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What Happens To My Joint Trust If I Get Divorced?

What Happens To My Joint Trust If I Get Divorced?

 

 

What Happens To My Joint Trust If I Get A Divorce?

What Happens To My Joint Trust If I Get Divorced?

              Going through a divorce can be an extremely painful, stressful and seemingly unending process.  It affects so many different aspects of your life.  This article discusses just one of the effects, which is your estate planning, including your living trust, will and power of attorney documents.

What happens to my estate plan when I get divorced?

This is a great question and one that a qualified estate planning lawyer Dardenne Prairie can assist you with.  In Missouri, a divorce essentially treats any distributions intended for your ex-spouse as void.  In other words,  you have a will, it says that when you pass everything goes to your ex-spouse, but upon finalization of the divorce, that provision for your now ex-spouse is treated as if they have predeceased you and therefore the distribution would pass to your contingent beneficiaries, which would usually be your children.

What happens if I have assets that will avoid probate, such as a life insurance policy?

The Missouri law treating the ex-spouse as a voided beneficiary only covers assets in probate.  If you had a life insurance policy that left your soon to be ex-spouse as the primary beneficiary, you would need to change that after divorce, because if you pass away, your ex-spouse would inherit.  This happens all the time, unfortunately, and that’s why it’s important to have a game plan to review your estate plan (or establish one) after your divorce is final.

The second thing to note is that any distribution to your ex-spouse upon your passing is only void if the divorce is final.  If you expect your divorce to be extended for a period of time, it’s important to meet with an estate planning attorney to make changes anyway.  Under Missouri law, you can adjust your estate plan to cut out your soon to be ex-spouse.  You can’t completely cut them out (unless you have a prenuptial agreement or postnuptial agreement), but you can ensure that they will not inherit everything, which would be the case if you did nothing and passed before your divorce was finalized.

What happens if I have a trust and am getting divorced?

That depends on the type of joint trust you have.  An irrevocable trust attorney O’Fallon, Missouri  can explain in more detail, but the terms of this type of trust cannot be changed after the trust is created, regardless of divorce.  This type of joint trust, however, is usually created by spouses to benefit their children.

If, on the other hand, you have a revocable joint trust, both spouses can retain control over the assets.  Of course, this assumes you would want to do that.  Most of the time, spouses want to dissolve their trust and distribute assets as agreed in their marital settlement agreement.  From there, you can take the safest step and create a new estate plan with your own trust, a new will and new powers of attorney.  You’d probably want to do that anyway, since your now ex-spouse is usually listed as your principal in your healthcare power of attorney and durable power of attorney documents.

Do you really want your ex-spouse making healthcare calls for you at the end of life?  Me neither.

As you can see, the best practice, at a minimum, when you are going through a divorce is to sit down and review your estate plan with an experienced estate planning attorney.

 

 

Keep Your Original Will In A Safe Place…

Keep Your Original Will In A Safe Place…

Keep Your Original Will In A Safe Place…

I recently had a case where the aunt of a client had passed away but we could only find a copy of her will.  With some research, we were able to discover that the original will, drafted in 1985, was kept by the Nevada attorney after it was drafted and signed by the aunt.  That was apparently his office policy and some attorneys do have this policy (my firm does not).  When the Nevada attorney retired a few years ago, he apparently sent the original will to the decedent aunt by mail, with a note explaining he was retiring and to keep the original will in a safe place.

However, the original will was either never received by the aunt, or, more likely, at some point, got thrown out.   In the copy of the will, my client was listed as the alternate beneficiary and alternate executor after her uncle and her mother, who had both predeceased the aunt.  Accordingly, when aunt died my client was to be the executor and to receive everything in the estate.  Luckily, most everything in the estate had been placed into a trust and my client was named the alternate trustee of that trust.

The only asset left out of the trust, and thus part of the probate estate was a pesky bank account, having a value of just under $15,000.

Since the probate court requires an original will and we could not locate it, we had to file an affidavit from the client explaining the circumstances of when and how the original will was lost, what steps were taken to try to locate the original, who else assisted in this process and the circumstances of the Nevada attorney sending the will and it never being found.

We also filed a Petition to Admit a Copy of a Will in St. Charles County Probate Division and had to set the matter for hearing.  It’s a somewhat uncommon issue, so there was a little confusion between the court staff about what needed to be filed.  We ultimately filed everything that was needed and were able to secure a hearing date after a few months.

There was a bit of pressure on both my client and myself.  If the will was not admitted, then the aunt would have been deemed to have died intestate (without a will).  Under Missouri law, my client and each of her many cousins would be entitled to an equal share of the bank account.

At the hearing, my client was put on the stand and had to give testimony related to the lost will, including the facts related to the last few months of her aunt’s life, when she had moved to and lived in St. Charles County.  My client was very close to her aunt and this was upsetting for her having to recite these things in open court, including the care she took of her aunt around the time of her passing.

Happily, based on our filings and my client’s testimony, the court correctly found there was sufficient evidence to admit the copy of the will as the original and the proceeds of the account were, pursuant to the terms of the will, distributed solely to my client.

Now that this matter is behind us, I figured this story would make for a good example of the importance of keeping your original will, and all of your original estate planning documents, in a safe place.

Own Property in Missouri? Get A Beneficiary Deed

Own Property in Missouri? Get A Beneficiary Deed

OWN PROPERTY IN MISSOURI?  GET A BENEFICIARY DEED

If you are a landowner / homeowner in Missouri, part of getting your affairs in order should include having a beneficiary deed drafted and recorded for your property.  Unlike a quitclaim deed or warranty deed which evidences your current ownership of property, a beneficiary deed is not a present transfer of ownership.  This type of deed merely states that when you pass away, if you own that property that it should pass to the beneficiaries you name in the beneficiary deed.

The biggest advantage of recording a beneficiary deed is that doing so will ensure that your property avoids probate when you pass away.  This is because the recording of one of these types of deeds is what is referred to as a non-probate transfer.   Considering that the costs of probate for a $300,000 home will probably be around $8,000 – $10,000, having a beneficiary deed drafted and recorded for roughly $250 (our fee at Legacy Law Center) is a terrific investment.

In a beneficiary deed, you are the grantor, the person granting the property to your beneficiary, who is the grantee.  If you have a living trust, your beneficiary might be your living trust rather than named individuals.  You will need to discuss this with the attorney that drafts the beneficiary deed for you, although in many cases our firm drafts beneficiary deeds as part of an estate plan that includes a living trust for a couple or an individual, so that discussion would be part of the larger discussion about all aspects of your estate plan.

The beneficiary deed is also an easy solution for those who live in one state but own property in Missouri.  We have drafted and recorded many beneficiary deeds for out of state clients who just wanted to ensure that their Missouri property will be protected when they are gone.

Beneficiary deeds are authorized specifically by Missouri law and Missouri is one of about twenty or so states in America that have them.  Keep in mind a few things about them, however.  First, unlike other deeds (such as a quitclaim deed) that can be recorded after your death, a beneficiary deed must be recorded before you pass away.  Another important thing to know is that a beneficiary deed can be revoked and a new beneficiary deed can be recorded in place of the old one.  So, for example, if you originally wanted to give your property to one of your children but changed your mind, you can record a new version granting the property to all of your children, so long as the document is recorded prior to your passing away.

A few other things to consider:  Whether you have a mortgage on the property or own it free and clear is irrelevant.  The beneficiary deed will not affect your ability to sell a property and if you do sell the property, the deed is obviously void.  Of course, if you sell one property and buy another, you’ll need to record a new document for the new property.

Here is the link to the statute authorizing beneficiary deeds: http://www.moga.mo.gov/mostatutes/stathtml/46100000251.html

Missouri Probate: The Small Estate

Missouri Probate: The Small Estate

MISSOURI PROBATE:  THE SMALL ESTATE

If you are familiar with the term probate, you may know it almost as a vulgarity or a swear word, rather than the process by which a dead person’s assets are administered through the courts.  The Missouri probate process, however, offers some relief in cases where the assets of the estate are limited.  This is called the Small Estate Procedure and it offers a less complicated and streamlined process for administering an estate in Missouri.

There are a couple of qualifications that must be met in order to use the small estate procedure.  First, this is generally only allowed when the total value of property is less than $40,000 (after debts are paid).  Second, the small estate procedure is generally best for members of the decedent’s family other than the spouse or minor children, i.e. adult children and other relatives.  Surviving spouses and minor children have better and even more efficient options available to them, most notably refusal of letters.

Other conditions must be met:  thirty days must have elapsed since the person’s death and no application for letters testamentary or for administration or for refusal of letters is pending or has been granted.  Additionally, a bond in an amount of not less than than the value of the personal property must be filed and the bond is conditioned upon payment of decedent’s debts and funeral and burial expenses, compliance with court orders regarding decedent’s estate; and delivery to the property persons any assets which the distributee is not entitled.

Any and all fees must be paid to the clerk of the court.  Finally, where the estate is worth more than $15,000, notice must be published for creditors and such notice advises them that their claims against the estate are barred unless filed within one year of the decedent’s death.

The basis of the small estate procedure filing is an affidavit confirming certain information about the estate, the decedent and the people entitled to inherit.

All of this sounds overly complicated and it is for non-lawyers.  However, an experienced probate attorney cannot only confirm that the small estate procedure can be utilized in a given situation but can put together all of the information necessary to do so.

The small estate procedure is cheaper to file, cheaper to hire an attorney to assist you with the process.  It’s cheaper and best of all, allows for a quicker open and close of an estate versus a regular probate in Missouri, which cannot be closed for at least six months and 10 days after the death of a person.

Common myths about wills…

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Myth 1 – A Will avoids probate.

In Missouri, unless the assets of the estate are less than $40,000, probate is generally required.  If real estate is located in other states, then what is known as an ancillary probate may be necessary in each state where real property is owned by the decedent.  In Missouri, a will cannot be filed until 10 days after death and during the first 6 months assets are generally frozen and distributions to beneficiaries may not be made since claims can be filed during this period.

Myth 2 – A Revocable Trust eliminates the need for a Will.
A Will is necessary to transfer items to the Revocable Trust if it was not fully funded during lifetime. In addition, guardians for any minor children are nominated under a Will.

Myth 3 – A Will takes effect upon incapacity.
A Will only has legal effect at death. Upon incapacity, agents under Powers of Attorney for Property and Health Care may be empowered to act, otherwise a Guardian must be appointed and a proceeding in guardianship court initiated.   Thus, Powers of Attorney are hugely important.

Myth 4 – You can disinherit anyone, including your spouse, under a Will.
In Missouri, a testator can disinherit their children and almost anyone else.  However, they cannot fully disinherit his spouse, unless both spouses have waived the right to be included in each other’s estate in an enforceable pre-nuptial or post-nuptial agreement. Each state has laws that shield a surviving spouse from being disinherited. In Missouri, the surviving spouse receives a minimum of the estate which depends on whether the decedent had children from a prior marriage, whether the decedent and the surviving spouse had children together or no children were born of the marriage or in a prior marriage.

Myth 5 – A Will is a private document.
Missouri requires that a Will be filed with the county in which the Testator resided.  After a year has passed, a will is considered to be invalid. However, once filed, any member of the public can access and review the document at the courthouse