Avoiding probate in Missouri saves time, money and sanity..
A primary goal of almost all of my estate planning clients is to avoid probate. Probate is the process by which the assets of a decedent are administered through the courts. Most of my clients know for sure they want to avoid probate but they are not exactly sure why.
The purpose of this article is to explain why probate should be avoided.
There are three primary reasons: money, time and sanity.
I mention money first because probate is expensive. Probate fees can include executor fees, attorney fees, court costs, bond costs and miscellaneous. Executor and attorney fees are set by statute and are based on a percentage of the estate. The larger the estate the higher the fees. Court costs are relatively static but add up and can include filing fees, publication fees and service costs. Here are rough cost ranges for different size estates: $150,000 = $5,300 – $10,000; $300,000 = $9,400 – $18,200; $750,000 = $21,100 – $41,400; $1,000,000 = $28,600 – $55,100.
Again, to be clear, probate is expensive.
Time is another component of the probate process and if you ask most people that have endured the probate process they will tell you it takes a long time. First, a probate cannot be filed until at least ten days after someone has passed away. Once a probate is filed, the estate must be left open for at least six (6) months to allow creditors of the decedent to makes claims against the estate.
Practically speaking, however, most estates take much longer than six months and 10 days to close and that’s because the process can be extremely complex. For one thing, the executor has to figure out what the decedent owned. In some cases, the executor (and the attorney for the estate) will spend several months trying to track down all the assets and liabilities of the deceased.
The probate process is very detailed and often involves a lot of phone calls and lots of small steps that are time consuming. That is why I mentioned the “sanity” aspect of probate, as in losing your sanity. The complexity and detailed nature of probate drives people crazy. Add anxious family members waiting on an inheritance and you can see why avoiding the process all together is the best investment of time and money and peace of mind a person can make.
So how can people avoid probate?
The best and most effective way is to establish a living trust. Probate is necessary because when a person dies, the assets are in their name. The probate process ensures that the assets of the decedent go to the persons named in their will or as decided by state law if they didn’t have a will. It also ensures that the debts of the decedent are paid, to the extent they can be.
But the easiest concept to understand a living trust and how it avoids probate is to imagine a box. The living trust is the box which you place all of your assets during life so that when you pass away there is nothing owned by you as an individual. It’s owned by the trust and those trust assets are distributed according to the trust terms. The debts of the decedent are paid out of trust assets, but not through probate. Again, since the trust owns everything, there is no need for probate.
Trusts are a bit more expensive to create than wills on the front end. But as we saw above, the back end costs of a will (in probate) are enormous. Depending on the needs of the client, a trust is a terrific way to save your estate money, time and sanity.
AVOIDING PROBATE IN MISSOURI THE EASY WAY
Avoiding probate in Missouri the easy way is the subject of this article. First, as a reminder, probate lawyer Missouri often, but not always, can assist a person to avoid probate through proper estate planning, including the drafting of a will and/or a living trust, healthcare powers of attorney and financial powers of attorney.
However, since the focus of this article is avoiding probate in Missouri the easy way is the point of this article, here are four tips:
TIP #1 CREATE AND RECORD A BENEFICIARY DEED FOR YOUR MISSOURI HOME
Missouri makes it easy to avoid probate with your home with the use of what is known as a beneficiary deed. This is a document that an estate planning attorney O’Fallon can draft for you that acts essentially like a life insurance beneficiary designation for your home. The beneficiary deed states who the owners of the property are (the Grantors) and who will receive the property when the owners die (the Grantees).
The beneficiary deed is a generally low cost and simple solution to avoid probate with your home. Just remember that the document must be notarized and must be filed before the death of the owners. Overall, the Missouri beneficiary deed is a very simple and effective way to keep your home out of probate when you pass.
TIP #2 CREATE PAYABLE ON DEATH BENEFICIARIES FOR YOUR BANK ACCOUNTS
Missouri also allows a bank account owner to name a payable on death (“POD”) beneficiary for the account. Say Mom is a widow and has two sons whom she wants to get the proceeds of her account when she passes away. With a simple trip to the bank, she can name a POD beneficiary Missouri naming her sons. This merely requires the completion of some paperwork at a branch location.
TIP #3 TRANSFER ON DEATH BENEFICIARY DESIGNATIONS FOR A CAR
One of the peskiest assets in the usual Missouri probate is the deceased’s vehicle(s). That’s because many people in Missouri don’t realize they can easily add a transfer on death (“TOD”) beneficiary for their vehicle. In most cases, a trip to the DMV with your vehicle title(s), the payment of a small fee and the listing of the beneficiaries is all that needs to be done. It’s a quick and effective way to avoid probate with your car in Missouri.
TIP #4 LIFE INSURANCE BENEFICIARY DESIGNATIONS
A life insurance policy is a common asset owned by a person when they pass away. Life insurance, of course, allows for the naming of a beneficiary for the policy proceeds. However, deeper planning can be done by naming a contingent beneficiary. Let’s say Husband and Wife each have a policy and two grown children. The primary beneficiary of each policy is normally the non-insured spouse. But what if Husband dies but is predeceased by Wife? By default, the beneficiary of the policy is their estate, meaning the life insurance proceeds will have to go through probate in St. Charles County.
A contingent beneficiary would leave everything to the two grown children, and, in the process, avoiding probate completely.
CONCLUSION
It should be noted that this kind of beneficiary estate planning is not for everyone, especially if you have younger children or a blended family. However, it works well for people with fairly straightforward assets and family circumstances.
