HOW WILL YOUR LOVED ONES BE PROVIDED FOR IN THE EVENT OF YOUR DEATH OR DISABILITY?

Probate

“Probate is a court procedure by which a Will is proved to be valid or invalid.”
Black’s Law Dictionary

The Probate Court is the branch of the Circuit Court that deals with the assets of the Deceased as well as those persons suffering from disabilities which render them incompetent to handle their own affairs.willsIn its most common usage, Probate is the procedure by which the assets of deceased persons are transferred to the heirs and legatees of the deceased. A will is typically presented to the Court with an application for probate of the will and letters testamentary. Upon satisfactory proof of the Will, the court will issue Letters Testamentary to the Personal Representative, allowing the personal representative to collect the assets of the deceased person, pay the claims against the deceased person, and distribute the net estate to the persons named as beneficiaries in the Will. If the deceased person left no will, the procedure is similar, with the exception that the beneficiaries are determined by law, rather than by the instructions contained in a Will. This is known as an intestate estate. An intestate estate is typically more difficult, and costly, to administer than one where there is a Will. A probate proceeding should not be handled by an amateur. It is always advisable to retain the services of an attorney experienced in probate proceedings. Attorney’s fees are generally paid from the estate with no money, other than court and administrative costs, up front.

For additional information, please contact our office at (314)725-1880.

Estate Planning

A comprehensive estate plan can ease the burden on your family and loved ones in the event of your death. It can also provide for your care and maintenance in the event that you become disabled and unable to handle your own affairs. Amazingly, although death and/or disabling illness are inevitable, most Americans have no estate plan whatsoever! The following material provides a brief overview of the basic estate planning documents: Wills, Durable Powers of Attorney and The Revocable Living Trust.

For more information regarding these services, please contact our office at (314)725-1880.

A basic estate plan should include the following components:

  • a Will
  • a Durable Power of Attorney
  • a Durable Power of Attorney for Health Care

Wills

If you die without a Will or other estate planning device, the State will determine who receives your property. Generally, your next of kin, (usually your children and spouse), will receive all your property. Without a Will or estate planning device, you, obviously, have no way to designate the proportions, to appoint a guardian for your children, or to provide for any persons or charities beyond your heirs as determined by state law. A Will should provide directions for payment of your burial expenses and remaining bills, designate who will receive your property, appoint a guardian for your minor children and a trustee to administer their inheritance until they are adults, and appoint personal representative (sometimes known as the executor) who may be permitted to serve without bond. In Missouri your will may provide for Independent Administration, allowing your personal representative to pay bills and make distributions without obtaining a court order to authorize each transaction. The Will generally provides a road map for the orderly distribution of your property according to your instructions.

For more information about wills and estate planning, contact our office today at (314)725-1880.

Durable Power of Attorney

A Durable Power of Attorney benefits you while you are still alive by allowing you to designate a person known as the “Attorney-in-Fact” who is given the authority to administer your property and handle all your financial affairs in the event of your disability. The person selected as your Attorney in Fact should be a trusted individual.
A Durable Power of Attorney is typically limited in use to those periods of time in which you are incapable of handling your own affairs as determined by one or more competent physicians. In the event that you regain your faculties, the powers of the Attorney in Fact are relinquished, since you are now again competent and able to handle your own affairs.

WARNING: Many people fail to execute a Durable Power of Attorney and later become incapacitated due to a stroke, automobile accident or serious illness. Without the Durable Power of Attorney your spouse or relative will need to file for a Conservatorship over your assets the in the Probate Court. THIS CAN COST THOUSANDS OF DOLLARS IN ATTORNEY’S FEES AND COURT COSTS EACH YEAR!! Whoever is appointed as your Conservator (often your spouse) will be required to purchase a Bond at a substantial cost for each year that you remain alive. Your conservator will be required to obtain a Court order to authorize any expenditures made on your behalf and to provide a complete accounting (to the penny!) for each and every expenditure and all receipts of income on your behalf. If discrepancies or mistakes occur in the accounting, your Conservator may be removed by court order and subjected to civil and/or criminal penalties!! These problems can be avoided by executing a Durable Power of Attorney while you are capable and in control of your faculties.

Health CareDurable Power of Attorney for Health Care

In a manner similar to your Durable Power of Attorney, the Durable Power of Attorney for Health Care allows you to appoint a person as your “Attorney-In-Fact” to make decisions regarding your health and medical care in the event that you are unable to do so as the result of incapacity, coma, of other debilitating condition which renders you unable to make your own decisions. Much attention has be given in recent years to the issue of persons living in a “persistent vegetative state” and whether or not certain life sustaining procedures should be removed. The Durable Power of Attorney allows you to set forth which life sustaining procedures you desire to be administered (or withdrawn) in the event that you would be determined to be in a “persistent vegetative state.” Hospitals and health care professionals are required to follow the directives set forth in your Durable Power of Attorney for Healthcare. Again, your written instructions reduce the burden on your loved ones in making these determinations during a time of crisis.

AVOID PROBATE WITH A LIVING TRUST (THE REVOCABLE INTER-VIVOS TRUST)

Over the years, many clients have come to my office with the expressed desire to “AVOID PROBATE.” Although a Will is part of any good estate plan, it is explicitly designed to be probated. In other words, a Will is generally of no effect or value unless the estate is administered through the Probate Court. This means that court costs and substantial attorney’s fees will be paid from the assets of the estate before your heirs receive their distribution. In addition, your heirs will typically have to wait a year (or more) before they receive their distribution.

Living TrustOne of the most effective ways to avoid probate is the establishment of a Revocable Living Trust. A Revocable Living Trust is an agreement that provides for the management of your property during your lifetime and for distribution of your property upon death, without the necessity of court action. In simple terms, when you create a living trust you set up a legal entity, separate from yourself, (but controlled by you), that will hold and manage all property transferred into the trust. In the typical Living Trust, the person who creates the trust and provides for the funding is known as the Grantor or Settlor. The person who manages the trust property, according to the terms of the trust, is known as the Trustee. The person who will receive the income and assets of the Trust is known as the Beneficiary or Grantee. Typically, the Grantor (the original owner of the property to be administered) established the Trust for his or her own benefit during his or her lifetime. The Grantor will also be the Trustee and manage the assets until such time as he or she becomes disabled or dies. The Trust should provide for a person to be the Successor Trustee and manage the trust property in the event that the Grantor dies or becomes incapable of managing his or her own affairs Most living trusts provide that the Successor Trustee will manage the property and spend or distribute the income and property of the Trust for the benefit of the Grantor during his or lifetime, and distribute the property to the designated Beneficiaries upon the death of the Grantor.

 Already Have a Living Trust?  Make sure it’s “Funded.”

Trusts are no longer  just for the “rich and famous.”  Even families of modest means can benefit, provided they use the trust properly. Experience suggests that many revocable trusts remain “unfunded” after they’ve been drafted by the attorney and signed by the grantor (the person who creates the trust).   The result being that the un-funded trust is merely a very expensive piece of paper with no legal effect.  I have filed several estates which would not have been probated if the trust had been properly utilized.
Funding the trust  requires that the assets are placed in the name of the trust.  For example, if John and Mary Smith have a brokerage account or certificate of deposit  in their names as joint tenants with rights of survival (JTWROS) they would need to retitle the account in the name of their trust(s).  This is not as complicated as it may sound .  It merely requires completing the proper documents with the bank or the investment company.  

Once the account has been  re-titled into the trust, it would look something like this:

 The John Smith Revocable Trust, dated January 11, 2011, John and Mary Smith  Trustees. This would place all the assets in this account in John’s name. Mary should have her own separate trust with appropriate assets funding it in her name. This allows the full unified credit for estate tax exemption (currently $3.5 million per person as of November 2009) to be used when each one dies. Note: the unified credit is scheduled to be unlimited next year before reverting back to $1 million per person in 2011.

Real estate can be titled in the name of the trust by executing a Deed from the grantors (owners) to the Trust.  Seek professional help from a legal professional and make sure that the Deed is propertly recorded to with the Recorder of Deeds to be effective.  This is an important aspect of trust funding, since real estate is often one of the largest assets ot an estate, and will normally result in the requirement of opening a probate estate if a proper transfer into trust (or other non-probate transfer) has not occurred prior to the decedent’s death.

 It is  important to understand that if assets are not placed in individual names (whether or not a trust is utilized) and remain as JTWROS, then the unified credit of the first spouse to die is lost forever and, if the unified credit does revert back to only $1 million per person in 2011, it could be an important planning issue for many “middle class” households. Note: Qualified Retirement plans (IRA, 401(k), 403(b), etc.) should not be re-titled to the trust because that would constitute a taxable event.

To avoid probate, and protect your estate for your loved ones, please contact our office at (314)725-1880.

DISCLAIMER: THE PRECEDING INFORMATION WAS OF A GENERAL NATURE AND NOT MEANT TO CONSTITUTE LEGAL ADVICE OR TO BE USED IN, OR APPLIED TO, ANY INDIVIDUAL SITUATION. THIS GENERAL INFORMATION IS APPLICABLE TO THE STATE OF MISSOURI AND MAY NOT BE VALID UNDER THE LAWS OF OTHER STATES. IF THE READER HAS SPECIFIC LEGAL QUESTIONS, HE OR SHE SHOULD CONTACT AN ATTORNEY.