A:            The drafting alone is merely the first half of the process to create an effective Living Trust. While the Living Trust is a highly useful addition to the Will, and can significantly lessen the burden on your family after you are gone, it must be properly funded. As the client, you will need to work with assistance of your attorney to properly fund the Trust.

Funding the Trust means that contracts and accounts, such as Life Insurance Policies, Brokerage Accounts, Retirement Accounts, etc. should be reviewed.  Changes to the Beneficiary Designations on such accounts should be made consistent with the terms of the Trust.  Also, assets, including personal property and real estate, need to be titled in the name of the Trust to help assure avoidance of Probate Court.

By working closely with an experienced estate planner, you can not only ease your family’s burden upon your passing, but you can also ensure your estate is distributed in a manner consistent with your final wishes, while avoiding government interference.

     I keep a record of what I want people to receive when I pass.  Since I have such a list, I don’t need to worry about having a will or updating my will to include the existence of the list, right?

 Answer: 

     Unfortunately, this common assumption is incorrect, because generally, testamentary directions must be contained within a properly executed Will in Missouri.  By and large, in order for such a list to have the effect intended (i.e. Distributing your property) the list must be referenced in the will, must be dated, and must be either entirely in the testator’s (person leaving the property) handwriting.  See, Mo. Rev. Stat. § 474.333 (2010).

     Unless the above requirements are met, the Probate Court may ignore your specified list, and instead distribute your property based solely on the dispositions made within the Will.  If no beneficiaries are named in the Will because of reliance on the list, you may risk your estate being distributed intestate (without will). An estate that is distributed intestate follows the laws of the state, and is distributed through the state’s statute on point.  While such a distribution may be similar to the one you have in mind, it may make distributions you did not intend, and could cause property to be sold in order to satisfy the proper breakdown according to the statute.

      The best way to avoid this potential pitfall is to make sure you communicate with the Attorney creating your estate, as clearly as possible, how you wish to distribute your property.  Further, if you desire to use a list for distribution, you should make sure the list conforms to the statute referenced above, and most importantly, that your Attorney knows you intend to use such a list.  If you don’t inform your Attorney of your intentions, you may run the risk of having your estate distributed in a manner you did not intend.

 While this statement may be true from time to time, it remains that the passing of an individual, and the parsing of an estate can, and often does, create a great deal of problems in families.

Many people with small or limited estates may question whether they even need a will or estate plan.  It is thought, by many, that their property will simply be split up between their family members evenly, and that will be the end of it.  However, if your property isn’t allocated via a will or trust, then your estate will go into Pobate, and without a Living Trust would not avoid Probate unless all of the assets devolved by means of other non=probate transfers, such as joint ownership or beneficiary designations.  In Missouri, there is a specific statute (Probate Code §474-010) which denotes who is in line to get your estate through what is called descent should an individual pass intestate (without a will). (See definition in next paragraph.)

To begin we should define a couple of terms.  Probate: to prove, this is the process by which the state goes through your estate to determine who is in line to receive your property.  When there is a proper estate plan in place, this process can be avoided all together, saving your family a lot of time, grief and even money.  Descent: the order of succession which the law of Missouri will follow in distributing your property. In Missouri, this begins with the surviving spouse, and then goes to your issue (children), and to your children’s descendents.

While the law of the state will make sure your estate is distributed, the law does not know your intent of the most important question of “How?” your estate should be distributed.  Under the Missouri Probate Code, you will have no control over what goes to whom, or have any control to stop anyone from collecting from your estate.  By preparing your estate, and planning your legacy, you can not only give yourself peace of mind that your loved ones will be cared for when you pass, but you can also maintain control over your estate, ensuring your property goes to precisely who you want.  However, by leaving your estate to the probate laws of the state, you may be opening up your family to unforeseen trouble that can be easily avoided through taking the time today to plan your legacy.

There are no maintenance costs to such a Trust–a self-trusteed trust does not operate under court supervision, and is not required to file annual reports with any governmental agency. Usually, a trustee’s accountings are rendered to the named parties in the trust, and since the grantors are generally the sole beneficiaries during their lifetimes they, as trustees, are able to render their own accounting, in whatever form they reason to be adequate. There are no special records necessary for maintenance aside from the records necessary for income tax purposes.

 Flexibility To Make Changes

Since trusts are revocable and amendable, the grantors can simply change the provisions of their trust, without the legal red tape implicated in modifying one’s will. There are no requirements for a trust amendment to be witnessed or acknowledged before a notary public, and only grantors’ signatures are required for validity, so the changes are not only more simple and cost effective than the changes of a will, but are even easier to begin in the first place.

 Low Cost of Administration and Final Distribution

Generally, there should be only nominal costs of administration or allocation of the estate. Usually, those costs are identical to the costs of transferring property during the life of the grantors. There should be no legal costs except for preparation of any required conveyances of property, a deed, for example, which are normally minute.
 
The use of a living trust should not considerably affect the expenses of valuing the estate for estate and inheritance tax purposes, and to establish basis for the assets being distributed. Depending upon whether local procedure the trustee may be able to informally appoint appraisers, which may save the estate money in the long run. Additionally, the valuation of the assets of the estate is far easier because all of the assets are held in one place, the trust. Knowing exactly what assets are in the decedent’s estate at the time of his death should make valuation of the assets easier.

 For More Information See:  MO BAR CLE, 1-2 Living Trusts: Forms and Practice § 2.04

 Answer:  Beneficiary deeds are a useful tool in allocating property in order to avoid probate.  They are relatively new in the canon of estate planning.  The beneficiary deed provides for the automatic transfer of property upon the owner’s (or last surviving owner) passing.

The beneficiary deed does provide certain advantages including flexibility, the immediacy of the property transfer it creates, and the avoidance of probate which can be a grueling process on the recently bereaved. 

However, the beneficiary deed does have one pitfall as all beneficiaries must be 18 at the time of death of the grantor (or maker of the deed).  For that reason, another tool that may be useful is the Living Trust, which can avoid the age requirement of the beneficiary deed.

It never occurred to her that the US Government Bonds physically located in her safe deposit box would be subject to Probate, so she didn’t include them when telling the attorney about her assets.  These bonds were held in her name, only, and thus are not saleable or transferable upon her death until the Probate Court acts to legally change the title.

This story is a fairly common one and it illustrates that persistence and thoroughness are vitally important in estate planning.  There is an old saying “The Devil is in the Details”.  When planning one’s estate, this saying often rings true.  In this case, Grandma should have changed the name on the deposit box, and included the deposit box in the estate.  That way, the beneficiary she intends to receive the bonds will, assuredly, receive the bonds.  Otherwise, Grandma’s bonds will go into the probate court, costing more time, and more money.

A:  Maybe, but there is no guarante.  A simple will can be an effective tool that can provide for the outright distribution of assets for an uncomplicated estate. However, different states (and Missouri is no exception) have different rules regarding wills and estates.  To be certain your estate is properly allocated, no matter how simple it may seem, you should consult a professional.  Without professional help, your estate may spend a long time going through the probate process, causing greater complications for your loved ones.

My brilliant computer man, Steve Driscoll, has impressed upon me the importance of starting a blog and sharing potentially valuable thoughts with the internet world.

This law firm exists to help people with long term financial and estate planning. I earned a Master’s Degree in Finance and a Law Degree at the University of Missouri-Columbia ( see resume on website for more info about me ).

Estate Planning thought for the week. TRUE OR FALSE: A will controls the distribution of all my property at my death. ANSWER: Almost always FALSE. Many other legal and contractual facts pertaining to one’s specific assets might control the disposition of one’s property. For example, if one names a person as a beneficiary on a life insurance policy, after the beneficiary submits acceptable proof of the claim to the insurance company, the insurance company will send the death benefit proceeds to the named beneficiary(ies). (PERIOD). The wording of the Will has no effect on this result.

In the next blog entry, I will likely pose the question: If one has a simple Will, what does is do?