman, DeFries and Nothern, P.A.

President Obama's State of the Union Address included a call to increase the top capital gains rate. This fuels a discussion on the benefits of trusts and how these legal tools can shelter wealth.

President Obama's recent State of the Union Address included a call to move forward with some major tax changes in upcoming years. One of the pieces of future legislation under consideration that is gaining media scrutiny would likely increase the value of certain trusts.

The change under scrutiny involves a change to capital gains taxes. The president is proposing to adjust the top capital gains rate from 23.8 percent to 28 percent. This tax is applied when shares are sold. A recent article in Forbes provided the example of a person who purchased $10,000 in Apple stock in 2009, currently valued at $50,000. If the shares were sold at this current value, the owner would have to pay a tax on the $40,000 increase in value. But, if the creator dies before selling the shares, the beneficiaries get to "step up" the value of the shares. Instead of getting taxed for the initial $10,000 the beneficiaries would be taxed for any gains earned over the value at the owner's time of death. In this case, the shares would be valued at $50,000.

President Obama is pushing for this step-up to be eliminated and for a tax to be imposed at the death of the original owner. This combination, according to the financial analyst with Forbes, would make the use of irrevocable trusts for assets that are likely to increase in value like certain stocks, very lucrative. Why? If proper language is used when these trusts are created, the owner can transfer these assets without having to pay gift or estate taxes, likely avoiding the extra taxes proposed by President Obama.

It is important to note that this is just a proposal, and the Republican-led Congress makes its passage unlikely. However, the discussion highlights the potential benefits of trusts.

Additional Benefits of Trusts

This is just one potential benefit of trusts. Various forms of trusts are available that provide different benefits. Some common examples include:

  • Credit-shelter trust – This form of trust allows the creator to place an amount of assets below the estate tax exemption amount within a trust and pass the rest of the estate to a spouse. The spouse retains rights over the assets within the trust and the income that is generated by the trust during the remainder of his or her lifetime. This is also referred to as a tax by-pass trust as it allows a couple to limit the amount of federal estate taxes applied to the couple's estate.
  • Spendthrift trust – This form of trust allows a creator to provide assets to a beneficiary with confidence that the inheritance will be used wisely. The beneficiary is not able to sell any interest in the trust and the trust is protected from the beneficiary's creditors.
  • Special needs trust – Another form of trust that can be beneficial is a special needs trust. This legal tool allows a creator to provide an inheritance for an individual who is receiving government benefits without running the risk of disqualifying the beneficiary. Generally, the beneficiary of this trust is not allowed to control the amount of trust distribution he or she receives and the beneficiary cannot revoke the trust.

The language used to create the trust is important. Since these legal tools are complex, it is wise for those considering securing their wealth with a trust to seek the legal counsel of an experienced wills and trusts lawyer. This legal professional can review your situation and wishes and help craft an estate plan that is more likely to meet your needs.

Keywords: estate planning trusts

Don’t Overlook the Importance of Choosing the Right Trustee

Don’t Overlook the Importance of Choosing the Right Trustee

On behalf of Jeff Wietharn at Coffman. DeFries and Nothern. P.A.

Many people overlook the importance of selecting the right person to act as a trustee when they are creating their estate plans.

When people create estate plans, they are often focused on how they can reduce taxes on their estates and pass their assets on to their heirs. However, many people spend a lot of time creating extensive plans with very detailed documents, only to choose people to carry out those plans as an afterthought. If you choose the wrong person to act as a trustee, you may be unintentionally sabotaging your aims in setting up the trust.

What Are the Characteristics of the Trust?

When trying to determine the best person to serve as a trustee, you need to consider several aspects about the trust itself, as they could impact who is the best fit to administer the trust. First of all, identify the purpose of the trust, such as preserving wealth, professional asset management, protecting beneficiaries from their own poor financial choices or keeping assets for multiple generations. Your trustee will need the skills to carry out the purpose of the trust.

Next consider the beneficiaries of the trust. They may have developmental or physical disabilities and need others to manage their assets for them for all of their lives. Or the beneficiaries may be spendthrifts who need someone with a firm hand to control them. The trustee needs to be able to deal with the personalities and needs of the beneficiaries.

You should also choose your trustee in light of the dispositive terms of the trust. A trust can be relatively simple, with periodic payments of a set amount, or be more complex because it involves the discretion of the trustee regarding how much of the trust assets to give to beneficiaries. The assets in the trust can also make administering a trust more complicated, such as when there are mineral rights or equity in a closely held business, and the trustee needs to have sufficient financial knowledge to handle the trust when it contains such assets.

What Characteristics Should the Trustee Have?

The assets in trusts and terms of trusts vary, but all trustees should share some basic characteristics. You should choose a person with the skills and knowledge sufficient to administer the trust. Your trustee can hire experts to assist with the job, but the trustee needs to have the acumen to hire the proper experts and review what they do from time to time.

You should be sure that the person you choose to act as trustee is free from any conflicts of interest and can administer the assets in the trust for the benefit of the beneficiaries – even if it makes the beneficiaries upset. The trustee may need to have to defend the decisions he or she makes, so you should choose a person who has the personality to handle criticism.

Finally, you should pick someone who will be able to administer the trust for as long as it lasts. While this is not an issue if you choose an institution like a bank to administer the trust, you should consider the age of the person you choose as a trustee when selecting a candidate. You should also select a back-up candidate in the event that your first choice becomes unable or unwilling to act as trustee.

How Can You Set Up a Trust?

Trusts are a useful estate planning tool, and you can accomplish a variety of goals with a trust with the help of the right trustee. If you have questions about how to incorporate trusts into your estate plans, talk to a skilled estate planning lawyer who can advise you how to proceed.

Keywords: estate planning; will; trust

Business Succession Planning Vital for Kansas Business Owners

Business Succession Planning Vital for Kansas Business Owners

On behalf of Jeff Wietharn at Coffman, DeFries and Nothern, P.A.

Baby boomers – individuals born between 1946 and 1964 – make up a large number of business owners in Kansas. Many are just now hitting their stride and are looking forward to riding the wave of future successes as the economy picks up. Unfortunately, just behind that wave lurks a potential problem.

As hundreds of thousands of baby boomers prepare for their retirement, most are finalizing their estate plans and, as a part of that plan, many intend to sell the businesses they spent lifetimes building up. This is creating a glut in the market, making an exit from the business world difficult.

According to the Huffington Post, business sales were up more than 50 percent last year and retirement of owners was the largest force behind the sales. It is not uncommon for an owner of a family business to find that he or she has no one to take over the business and is at a loss when it comes time to retire. Even if you have children or other relatives willing to pick up where you intend to leave off, a business succession plan is vital to continuation of the business and to a successful retirement.

Getting Started

It is never too early to establish your business succession plan. Get started by overcoming the following common hang-ups:

  • Uncertainty: Just because you are unsure what your future holds, it is no reason to put off planning. No one has a crystal ball - even those who claim they are certain of their futures - so put various options on paper. The economy may react in unexpected ways or your business may suddenly be the next hot topic. Do not let uncertainly paralyze your planning.
  • Internal disputes: Internal squabbles, family disagreements and conflicting management styles often plague small, closely held businesses. Work around internal conflicts by listening to everyone's ideas and creating options that cover a number of contingencies. Most importantly, address the differences rather than ignoring them.
  • Fear of failure: If a business has been in the family for multiple generations, fear of failure can be debilitating. Emotional hang-ups can overshadow business concerns so try to step back and analyze whether the fears are based on business realities or family pressures.
  • Confusion: Many business owners are overwhelmed with the daily pressures of running a company but confusion about how to get started on a long-range business succession plan is a more common reason for failing to start. This is when a professional can help.

Consult an Attorney

Seek the counsel of an experienced business lawyer if you do not have a business succession plan in place or have concerns or questions about your current plan. An attorney knowledgeable about every stage of business formation, ownership and succession can help you accomplish your business and retirement goals and desires.

No New Year’s Resolution? How About Getting an Estate Plan in Place?

No  New Year’s Resolution? How About Getting an Estate Plan in Place?

On behalf of Jeff Wietharn at Coffman, DeFries and Nothern, P.A.

It's a new year, and a lot of us are going into it without a resolution. Even if you didn't make a New Year's resolution in advance, now is the perfect time to take action, stiffen your upper lip, and accomplish something you've been putting off for far too long: speaking to an attorney about your estate plan.

Ensure Future Viability of Businesses, Minimize Taxes, Control Health Care Expenses

When most people hear the term estate planning, they think of a will. If your assets will be relatively easy to administer, a simple will may be sufficient for your estate planning needs. More complex property may require more sophisticated estate planning tools. For example, for a small business or family farm, succession planning is important to ensure a smooth transition that will preserve the wealth-creating enterprise for future generations.

Minimizing tax liabilities is an important aspect of estate and succession planning, and can also be very important even when there is not some kind of family enterprise involved. The federal estate tax can take a significant bite out of larger estates. While Kansas does not currently have its own state-level estate tax, it has had estate and inheritance taxes in place in the not-too-distant past, and these taxes could be reinstated by lawmakers at any time.

Even for those whose estates fall below the exemption amounts for the federal estate tax, estate planning can help keep much needed resources intact. Perhaps there is a need to set aside funds for the care of a disabled loved one without impairing that person's ability to qualify for Medicaid in the future.

Why Should You Consider Getting an Estate Plan?

It's no secret that for many individuals, estate planning is a difficult thing to think about. For just that reason, this is the year you should take on the challenge. You never know when it could become too late or when laws could change to take away current estate planning advantages. Getting your estate plan in place is taking a plunge; once it is complete, you will feel a sense of accomplishment, and will have done something thoughtful to dramatically alleviate the burden on your heirs after you pass on. Make a resolution that really matters and get in touch with an estate planning attorney today.

Comprehensive Estate Planning Includes Online Accounts and Passwords

Comprehensive Estate Planning Includes Online Accounts and Passwords

On behalf of Jeff Wietharn at Coffman, DeFries and Nothern, P.A.

Most of us pay our bills or do some sort of banking online. The conveniences that these services offer help us make better use of our time, and make it easier to control our finances. When we have questions about certain payments or accounts, we can access this information from anywhere at any time, saving us the trouble of having to contact our financial institution.

While we know where our accounts are located, as well as the passwords necessary to access them, our family members may not be aware of the location of these funds, or the bills that are automatically paid each month. If this information is not included in any estate plans, it could have a severe negative impact on an estate.

It is important for individuals to list all of the accounts and passwords that they have online, and include this information with the rest of the documents in an estate plan. That way, the family is able to go in and turn off any automatic payments, and close any outstanding accounts.

This information should also include the usernames and passwords to any social media accounts, and also any passwords necessary to access personal computers, as often these will contain photos or other important items that the family will want to preserve. If any of the information changes, be sure to make updates as necessary, otherwise the family members may be unable to access these materials.

As part of the estate plan, the individual may wish to appoint someone to handle these issues, similar to an executor of an estate. This person should be someone that they trust, who would know how to take care of any concerns that may arise.

It can be uncomfortable to make plans concerning what will happen when you pass away, especially if you are just getting started in life. While it may seem like you have plenty of time to address these issues, you need to realize that you have no control over the future. Things can happen at any time, and if you are not prepared, you may leave your family in a very difficult position.

If you have questions about preserving your family's legacy, speak to an experienced estate planning attorney regarding your concerns. An attorney can help you create a solid plan that protects your assets, allowing you to pass them on to your loved ones. It is important to understand all of the options that are available to you at this time, so that you can make decisions that are reflective of your final wishes.

Estate Planning Is Important for People of All Ages and Levels of Wealth

Estate Planning Is Important for People of All Ages and Levels of Wealth

On behalf of Jeff Wietharn at Coffman, DeFries and Nothern, P.A.

Estates valued in excess of $5.25 million - $10.5 million for married couples - are subject to federal estate taxation. Although most people will never realize that much wealth in their lifetimes, it is still vitally important to consider estate planning, regard­less of your age or financial situation.

Set up an Estate Plan

An estate plan allows you to designate what goes to whom and in what amount after your death. It also helps to preserve family wealth, integrate tax planning, and simplifies the probate and trust administration process.

Minimum estate planning should include a will, health care directive and power of attorney for financial matters. If you have minor children, you can designate a guardian and determine when your child will receive his or her inheritance. Specially crafted trusts can also provide for your adult children if they have special needs or struggle with addiction or financial responsibilities.

Regularly Review Your Plan

Once you have set up your estate plan, do not set it aside and forget about it. Circumstances change, families grow, people divorce and remarry, and new laws are introduced every few years. All these factors may affect how you want your estate plan to be structured. The recent tax law changes meant major changes for a number of people and future tax laws may affect you the same way.

Check Your Beneficiary Designations

Not only must you regularly review your existing estate planning documents, you should also check the beneficiary designations on your insurance policies and retirement accounts. Beneficiary designation forms usually trump what you have written in your will or trust, which may not be the wishes reflected in your documents.

For example, when you started your first real job, you may have begun contributing to a 401(k). At the time you set up that account, you probably designated a beneficiary and a contingent beneficiary. If you were married and subsequently divorced, failure to update the designation may allow your ex-spouse to receive the proceeds. Similarly, if a named beneficiary predeceases you, unintended results may occur without an update to your beneficiary designation.

Consult a Lawyer

No matter what your level of income, it is important to evaluate your estate planning needs with an experienced lawyer. An attorney knowledgeable about estates, trust administration and tax planning can help you create a plan that serves your particular needs.

Coffman, DeFries & Nothern, P.A.

534 S. Kansas Ave., Suite 925
​Topeka, KS 66603
Phone:  785-234-3461
Fax: 785-234-3363